In Canada's oil sands, a boomtown starts feeling the chill

Tue Dec 16, 2014 1:00am EST
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By Nia Williams

FORT MCMURRAY, Alberta Dec 16 (Reuters) - The boomtown in the heart of Canada's oil sands region is getting nervous.

Fort McMurray, surrounded by the boreal forest of northern Canada, has long drawn thousands with jobs that paid six-figure salaries to a region that produces more crude than anywhere else in the Western Hemisphere.

But a slide in oil prices since June has fueled a sense of unease in the community of nearly 73,000 which for over a decade has rarely known anything but the good times.

So far, it has been spared mass layoffs at the huge mining and thermal oil facilities that surround the city and produce 2 million barrels per day, roughly two thirds of Canada's exports.

Yet for a city whose junior hockey team is called the Oil Barons and where nearly half of the jobs are in oil, gas or construction, a nearly 50 percent slide in crude prices is plain bad news.

"We are not far off 2008, that's in recent memory, a major slowdown, and everybody is waiting for that to come back," said Chris Martin, a boilermaker from Nova Scotia, relaxing at the Wood Buffalo Brewing Co., a popular local brewpub.

Suncor Energy Inc, Total SA and Statoil ASA had already canceled or deferred major high-cost oil sands projects before the price slide, with Total's Joslyn mine alone worth C$11 billion ($9.44 billion).

Consultancy Wood Mackenzie estimates new mining projects require a U.S. crude price of $115 a barrel to break even, while new thermal projects need oil in the $50-$70 range. U.S. crude benchmark, hit $55.34 a barrel on Monday.   Continued...