EDMONTON – Despite concerns about pipeline constraints and the risk of falling oil prices, Alberta’s energy sector is still a great place for investment, the Sequeira Energy Services Symposium was told Wednesday.
And foreign firms are buying, looking for both local oilfield technology and innovation tools that they can take to world markets, as well as companies that are undervalued when compared to larger firms with international operations.
“There is almost a trillion dollars on the sidelines with private equity firms and we have determined that more than 200 have investing criteria that would fit Canadian oilfield service companies. Foreign buyers are seeing more and more opportunity on the service side of the oilsands,” said Aroon Sequeira, founder of Sequeira.
This year the largest was a $1.5 billion deal from URS to buy Flint Energy, which a few months earlier bought Carson Energy. There were also many smaller deals during the year.
And while there was $63 billion in capital spending by the oil and gas industry across Canada, the public fears a slowdown in the offing when firms like Suncor Energy announce that $850 million previously earmarked for projects will not be spent this year.
“But look at what is not being cut. Just within the oilsands, Suncor is spending $4 billion,” he said, adding many firms are simply putting more focus on their steam assisted gravity drainage operations.
Participants agreed that the Keystone XL pipeline segment between Alberta and Cushing, Okla., will be approved without too much more delay. The southern leg to the United States Gulf Coast is already under construction. The Keystone XL will carry Alberta crude and shale oil from the prolific Bakken deposit in North Dakota.
“Looking at this from the American perspective and their own oil producers, and the environmental view that it is safer to move oil by pipeline than rail, I am optimistic it will go ahead,” said Mike Percy, dean emeritus of the Alberta School of Business at the University of Alberta.
That view was shared by others, including Logan Walters, a vice-president with Rockwater Energy Solutions in Houston and a former energy official under former U.S. president George W. Bush.
“There are a lot of people in Washington who don’t understand the energy business, but they understand jobs and manufacturing and that less expensive energy is generally better for the U.S. economy,” he said. “With the re-election of President Obama, I would bet on the Keystone XL going through and a friendlier attitude toward the energy industry and the jobs it creates. I don’t think you will see a lot of regulatory changes.”
As for the proposed Northern Gateway pipeline from Bruderheim to British Columbia, there was a general feeling it will not proceed in its current form.
“I don’t think (the federal government) will force that through. They will likely go east through pipelines,” said Willi Hamm, the Vancouver-based chief executive of Steeplejack Industrial Group, a firm does the majority of its business in the oilsands.
Enbridge will soon be seeking National Energy Board approval for a reversal of its line to Montreal and Trans Canada is likely going to convert one of its natural gas transmission lines to move crude oil eastward.