Oilsands camps weathering lower oil prices, report finds
The sharp drop in oil prices has had a “less-than-expected impact” on occupancy rates in work camps in Alberta’s oilsands and other parts of North America, an industry report shows.
Edmonton-based Orissa Software Inc. released its first snapshot Monday of the North American remote camp industry, focusing on the first three months of 2015.
Oil, gas and mining companies use Orissa’s workforce housing management software to track guests’ meals, reservations and other activities.
The report is based on 15 months of information from more than five million “resident days” at 15 camps in Alberta’s oilsands, other areas of Western Canada and in regions of the United States where hydraulic fracturing is used to extract oil and gas. The camps average 1,100 beds each.
“The camps in our data did not see a significant reduction in operations in the initial wake of the drop in oil prices,” the report says.
Higher occupancy rates in the first three months of 2015 compared to the same period of 2014 “seem to indicate a tempered reaction to lower energy prices,” it says.
Jim Seethram, Orissa’s chief operating officer, said the camp usage numbers show energy companies didn’t have a “knee-jerk reaction” to the plunge in oil prices.
“I don’t have a crystal ball, but what it might mean is that in Q1 they are taking the time to assess the impact of dropping oil,” he said. “In Q2 and Q3, we might see the consequences of decisions arising from that assessment.”
The information also reflects Orissa’s client base, he said. “We’ve got a lot of clients that are in the production phase. They’re not ceasing operations like an exploration rig would cease operations.”
Rig counts in Canada and the U.S. fell sharply with the drop in oil prices, while in the oilsands, production is expected to increase this year.
Overall, monthly occupancy in the 15 camps was higher in January 2015, when benchmark West Texas Intermediate oil dipped below $50 US per barrel, than in January 2014, when WTI averaged $95 US.
But the report cautions that occupancy rates can lag months behind a slowdown in exploration and construction activity.
Occupancy rates at Alberta oilsands camps averaged 62 per cent in the first quarter of 2015, compared to 51 per cent in the same period of 2014.
Reservations across all camps were up 11 per cent in the first quarter of 2015 compared to the same period in 2014.
A decline in reservations in U.S. fracking regions was offset by an increase of more than 20 per cent in Alberta.
The report found a decrease in “no-shows” — workers who don’t show up and don’t bother to cancel their reservations. Operators may be more diligent in enforcing rules, the report says.
Seethram said data for the second quarter, which ends Tuesday, will likely reveal effects of the slowdown in oilsands project activity stemming from tighter budgets. WTI is currently trading around the $60-US mark.
He said he knows of two large oilsands camps that have recently switched from daily room tidying to once every three days as a costsaving measure.
Camps wouldn’t cut back on weekly bed-linen changes, sanitary services or food quality, “but they can cut back on the nice-to-haves,” Seethram said.
“To have somebody come and empty your garbage and make your bed — that doesn’t need to be done every single day.
“I mean, it doesn’t happen in your own house.”