ALBERTA

In Fort McMurray, contractors bearing the brunt of oilsands cutbacks

02/03/2015 08:03 EST | Updated 04/05/2015 05:59 EDT
FORT MCMURRAY, Alta. - Roman Skowroniski would go back home to British Columbia if he thought the job prospects there were any brighter.

But, for the time being, the heavy equipment operator will keep trying to make a go of it in Fort Mac.

"Right now the economy's very, very slow," he said. "The situation has started to get from bad to worse."

Most of the time, Skowroniski is able to land short-term jobs through his union, but he's had little success lately.

"Our job board — it's equal to zero right now."

Most livelihoods are in one way or another tied to the oilsands in Fort McMurray, Alta. Downtown, after work, overalls and steel-toed boots far outnumber suits and ties. It seems almost everyone drives a pickup.

The impact of crude's sharp slide wasn't readily evident in the city in late January. Most people who live there permanently continue to have steady jobs at mines north of town or at businesses that serve that clientele. Restaurants and bars are busy and residents complain about the traffic.

Based on past experience, many Fort Mac denizens see the current situation as temporary.

"In two years it's going to turn around big time," said Mike Beaulieu, who works at Shell Canada, which has cut some of its oilsands staff.

His colleague, Jaimie Caines, recalls: "(In) 2009 this happened too and everyone was worried. It'll blow over eventually. It's not too big of a deal."

But Fort McMurray and the surrounding region has a large "shadow population" — 39,271 out of a total population of 116,407, according to the 2012 municipal census. Those folks may officially reside elsewhere in Canada, but fly in and out of site to work for weeks at a time. While on the job, they stay at lodges — many well-appointed with gyms, theatres and other perks — largely bypassing the city itself.

"I think that's the group that's probably been affected the most by any slowdown or any lengthening out or switching the timelines," said Nick Sanders, president of the local chamber of commerce.

"From our perspective, that's a pretty good business decision for the oilsands companies to make. You don't want to start laying off the people in Fort McMurray because they've made that long-term commitment to the community."

Heavyweights such as Suncor Energy Inc. (TSX:SU) and the Syncrude Canada Ltd. consortium continue to dig up bitumen. The industry churned out 1.9 million barrels a day at the end of 2013 and is expected to grow that to 2.3 million barrels this year from projects already underway, according to the Canadian Association of Petroleum Producers.

But, with crude prices slumping below US$50 a barrel for most of the year so far — and some observers expecting the doldrums to last for a while — expansions and new projects are in question, affecting short-term construction jobs. Suncor has announced a $1 billion reduction in spending and has said it will cut 1,000 positions — mostly contractors.

"We've got a community full of citizens that are here living their lives day by day and I don't think there's the same amount of concern as there would be for people who are here on a temporary basis," said Mayor Melissa Blake.

"We have a very large camp population that comes from all over Canada and they're predominantly here to support the construction side of things and, when companies are looking at what expenditures can be foregone, it's not the operations side."

Rob, a tradesman dining at a downtown soup kitchen, said he's expecting lean times for three or four years.

"It's looking pretty bleak up here," he said.

"I'm expecting I'm going to have to work some place else because the price of oil is getting so low that pretty much all the things are getting shelved. There may be some minor maintenance work, but it's awful here."

Rob brought in six figures working contract jobs last year, but now finds himself on the street "due to the effects of cutbacks and some poor choices on my part and some unfortunate things that happened to my life."

"I had money. I was living a little bit over my means, I suppose. I never expected this to happen."

"If someone told me that the price of oil was gong to hit $50 a barrel...," he said, trailing off.

Joseph Enverga, who runs the soup kitchen at the Fellowship Baptist Church, said Fort McMurray is a generous community with a tighter-knit, more small-town feel than his hometown of Toronto.

But he said many arrive in Fort Mac with the misconception that they'll hit the jackpot.

"A lot of these guys, they don't come with a secure job. They come hoping to land something and then a lot of them end up getting burned."

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