The Estevan Chamber of Commerce hosted an event that directly addressed an anxiety that many in the Estevan business community have been facing in the last few years, overe where the oil and gas industry is heading.
The State of the Oil and Gas Industry luncheon at the Estevan Days Inn featured the knowledge of representatives from the Business Development Bank of Canada (BDC). They shared that knowledge with guests, in the Taylorton Room, on April. 6.
Tom Corner, an economist with BDC spoke on the economic conditions, both domestically and internationally, which have lead to the current situation in the oil and gas industry, along with future predictions for what’s to come.
Corner gave an overview of how an oversupply of oil has resulted in the current situation, and how Canada’s situation with crude differs which the production of other types of oil in the U.S., noting that 2016 will be a rebalancing year.
One important point Corner made was that the days of US $100 per barrel oil are past us, and that a “new normal” price per barrel will be significantly lower than it was before.
Corner said that the price outlook is difficult to predict because it’s affected by factors like the Organization of the Petroleum Exporting Countries’ (OPEC) output, sustainability of productivity gains and the global demand for growth, which is predicted to be most pronounced in the emerging markets of developing countries.
Lyndon Holm, vice-president of consulting for the Prairies and Western Canada with BDC, provided an advisory segment of the event, talking about the kinds of strategies businesses can implement, in the meantime, to weather the uncertain economic conditions that they are facing right now.
Holm advocated that businesses adopt broader perspectives, by diversifying into other sectors to maximize profitability and stability. He also spoke about strategies to improve a company’s workforce and its efficiency, by doing things like retraining employees and changing hours to cut wasteful spending.
He noted that unprofitable investments should be cut, working capital should be monitored closely, and that buyouts and the seeking out niche markets are all options. One thing Holm emphasized was the danger of just being a “drifter,” and waiting and hoping for the poor economic environment in the industry to pass without a plan of action.
For more detailed cover of the luncheon, see next week’s issue of the Mercury.
