Could Alberta’s oil industry be rebounding?

Click to play video: 'Cautious optimism that worst of Alberta’s downturn is over'
Cautious optimism that worst of Alberta’s downturn is over
WATCH ABOVE: While there is still a long way to go before we see Alberta's oil industry rebound to where it was two years ago, there are some positive signs out there. Tom Vernon reports. – Jan 23, 2017

Most in the oil industry don’t want to speak too soon, but early numbers show things could be starting to look up in Alberta.

“Our members are looking for labour to get some more crews going. It’s optimistic right now,” said Mark Salkeld, president and CEO of the Petroleum Services Association of Canada.

“Not quite the numbers we had for a few years but at least picking back up again. We’re just kind of keeping our fingers crossed that we can get certain levels to continue through Q2 and Q3.

“It’s picking up on the drilling and the completion side, without a doubt,” he said.

Numbers from the Canadian Association of Oilwell Drilling Contractors (CAODC) also point to optimism.

When comparing the number of rigs in service in Alberta for the week of Jan. 16, year over year:

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2017: 219 out of a total of 450 rigs in the province (49 per cent)
2016: 133 out of a total of 523 rigs in the province (25 per cent)
2014: 409 out of a total of 565 rigs in the province (72 per cent)

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Between 2014 and 2017, the number of total rigs operating in Alberta dropped from 565 to 450; a decrease of nearly 20 per cent.

“The services sector started laying off, unfortunately, two-and-a-half years ago,” Salkeld said, “when drilling contracts were cut short, completion contractions were cut short and our people and equipment were sent home early. We called it an economic breakup.”

Using details like producers’ budgets, information on public companies’ drilling programs and land sales, Salkeld is hopeful.

 “There’s going to be work into Q2 and Q3, [it’s just a question of] how much there’s going to be. It’s still somewhat of a fragile time with the geopolitics.

“It’s still fragile times, without a doubt, but there is – I’m going to use a term from ’08, ’09, ’10 – ‘cautious optimism.'”

READ MORE: Worst of energy downturn over in Alberta as oil starts to stabilize, ATB Financial says 

In November 2016, ATB Financial said it expected Alberta to emerge from a two-year recession caused by the collapse of oil prices.

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ATB chief economist Todd Hirsch said, with oil prices expected to hover around US$50 to US$55 a barrel this year, there will be increased stability in the energy industry — but not growth.

“We are expecting the recession will end in 2017, however the unemployment is going to remain elevated.”

READ MORE: Alberta’s unemployment rate hits levels not seen since 1990s 

Landon Malec bought Luba’s Hotshot Services Ltd. in January 2014. He says the last two years have been “extremely challenging” for the Leduc company.

“We had to take a look at every line item on our budget and cut everything,” Malec said. “We went from having five drivers and two employees – seven employees total – down to only having two employees with me as the primary driver.”

Luba’s is now back up to having three drivers.

He says he’s grateful to still be in business and very cautiously optimistic about the future.

“It’s great right now, but keep in mind, breakup is just around the corner. As much as I’m optimistic with the increase in activity… I think a lot of it seasonal and I think when the spring thaw comes you’re going to see significantly less activity.”

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With files from Ian Bickis, The Canadian Press

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