Alberta's beleaguered energy sector is making a comeback
Oil and gas in the Duvernay Formation is attracting billions in investment
Originally published Nov. 29.
The trucks, and the traffic, have returned to Rocky Mountain House.
The Alberta town, about two hours northwest of Calgary, is booming again, more than three years after the price of oil began to slide and took the province's energy sector along with it.
Today, fracking rigs line up on the shoulder of the highway as a steady stream of trucks hauling heavy equipment makes its way into the heart of the Duvernay Formation, one of the energy sector's hottest plays.
By the end of summer, it was full of trucks.- Prab Lashar, Rocky Mountain House chamber of commerce
"Rocky is a two-light town again," says Prab Lashar as she waits at an intersection for all the trucks to amble by — a nod to the fact that the rapid return of the energy industry to the area has meant a slower commute for her.
It's a shift the executive director of the local chamber of commerce began to notice some months ago.
"In late spring, the campgrounds started getting packed with oil and gas workers," Lashar said. "And then the trucks started moving in, and by the end of summer it was full of trucks."
'A new Alberta vibe'
Those trucks are part of a move by major energy companies, including Chevron, Shell and Encana, to stake their place in the Duvernay, a formation that stretches across much of central Alberta and is estimated to hold more than three billion barrels of marketable crude, six billion barrels of natural gas liquids (such as propane and butane) and more than 75 trillion cubic feet of natural gas, according to the National Energy Board.
It's a lot, and according to industry analyst Peter Tertzakian, new horizontal fracking technology means all those hydrocarbons are now cheaper and easier to get to market.
Tertzakian, executive director of the ARC Energy Research Institute, says those lower costs are why capital is flowing into the Duvernay and other traditional formations like the nearby Montney, instead of to the more capital-intensive operations in the oilsands.
"There is no question there is a new Alberta vibe happening in that west-central Alberta/northeast B.C. area," he said.
Tertzakian says capital is already pouring into the area and forecasts about $30 billion will be invested next year, with as much as 20 per cent of that being directed towards the Duvernay — compared to just $13 billion in oilsands investment, which is mostly maintenance and not going toward new projects.
'Things are really flying'
In Rocky Mountain House, the impact of that spending is already apparent. Hotels and restaurants are full, and signs looking for workers are already springing up around town.
Inside the maintenance shop at Pidherney's construction, that spike in business is hard to miss. Wendall Mason has to squeeze past a bustling crowd of welders, mechanics and other workers to cross the floor. The company's oilsands manager says he is looking to hire more people. "We are flat out," Mason says. "Things are really flying."
It is a huge change compared with the same time last year. "The Duvernay play has been really big for us, obviously, all the way from Grande Prairie to Fox Creek," Mason says, referring to a 200-kilometre stretch of activity.
Across town, at the Walking Eagle Inn and Lodge, signs that the boom times are back are easy to find. The lunch rush has returned to the restaurant, and the hotel is fully booked for weeks at a time, according to general manager Colleen Dwyer.
Dwyer says she did more business in the first part of this month, up to Remembrance Day, than she did in all of November last year.
"It's only just been very recently that things have picked up, and we are just in a lucky area because of the Duvernay," she says.
Dwyer would like to believe that the good times will last, but she has lived through her fair share of booms and busts in Alberta's oilpatch and knows they rarely do.
"This industry it is so unpredictable," she says. "There are so many variables and you just can't predict, you can't forecast, so you just keep your fingers crossed."
Stable oil price will bring more investment
But the province's energy sector may not need luck if the price of oil continues to flirt with $60 a barrel.
Tertzakian says that if the industry believes prices have stabilized at that level, he sees even more investment in the Duvernay — and he wouldn't rule out renewed interest in the oilsands either.
"I think above $60 you are going to be seeing a little bit more investment above maintenance," Tertzakian says.
Crammed into the cab of a newly purchased road grader, Kim Hassink hopes the good times stick around a little while longer at least.
Hassink, who works for Prentice Creek Contracting clearing roads around oil and gas facilities near Rocky Mountain House, has gone from working two days a week to seven — 70 to 80 hours each week. "Gotta do what you need to do to pay the bills," she says.
Hassink hopes her days of just scraping by are over. Now that the money is rolling in again, she says she even has plans to buy a home.
The hope for Hassink, and thousands of others here, is that the good times are back in Alberta's oilpatch, and that this time might be different — that this time they might be back for good.