Oil industry woes hurting Alberta real estate market’s prospects

by Ephraim Vecina on 05 Jul 2017
Hopes for a renaissance in Alberta’s petroleum segment are being undermined by a global oil slump—in turn harming the possibility of a reinvigorated real estate market in the province.

Investors have been frightened off the region, especially in light of last year’s Fort McMurray wildfire which forced oil production to shut down for nearly a month. Producers including Royal Dutch Shell Plc and Koch Industries Inc. have scrapped or put on hold billions of dollars of projects since crude dramatically declined from more than $100 a barrel in 2014 to as low as $26 last year.

Since March, Shell, ConocoPhillips, and Marathon Oil Corp. have also agreed to sell oil-sands assets to domestic producers Canadian Natural Resources Ltd. and Cenovus Energy Inc. Exxon Mobil Corp., majority owner of Imperial Oil Ltd.

A recent Bloomberg analysis of local company spending plans found that virtually no new projects or expansions will go into operation next year.

“We will not see a pickup of significant work for two to three years,” once existing expansions are completed in 2017, according to Christian Labour Association of Canada regional director Jay Bueckert.

The exodus of skilled workers has bled the province of as many as 5,000 skilled personnel, according to municipal population figures. And while home sales were up in the first five months of 2017, prices continued a downward trajectory that started after the oil-price slump began three years ago, according to the Fort McMurray Real Estate Board.

“A lot of people just sold and left,” scaffolder Sam Keane said as he stood beside a rebuilt home he has purchased from a previous resident of a neighbourhood affected by the blaze.

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