Despite uncertainties about the future of pipeline projects like Keystone XL and Northern Gateway, the oil and gas sector will find a way to get its products to market, says the president and CEO of the Petroleum Services Association of Canada.
“It will happen one way or the other,” said Mark Salkeld during a presentation at a Red Deer Chamber of Commerce luncheon on Wednesday.
Rail transport may be a less desirable alternative, he suggested, but it’s helping to satisfy a need.
“That shows how the industry is working. We’ll figure a way around it.”
Given the importance of developing pipeline links to export markets, Salkeld believes these projects are going to happen.
“They will get approved. It’s good for the country; it’s good for the province. We need our exports to get to markets other than the U.S.”
The economic contributions of the oil and gas sector are significant, pointed out Salkeld. In 2006, they accounted for $65 billion of Canada’s gross domestic product, including $43 billion in Alberta.
More than 800,000 Canadian jobs are connected to the oilptach, he added.
Central Alberta has particularly close ties to the industry, said Salkeld.
“Red Deer is essentially the heart of oilfield services for the province of Alberta.”
The importance of the energy sector to the regional economy became painfully obvious following the Alberta government’s royalty review in 2007, he said. Many producers scaled back or moved their operations, leaving local service companies without work.
“The oilfield services companies operating in Sylvan Lake and Red Deer were faced with hard choices. They had to lay people off or not donate to local community hockey teams and this kind of thing.”
The sector has enjoyed stable growth over the past several years, said Salkeld.
“We’re steady, and it’s nice. If (natural) gas prices get back up to $8 or $9, and there’s investor confidence, then all hell’s going to break loose and we’re going to be trying to drill gas wells as well as oil wells.”
Development of oil pipelines and liquefied natural gas facilities could spur increased activity.
“Everybody’s watching these initiatives on the horizon,” said Salkeld, adding that some companies are boosting their drilling rig fleets in anticipation.
If the industry does become busier, skilled labour could become the next bottleneck. And that problem will be exacerbated by retirements in the aging workforce and competition from other industries, he said.
Salkeld also described how advancing technology has improved the efficiency and productivity of the energy sector.
“We could steer the drill bit on a rig in northeastern B.C. from right here in this room. All you need is the Internet and all of the instrumentation.”
Advancements in horizontal drilling and multi-stage fracking have also increased the viability of mature reservoirs, like those in Central Alberta, he said.
“We’re going back to these plays, the Cardium and Pembina and these other plays that we’ve known about for years, and we’re re-entering them horizontally.”
Based in Calgary, the Petroleum Services Association of Canadian represents some 260 oilfield services companies, with these employing more than 80,000 people.