A pause, but not panic, in Fort McMurray as oil prices languish below US$50

The city at the heart of Canada's oilsands is no ghost town, but things have slowed down a bit in Fort McMurray, Alta. An aerial view of Fort McMurray is shown in this Monday, Sept. 19, 2011 photo. THE CANADIAN PRESS/Jeff McIntosh.
The city at the heart of Canada's oilsands is no ghost town, but things have slowed down a bit in Fort McMurray, Alta. An aerial view of Fort McMurray is shown in this Monday, Sept. 19, 2011 photo. THE CANADIAN PRESS/Jeff McIntosh. THE CANADIAN PRESS/Jeff McIntosh

FORT MCMURRAY, Alta. – The city at the heart of Canada’s oilsands is no ghost town, but things have slowed down a bit in Fort McMurray, Alta. And that’s not necessarily a bad thing, according to the president of the local chamber of commerce.

“Do you know what? To me – for us – this is nice,” Nick Sanders said in an interview at a downtown cafe that had a smattering of customers in the middle of a weekday morning.

“We have a chance to sit back and say ‘Ok, let’s figure out what we need to get ready for the next increase in oil production.'”

Oil prices are the lowest since the Great Recession hit about six years ago, hovering below US$50 a barrel throughout much of January after having plunged from a summer high of US$107.

READ MORE: Conference Board says Alberta recession likely – Premier Jim Prentice disagrees 

But Fort Mac has not ground to a halt.

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According to the Canadian Association of Petroleum Producers, the oilsands churned out 1.9 million barrels a day of crude at the end of 2013. That’s projected to rise to 2.3 million this year thanks to projects that are already in the hopper.

So most of those who call Fort McMurray home continue to have stable jobs, whether it’s driving trucks at mines north of town or pouring pints for those workers when the day is done.

It’s the expansions and new projects that are up in the air, as companies try to get a handle on where prices are heading long term. Bearing the brunt of the downturn so far have been contractors from elsewhere who rely on those temporary construction jobs, often flying directly to and from site and residing in work camps for weeks at a time.

Suncor Energy Inc., which has massive mining operations north of town, is cutting its company-wide workforce by 1,000 – mostly contractor jobs. Shell Canada is cutting up to 300 jobs at its mining operations in the area. Across the sector billions have been pared from 2015 budgets.

READ MORE: Suncor cutting 1,000 jobs, taking $1B out of 2015 budget amid oil rout 

The uncertainty has made it difficult for authorities in Fort McMurray to make sure they have enough housing, infrastructure and services to match whatever size population is needed for the next growth spurt.

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If anything, Sanders is worried about how the community will be able to respond if oil swings as sharply upward as it has downward.

“Very little needs to change globally for the price of oil to jump up,” he said.

“That would be our biggest worry – is that, have we slowed it down too much?”

Among other things, Sanders wants to make sure the province continues to work on twinning Highway 63, the key north-south artery through the region that has been notorious for fatal traffic accidents and, eventually, for bridges to be built across the Athabasca and Clearwater rivers so that the city can expand.

There was little gloom evident in downtown Fort McMurray during an unseasonably warm spell in late January. It was tough to find a parking spot amid the throngs of mud-splattered pickups outside Peter Pond Mall. A steady stream of trucks rumbled down Highway 63 as rush hour approached. The local brew pub on the main drag was crammed on a weeknight.

At Earl’s restaurant a few blocks away, one patron did note that the bar used to be packed “wall to wall” a few years ago, whereas now there were free tables to be had. Another customer complained that traffic is still “a mess.” Downtown businesses say sales are a bit slower, but nothing drastic, and they can’t say for certain whether the post-holiday hangover or low oil prices are to blame.

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READ MORE: Falling oil prices attract American broadcasters to Alberta 

Mayor Melissa Blake has had to manage the municipality’s resources through many ups and downs during the past decade. If there’s one thing outsiders get wrong about Fort Mac, it’s the degree to which the “drama” over oil prices matters to day-to-day life, she said.

“We’ve been through cycles like this in the past,” she said. Blake recalls in 1998, when she was on city council, encountering a budget squeeze when crude tanked to US$10 a barrel.

“Within two years, we were already saying ‘oh my gosh, how are we going to handle the growth.'”

As of the 2012 census, the Regional Municipality of Wood Buffalo – a more than 68,000-square-kilometre swath of land that encompasses Fort McMurray and nine rural communities – had a population of 116,407. About a third of that – 39,271 – were part of “project accommodation,” or work camps, which these days often more closely resemble hotels or lodges.

“The population is what really drives the services you have to provide, so whether it’s about having the right road kilometres that are paved and in good shape or it’s how many garbage pick ups you have to make or snow clearing that you’re doing. It could affect how many parks you’re putting in the neighbourhoods,” Blake said in an interview in her downtown Fort McMurray office.

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For Blake, today’s low oil prices aren’t the biggest worry.

“I’m more concerned about what happens when this turns around and whether we’re going to be prepared adequately.”

According to the census, the municipality has seen overall growth of 124.5 per cent since 2000. The work camp population has grown an average of 17 per cent a year between 2000 and 2012.

“We had so much growth in such a short time, that we were already behind the eight ball,” said Blake.

“And so getting caught up now, it’s actually a good place for us to take that reflection time and make sure that we have what we need for the people that are here without overshooting.”

Like Sanders, Blake sees some potential benefits now that the pace has slowed a bit, such as more contractors to bid on projects.

READ MORE: Prentice says Alberta oil crunch will hurt economies across country 

The slowdown means “maybe a little time to regroup” but “no doom and gloom,” said Catherine Koch, vice president academic at Fort McMurray’s Keyano College. About a third of the college’s 2,500 students are pursuing careers that are in some way related to oil and gas, whether that be welding, operating heavy equipment or power engineering.

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Koch said she’s finding that, if anything, those courses are in higher demand. For instance, apprentices may have clocked all the work hours they need, but haven’t had time until now to complete their academic training to get their certifications. As things slow down, companies are able to free up their employees to upgrade their skills, she said.

Bryan Lutes, who leads the Wood Buffalo Housing & Development Corporation, said rents aren’t climbing as rapidly as they used to during boom times, but they’re not falling either.

“We anticipate a levelling off,” he said.

“A one bedroom apartment around here could cost you over $2,000 a month, $2,200 a month and it goes up from there. Where, in most other areas in the province of Alberta, they’re about half of that.”

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