Good news has often been hard to come by for the beleaguered oil and gas sector in Canada during the past 30 months.
They have suffered one blow after another. The plunging price of oil is obviously the biggest challenge the industry has encountered, but they have also had to contend with delays in pipelines, and with U.S. President Barack Obama’s frustrating decision to stonewall the completion of the Keystone XL Pipeline.
The election of Donald Trump to be the next American president provided some hope that Keystone would proceed, but the best news has come this past week.
First, the Canadian government has given the green light for two pipeline projects: Kinder Morgan’s Trans Mountain project from northern Alberta to B.C.’s Lower Mainland; and Enbridge Pipeline’s Line 3 replacement, which will run from Hardisty, in northern Alberta, to Superior, Wisconsin.
The latter will have a bigger direct impact on the Saskatchewan economy, since Line 3 cuts across the province diagonally, and the construction phase will result in a significant economic spinoff for a province in need of a boost.
The completion of the two pipelines will also help alleviate the oil glut that has contributed to the lower price of oil, and has consequently hurt the national economy.
The one downside came when the federal government blocked Enbridge’s Northern Gateway project, effectively killing it. Most people knew, though, that Northern Gateway was going to meet its demise the moment the Liberals were elected, and the Trudeau government started talking about preventing oil tankers from accessing ports in northern B.C.
The other dose of good news came when the Organization of Petroleum Exporting Countries (OPEC) announced it would cut its daily oil production by 1.2 million barrels per day. While the figure represents just a fraction of the 32.5 million barrels they produce on a daily basis, OPEC’s decision has given oil prices a necessary boost.
These announcements aren’t going to usher in a return to the milk and honey days of the oil and gas sector. We aren’t going to see oil surging back to $100 per barrel. But hopefully it does mean we see a steady rise in the price of oil, and renewed activity in the southeast.
The last 30 months have tested the resolve of the energy industry. There have been layoffs and difficult times for companies. They have seen profits turn into deficits, and some companies have been pushed to the brink of survival.
But the oil and gas industry has also shown how resilient it truly is. They have withstood a prolonged slump, and emerged from it, battered, but still standing.
The addition of a few pipelines, and a reduction in output from OPEC, won’t radically change any fortunes. But these are good signs for the industry as it slowly regains its strength.
