While you are busily mulling over the possible implications the drop in oil prices might have on the provincial government’s budgets, distract yourself by pondering some of the other implications of low oil prices on the provincial economy.
The Paris-based International Energy Agency thinks that about 25% of Canadian energy projects would be in jeopardy if oil goes below US$80 a barrel and stays there for any length of time. As the Financial Post noted in its report last week on the IEA opinion, that would put a number of newer more expensive projects in Alberta and maybe in Saskatchewan in doubt. Norway’s Statoil has already shelved an oil sands project.
Globally, the low prices would also make about three percent of all energy projects dodgy propositions. Some of those are deep water projects like those in the Orphan Basin offshore Newfoundland. The Orphan isn’t turning up in any of these global forecasts because people don’t know enough about the prospects there to determine if they are even commercially viable.