Energy Exodus: The incentives in Texas luring Canadian oil and gas workers south

Michael Angelozzi moved his family from Calgary to Conroe, Texas — outside of Houston — at the end of 2017.

As the VP of Sales and Operations for oil and gas company Pro Torque, Angelozzi says he had to go to where the business is, and that’s in Texas.

“You have to be here,” says Angelozzi. “It all comes down south to the lower 48 and that’s where the money is going now and that’s where the people are going.”

He does say, while the market is there, you still have to work for it.

Alberta Premier Jason Kenney criticizes province’s NDP of ‘pretending’ to support energy workers

Alberta Premier Jason Kenney criticizes province’s NDP of ‘pretending’ to support energy workers

“Even though the rig count, which directly drives our business, is a lot higher, the competition is a lot stiffer as well. So it’s not as easy as just picking up and coming down (to Texas) and you’re automatically going to start generating revenue. You have to be smart about it.”

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His wife Courtney Radu, and daughter, Hailey, say it was a whirlwind, but that Texas felt like home, instantly.

“You can play outside all year long,” Radu says. “It’s a bittersweet adjustment for sure. Of course, we miss the people, our families and friends at home. But I think we’ve all agreed that we’ve shoveled our last driveway,” she laughs.

Their story is not a unique one.

READ MORE: Energy exodus: oil and gas workers look for more opportunity in Texas

There has been a brain drain from Alberta to Texas in recent years, with many saying the state is a great place to do business. Compared to Canada, it’s got fewer regulations and low corporate taxes. The high U.S. dollar doesn’t hurt, either, as it translates into more money for the Canadian companies doing business stateside.

“It all comes together to create a really attractive environment,” says David McLellan, principal at Ridgeway Strategic Consulting. “It’s a friendly jurisdiction. They want to get things done.”

But McLellan, who moved to Houston from Calgary in 2014, says it’s at the expense of Canada.

“They took the mantle from us,” he says, referring to Canada’s oil and gas industry.”

McLellan says Alberta still has the third-largest oil reserves in the world, but Canadian companies that used to turn to the U.S. market for growth are now using it as a matter of survival.

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“The size of the Texas economy eclipsed that of Canada with almost 10 million fewer residents in 2018. Canadians need to be concerned about that, because we are smart, hard-working, industrious people. How did that happen?”

2020 forecast suggests oil drilling rates will remain flat

2020 forecast suggests oil drilling rates will remain flat

There are cities and groups in Texas that are actively trying to get Canadian companies to relocate, like Lubbock, a city of 250,000 people in West Texas, near the Permian Basin.

John Osborne, president of the Lubbock Economic Development Alliance, says they’ve made about five trips to Canada in the past 18 months, visiting some 30 Canadian companies, though no one has signed on the dotted line just yet.

“We have had a lot of conversations with Canadian companies and we’ve definitely got some interest.”

In Montgomery County, about an hour’s drive north of Houston, a realty group sent out 15,000 brochures to Canadian companies that read “Arrowstar Realty invites you to relocate to Texas: join the 100s of companies that have already made the move!” Inside are listings to its business park and nearby homes.

Robert Graham, with Arrowstar, says hundreds of people have reached out since.

Cody Coates/Global News
Cody Coates/Global News Cody Coates/Global News

The U.S. oil industry has seen a slowdown in recent months. Oil rigs are being taken out of production.

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“There is a slowdown, this is the most serious slowdown we’ve seen since 2015 when companies got recapitalized and assets put back into circulation,” McLellan says.

“The slowdown that’s happening now, though, is still a fraction of what is happening in Canada. So despite the slowdown — the rig count down by 25 per cent in Texas — there’s still 400 active rigs in the Permian Basin alone and Canada has roughly 100 rigs, or a quarter of the size.”

Cody Coates/Global News
Cody Coates/Global News Cody Coates/Global News

Despite the slowdown, U.S. oil production is set to rise. It has doubled over the past decade, ready to hit 12.3 million barrels per day (b/d) as an average for 2019, according to the U.S. Energy Information Administration.

In Canada, the Canadian Association Of Petroleum Producers has a constrained outlook for overall crude production in Canada. CAPP projects crude production will increase by 1.27 million barrels b/d to 5.86 million b/d by 2035. That represents a growth rate that is less than half of what CAPP was predicting just five years ago in 2014.

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Cody Coates/Global News
Cody Coates/Global News Cody Coates/Global News

Angelozzi and his family continue to watch what’s happening back in Alberta closely, and travel back to Calgary often.

“It’s going to take a lot of time for that confidence to be built back up,” Angelozzi says about the energy industry in Canada. “We hope that Canada can figure it out together.”

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