Shackles only growing tighter on energy industry

The Alberta economy is about to gradually gear up to levels not seen since the coronavirus crisis erupted, just as oilpatch activity is shifting down to levels not witnessed in decades.

In these difficult days, any positive news should be clung to like a life preserver.

Mixed economic signals greeted Albertans on Thursday, with the provincial government laying out its plan for getting the economy moving again in the wake of the COVID-19 outbreak.

Beginning Monday, dental and health care services such as physiotherapists, occupational therapists and dietitians can get back to work, while golf courses will be able to restart as early as Saturday.

Consider this a warm-up round for a much larger event.

In the first of a three-step process, a number of now-closed business will be able to reopen as early as May 14, although under strict social-distancing rules — and depending on the health situation in the province.

Businesses that can open their doors will include retail outlets, such as clothing and furniture stores, hair salons and daycare operations with occupancy limits.

One of the hardest-hit sectors — restaurants and cafes — can also welcome customers back, albeit at 50 per cent of their seating capacity.

“Businesses are anxious to reopen and they have a vested interest in ensuring these openings are done in a safe manner,” said Shawna Miller, who owns and operates more than a dozen fast-food restaurants in the Grande Prairie region and is chair of the Alberta Chambers of Commerce.

“It is providing a little bit of light at the end of the tunnel. Unfortunately, it’s a very long tunnel and it is very dark and it’s just a little bit of light. So I want to be very cautiously optimistic.”

In a second stage — and no timeline has been provided yet — more personal services will be permitted, such as getting a massage and manicure, along with movie theatres opening under certain restrictions.

Finally, in a third phase, businesses that remained closed, including gyms, nightclubs and recreation centres, will open under certain rules.

Health authorities will monitor each of these phases.

Getting the green light to move ahead will include an evaluation of the number of new COVID-19 cases in the province, hospitalization rates and the number of ICU beds occupied.

Premier Jason Kenney said the plan is not carved in stone and some local differences may apply, depending on the circumstances.

“We believe we can proceed prudently, cautiously, with a gradual, phased reopening of businesses,” Kenney said. “Businesses, if we are going to start gradual reopening, they need to start reordering supplies and rehiring people and getting ready.

“We can’t just turn on a dime. So now we’re giving those businesses some confidence about our expectations that we can begin a gradual reopening in mid-may.”

According to the province, about 15 per cent of businesses have had to shut down in the past two months because of public health orders, affecting 25,000 businesses and 300,000 jobs.

As long as any reopening plan is based on health data and can be done safely — protecting employees, employers and customers — and with a clear outline of the responsibilities for each industry, most business operators will welcome the news.

But the number of cases continues to grow, rising by 190 on Thursday to now total 5,355 across Alberta, while 89 people have died.

The real question will be if Albertans, who’ve been told for weeks to remain in lockdown, will feel confident enough to become front-line employees and active consumers again.

“It will be awesome, but we will probably have to do it in stages,” said Gordon Johansen, owner of the Sentry Box games store, which closed its doors to the public last month but offers curbside pickup. “It is going to be open, but it is not going to be normal. And I think it will be a month or two before we get back to normal, if then.”

It will take weeks before some of these tough questions can be answered. What seems more assured is the ongoing trouble for the province’s energy sector.

On Thursday, the Petroleum Services Association of Canada projected the number of oil and gas wells drilled this year will only reach 3,100, the lowest level since 1972.

Releasing its first-quarter results on Thursday, Calgary-based Precision Drilling Corp. said the COVID-19 outbreak and the global oil price war has led to the “deepest downturn the oil and gas industry has ever experienced.”

The company, one of the largest drillers in the country, has about 4,000 workers and operates in Canada and the United States. A sudden drop in oilpatch activity has led to job losses in both countries.

“Based on a year ago, we are probably down 1,000 people in Canada, and that is both in the field and office staff,” CEO Kevin Neveu said in an interview.

“This is probably the first time we’ve had this level of across-the-company cuts in my 14 years with the company.”

Earlier this week, Calfrac Well Services Ltd. said it’s reduced its North American workforce by 70 per cent.

At Precision, Neveu said the company has laid off office staff in Calgary, Houston, Red Deer and Nisku by a combined 20 to 30 per cent due to the slowdown in its business.

“We have a huge oversupply of oil that is going to persist, probably for several quarters, maybe into 2021,” he added.

“It will take several quarters to correct and ... we have to preserve the company so we can hire these people back if there is a recovery.”

An oil price rebound is months away, at best. A restart of the provincial economy appears to be closer at hand, but is far from a certainty.

Both are desperately needed.