There are signs Alberta’s economy has bottomed out. But are we turning around and seeing growth coming back?
Take this survey and let me know what you think?
In Alberta, we have a very large dependency on the oil and gas industry. It is a mature industry with a large outstanding reclamation obligation. With the collapse of oil prices and long-term low gas prices, extreme labor costs and past practices of wasteful management, we have an industry in hard times. We now have emerging restoration and reclamation obligations coming home to roost.
In 2009 and 2010 I was part of a research project that showed Albertan’s top value drivers around what constituted responsible oil sands development. We found the top issues used to evaluate if a project was meeting its obligations to the public interest was reclamation type, habitat protection, ecological monitoring and greenhouse gas emissions, in that order. The pace of reclamation was not critical then, but it is becoming more important now.
The industry focus on energy development creating jobs and economic growth was the least important value for Albertans. In today’s economy that may be a higher value drive.
We have done a very good job on monitoring around air, water, and land, but not much on habitat monitoring or protection. Very little reclamation has been done to date but it is getting more attention in oil sands. In the conventional energy business, this obligation is almost totally ignored by the industry.
So, gentle reader, what do you think today about the importance of restoration reclamation obligations in your energy resource assets?
Thanks to the extensive drilling associated conventional oil and gas business, Alberta is one of the holiest places on the planet…and I am not talking about our Bible-Belt reputation.
We have become very good at drilling in this province and export that expertise and technological advancements all over the world.
There are serious economic, environmental and regulatory challenges facing these well operators. Low prices, high labour costs, competition from shale oil and surplus supply, market access issues and looming reclamation requirements make this a tough business.
Given these situations, may operators are opting to declare many wells “Non-producing” meaning no oil flows That gives one year grace from regulatory obligations and time to see if conditions or technologies change to make oil production economical again.
After a year, and if nothing changes, the Regulator deems these wells to be “Suspended.” That triggers the legal obligation to reclaim the well site and close down to well permanently. Not only is revenue foregone and costs for reclamation looming these wells will move from the asset side of a balance sheet to the liability side. That will make nervous lenders even more anxious about the security they hold for loans.
There is some potential for some wells to be adapted to generate electricity from the heat of the geo-hydro potential in ground water. Innovators are now at a field test stage for this Alberta-based technology.
This can create so many positive results from a constant reliable renewable energy source independent of wind or sunshine limitations. It can decentralize power generation to local communities without costly transmission and distribution costs. It will create manufacturing, maintenance and operational jobs in Alberta communities. It can even help green the oil sands by using hot water recovered from SAGD operations to power plant services with no increased emissions.
To learn more about geothermal in Alberta – click here.
The Government of Canada Budget 2017 has a major emphasis on “Skills and Innovation.” It recognizes “Innovation starts with a skilled, talented and creative people.” There is recognition that education is not enough to keep current and capable in an increasingly competitive global economy with rapid technological changes including automation. Continuous learning is a
Continuous learning is a Canadian cultural imperative for workers to be adaptive, resilient, capable and employable throughout their working lives.
Continuous Improvement has to be core to keeping companies competitive in the world of Creative Destruction. Alberta businesses are not immune to this reality but many of the mindsets around the past successes of our energy sector breeds a lot of indifference to this reality.
GO Productivity’s innovative industry collaboration (PAAD) is determined to improve safety, productivity and internal competitiveness of Alberta’s energy, industrial construction, and manufacturing sectors by enabling adoption of best practices…including continuous improvement through continuous learning.
Continuous learning is the obvious means to continuous improvement but not enough Alberta businesses have this embedded in their corporate culture. The key to continuous learning is a competent workforce, not just a “qualified” workforce. Competency means workers are able to actually do their jobs safely, productively, with reliable quality and collaboratively with others.
Budget 2017 recognizes “Innovation is changing the way Canadians work.” There are significant Budget 2017 policy pronouncements that support the GO-PAAD efforts towards more productivity, innovation, collaboration and competency. They include:
If you are encouraged by these initiatives and can see how you can benefit from them, contact us at GO Productivity. We can help you start and be successful on your productivity, innovation, continuous learning and sustainability journey.
It’s your business…Only better! Looking forward to hearing from you.
The Owl newsletter from Alberta Treasury Branches posed this provocative question. Based on StatsCan data, there has been a perception of recent overbuilding in both Edmonton and Calgary, particularly in commercial real estate. Given that does the future pullback due to supply and demand market forces mean a collapse in these construction markets?
Using building permit data from both cities, the conclusion is construction activity in 2017, Calgary will be close to the ten-year running average. Edmonton is projected to be 13% above its ten-year running average. ATB notes things are “slow compared to two years ago” but taking a 10-year view, that includes two recessions, and “plenty of booms” construction is now “average.”
This data hardly portends a collapse, but a return to normal market conditions, and away from the overheated markets of 2014-15. Calgary is feeling the decline as permits are 25% plus off the peak construction in a recently over-heated market. That has resulted in high office space vacancies caused by the downward pressure on oil prices induced by the Saudis attack on US shale production. Boom and bust mentality is alive and unwell in Calgary.
Edmonton, on the other hand, did have a significant construction growth sparked by the removal of height restrictions from the closing of the municipal airport and the ripples from the downtown arena project. The current situation is Edmonton building permits are still above the ten-year average.
So the lessons to be learned in these “average time” is to not get suckered into the boom and bust cycles of the past. This is the time for Alberta construction businesses to look at investing in improving their processes, productivity, workforce capacity, and to look at adopting new technologies. Progressive businesses will be revising and getting ready for responsible, sustainable and resilient long-term rational growth.
Progressive businesses will be taking steps and getting ready for responsible, sustainable and resilient long-term rational growth. GO Productivity is able to help construction SMEs and their suppliers in getting leaner, greener, cleaner, smarter and quicker and able to take advantage of better ROI in these new normal times. They are looking forward to hearing from you.