2014-12-07 01:32:16 UTC
your boat to a sinking ship. A stinkin', polluting, environment-destroying ship.
Boom and Bust in Alberta
An oil boom creates scores of multi-millionaires but then the party ends
In the 1970s, Alberta was hit by a modern-day gold rush. Oil prices soared and
adventurers flooded into the province in a frenzied hunt to strike it rich.
For geologist Jim Gray, these were the glory days in Alberta when the pioneer
spirit was alive and well.
"Lets drill that well. Lets take that land. Lets not talk about this for the
rest of the day. And lets not have a bloody committee. And if we fail, well
fail big. But if we win, were gonna win big."
Gray did win big. He and his partner, John Masters, discovered Elmworth Deep
Basin, a gas field west of Grande Prairie, Alberta, which turned out to be the
second largest in North America.
"It was a great moment of self-satisfaction, especially when you find it where
everyone else said not to go," said Gray, who formed the company Canadian Hunter.
Gray - a devout Mormon from Kirkland Lake, Ontario - quickly joined the wild
pace of Calgarys oil world.
"There are over seven hundred oil and gas companies here," Gray said. "Its
heavy competition. Some people can't keep up with it. We've got a high
incidence of social stress. Divorce, drinking, suicide. But there's a lot of
us who thrive on it."
Imperial Oil lay claim to Alberta's first big oil strike in 1947. But the oil
frenzy more than two decades later would be touched off by an event half way
around the world.
In Alberta, the oil boom was creating more multi-millionaires than anytime
before in Canadian history. Alberta's Bible belt image was replaced by the
notion of oil wealth, with all its attendant perks and vices.
For a while, it seems as if money really did grow on trees. And everyone wanted
a piece of the action.
During the 1970s, the provinces population increased by a third. Four thousand
people a month flood into the province, looking for a share of this modern-day
"We would work seven days a week, sixteen, twenty hours a day," said oil rig
worker Dwayne Mather. "I was young) and full of all kinds of ambition and it
was great, a great time."
The Alberta oil industry boomed, transforming the cities of Calgary and Edmonton
At the height of the boom, Calgary issued more than $1 billion worth of
construction permits annually, more than Chicago or New York. Apartment
vacancy rates approached zero as Ontarians and Maritimers arrived daily in
search of high-paying jobs.
The housing market boomed, oil stocks rose, and an entrepreneurial spirit, once
exclusive to businessmen, was awakened in professors, lawyers, and dentists,
who began speculating in real estate and experimenting with oil ventures.
At Calgary's Petroleum Club, new Canadian millionaires rubbed shoulders with
American oil company presidents. The big players swap tales and make deals.
Jim Gray thrived on the competition:
"Everybody wanted to be in a big building. Everybody wanted to have a
corporate airplane. Young people with two or three or four years experience
were getting together with some other friends and starting their own little oil
and gas company."
But the frenzied greed of the Alberta oil boom would take its toll. By the
early 1980s, too rapid expansion and a world-wide economic recession hit the
As unpredictably as it began, the Alberta oil boom was over.
In 1982, Dome Petroleum, the country's largest oil company, avoided collapse
with a last-minute bailout package with Ottawa and the banks.
Within two years, mirroring trends elsewhere in the country, unemployment in
the province rose from 4 to 10 per cent. For the first time in more than a
decade, Alberta had more people leaving the province than coming in. The
province led the nation in housing foreclosures, bankruptcies and suicides.
The Calgary Heralds classified section bulged with homes for sale, sometimes
including the contents and cars. The city had 2.3 million square metres of
vacant office space, and its real estate speculators and oil investors had
reverted to their former careers as teachers, dentists, and taxi drivers.
In 1986, Alberta received another economic blow when world oil price declined
Alberta's economic woes began to turn around in the late 1980s. The provincial
government used enormous royalty revenues generated from oil and gas sales to
diversify into the forestry sector.
By the mid-1990s, Alberta's fortunes were on the rise again, thanks to the
fiscally responsible Ralph Klein government and higher world prices for oil and
OTTAWA — The Globe and Mail - Thursday, Dec. 04 2014
Saudi oil-price cut prompts Canadian energy stock slide
Alberta energy firms face harsh new reality as oil's slide steepens
Canada's energy sector faces the prospect of a lengthy downturn in oil prices
and broad spending cuts after OPEC said it does not intend to cut production –
a move that sent crude prices and energy shares plunging.
Investors immediately punished Canadian energy companies in reaction to the
Organization of the Petroleum Exporting Countries' decision Thursday to stand
firm on its production plans, defying industry hopes for a cut. The S&P/TSX
Capped Energy Index sank 7 per cent, hitting its lowest point since April,
2013. The price for Brent oil, the global benchmark, dropped $5.17 (U.S.) a
barrel to close at $72.58, a four-year low. West Texas Intermediate oil, the
North American standard, dropped $4.64 a barrel to $69.05.
Oil prices have been skidding since June, reflecting a global oversupply of
crude resulting from surging U.S. production and slack demand growth.
Now, Canada's energy producers, along with the Alberta government, must
reconsider their financial future. Oil firms must prepare for pinched profits,
and may have to shelve expansion aspirations.
So far, the energy industry has taken few major steps in reaction to plunging
oil prices, showing a reluctance to pull back production and give up revenue.
But analysts say any sustained downturn will force action to face the new reality.
"I think we're probably still in a state of denial. The producing industry, not
just here in Calgary but in North America, is still thinking that these prices
aren't going to be here for long, so no one's wanting to react yet," said Randy
Ollenberger, a Bank of Montreal analyst.
"But I think if we see these prices for a couple of months more – and I think
that's a distinct possibility – then you might start to see people looking at
this more seriously and become a little more concerned about what it means."