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Economic Performance:
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Calgary Region Cluster
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Calgary
Region Cluster Portfolio
Oil & Gas
Alberta's energy sector
has significant economic importance. Alberta's energy industry makes up
around 21% of Alberta's GDP and energy products were approximately 40%
of provincial total exports in 1998, jumping significantly in 1999 and
2000 due to high energy prices. Alberta has significant oil and gas assets.
It has the largest oil sands resources in the world, containing 1.7 trillion
barrels of bitumen in place. Of this total, almost 300 billion barrels
are considered recoverable and of this only 1% has been produced. Consequently,
the potential is huge over the coming years.
The oil and gas industry
in Calgary consists primarily of the headquarters of oil and gas extraction
companies, drilling and pipeline companies based here but with operations
in the field, and technical support services. In 2000, the cluster employment
was around 50,500 accounting for just under 10% of total employment in
the region.
Primary members of
this cluster include TransCanada Pipelines Ltd., Petro-Canada, Shell Canada
Limited, PanCanadian Petroleum Limited, Alberta Energy Company Limited,
Husky Energy Inc., Talisman Energy Inc., Nexen Inc., Suncor Energy Inc.,
and Canadian Natural Resources Ltd.
The oil and gas cluster
has been a driving force in the regional economy not only due to the investment
and growth of its own cluster, but also, due to its catalyst role in the
emergence of other clusters in this region, including strategic clusters
such as wireless/telecommunications, information technology, and geomatics.
The movement of people and technologies from this cluster to start-ups
in other industries has been a key driver of the diversification of the
region's economy. Axia NetMedia was established by Husky Oil employees
in 1995. Geographixs emanated from Imperial Oil/Esso. Westcoast Gas Services
Inc. spawned Studon Business Solutions Inc. in 1997 and Jaratech Business
Solutions Inc. in 1998.
Industry leaders
point to the dramatic increase in the global outsourcing of technical
work. Engineering, geological and technical services is the second largest
concentration of business activity here.
Consolidation, fueled
by global market dynamics especially of American firms, is underway with
numerous acquisitions and mergers over the past year. The number of service
sector and drilling companies has been reduced dramatically. Employment
has not yet declined substantially. As consolidation plays out, there
are emerging concerns over the potential of negative impacts on the region
including the reduction of the number of head offices and on regional
employment both in this industry as well as in supporting industries.
Nevertheless, it is also recognized that consolidation may also bring
new ideas and new people to the region which may result in larger, stronger
companies that are likely to be more competitive in the global marketplace.
Furthermore,
on-goingdevelopment of the oil sands may mitigate some of the negative
impacts of consolidation such as the loss of jobs.
In general, the outlook
for the region is good. As industry consolidation and restructuring of
industry continues, there may continue to be a growth in technical engineering,
design support, and project management.
The most significant
challenge faced by the cluster is human resources. The skills gap ranges
from a shortage of entry-level skilled technicians to professional staff
including holders of engineering technology diplomas to highly skilled
and specialized engineers. The industry, in collaboration with the province,
is working to form a national Sectoral Council that brings together all
the industry stakeholders, including pipeline business and training institutions.
Another challenge
is the gap in energy research and development. There appears to be a wide
array of research programs across institutions in Alberta with a need
for a shared vision and a strategic focus. The goals of such a focus may
be to maximize generation of today's fuels and launch the transition to
the next generation.
Some industry leaders
believe there is a key need to develop an energy research strategy. The
focus would be on innovations that will permit extracting more from the
entire continuum of energy resources. The short-term focus would be on
extracting more energy and value-added products from heavy oil and sour
gas. The next step should be to focus on the extraction and conversion
of next generation oil sands and development of coal bed methane (trapped
in coal seams). Eventually, or concurrently there could be a focus on
the transition to clean coal and the 'hydrogen economy'.
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