Tim Huber has been working in the oil and gas sector for 40 years. In that time, he’s seen five resource downturns. The current one got its start in 2014, following an extended period of oil trading for more than $100 per barrel.
“This is about the worst I’ve seen. The worst part is there’s not a lot of optimism in seeing an end to it,” Huber said.
Currently, Huber works as the general manager for Independent Well Servicing (IWS) in Estevan, Sask.
At the height of the last boom, IWS had 60 employees and ten working service rigs in operation. Now, the company is down to 38 workers and six working rigs.
Huber said that they’re trying to keep as many people working as possible. Lately, IWS has had their six crews sharing hours across four rigs. On top of the cut in hours, the average wage has dropped about 25 per cent.
According to Huber, the price differential between Canadian and American oil has really “slowed up” available work over the past year.
“Everybody’s feeling the pinch. Either you’ve cut back obviously the amount of revenue you’re taking in; you’re employees have been dropped because of less work and everyone’s in survival mode,” Huber said.
“We’ve been in survival mode for going on five years almost now, and this last year you’re still hunkering down doing what you can.”
The oil differential has closed compared to when Canadian oil dropped as low as $11 per barrel late last year. As of Jan. 9, 2019, Western Canadian Select was worth around $33 per barrel, compared to $52 per barrel for West Texas Industrial.
Huber said he only watches longer price trends, as they give a better indication of future resource investment.
From the oil patch to Main Street
The energy industry is a key driver in Estevan’s economy. On 4th Street, in the city’s downtown, there are a handful of vacant storefronts and one store was holding a going out of business sale.
“Lots of peers have expressed slumpy sales and just less overall traffic,” Jenny Pettitt, Estevan Downtown Business Association president said.
Pettitt has been in business for 25 years at her clothing boutique Jenny Joans. Despite struggles in local retail, she was pleasantly surprised to see that her store was more successful in 2018 than the year prior.
She attributed the success to her busiest Christmas shopping season in some time.
“People just don’t have the whereabouts to be travelling and driving and spending all the extra money on that expense, and people are starting to realize they need to support local and stay in town,” Pettitt said.
The struggles in the oil sector have extended to the housing market. Joshua LeBlanc, a broker and owner at Coldwell Banker Choice Real Estate, said the average and median sale prices have dropped since 2016. At the same time, new listings have been climbing.
“We usually used to see sales happen in about 30 days when the height of the boom was going on, but now we’re looking more six months plus in order to get that sale done, especially if people aren’t listing them competitively,” LeBlanc said.
What it takes to get a competitive listing has been falling with the price of oil.
“During the height of the boom, you could get a basic, single family bungalow – 1,000 square feet, decently renovated – for about $380,000. Now you’re looking at prices around $280,000 to $310,000,” LeBlanc explained.
LeBlanc added that this can be especially hard to swallow for those that bought during the height of the last oil boom.
“The unfortunate reality is people are trying to get out of their house what they can. We are starting to see foreclosures increase in the city. We’re also starting to see people take personal losses on their homes and all of that, just so they can get to their next opportunity and where they’re going,” LeBlanc said.
On the bright-side, LeBlanc said he is glad to see the Bank of Canada announce they are keeping their key interest rate at 1.75 per cent. He said this will help create more stability in the real estate market.