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Managing risk has always been a big part of the oil and gas business. One new strategy? Tapping into the spirit—and ingenuity—that made it great in the first place.
A large sign on the outskirts of Calgary reads ‘Welcome to Calgary, Heart of the New West.’ In the past year, that heart has taken quite a pounding.
In that time, oil prices, political dynasties, employment numbers and a whole lot ofassumptions have crashed in Alberta. If there is one certainty left in this time of uncertainty, it’s that things in the province—and the New West—have fundamentallyand permanently shifted. This isn’t just another post-boom bust.
For the past decade, job growth and economic development among the New West Partners—Alberta, Saskatchewan and British Columbia—seemed limitless. Canadians from across the country were drawn there by strong demand and soaring wages.
A year into the world oil price collapse, however, layoffs are the new normal. And that’s expected to endure as public and private sectors struggle to cut costs, reduce debt and grapple with the inevitable bloat of prolonged prosperity.
But while Alberta and, to a lesser degree, Saskatchewan, are reeling from an abruptreversal of fortunes, British Columbia is still holding its own.
To be fair, B.C. is less reliant on oil and gas revenues. Still, there are other significant differences. First, the province has ensured sustainable growth by collaborating with First Nations, securing their support for a number of new projects. Second, a policy of proactive environmental stewardship has limited some of the variables that can derail mega-project development. It has also helped position B.C. as a socially responsible resource supplier, something that is an increasingly important selling point, internationally.
Another change in the New West is on the political front.
A year ago, Saskatchewan, Alberta and British Columbia were closely aligned politically. The recent election of an NDP government in Alberta has altered that dynamic, adding a new degree of uncertainty to established relations among the three governments.
The future of that New West Partnership is no longer assured, despite the fact that Alberta’s government has moved forward with care. It has not yet presented a budget, defined its environmental approach, nor detailed its energy royalty framework. Arguably, it is the uncertainty created by that vacuum that poses the greatest threat to the Alberta economy and the partnership itself.
“Working strategically with governments on R&D and other initiatives is another way to mitigate and manage related risk.