The New Reality of Commodity Prices Oilfield PULSE October 2015 Issue

The New Reality Of Commodity Prices

Date PublishedOctober 22, 2015
CompanyPlains Fabrication
Article AuthorStephen Mackisoc
Article TypeOctober 2015 Issue
CategoryArticles, Oil & Gas
Tags, , , ,
HUB SEARCHPlainsFabrication
PULSE Interactive

The New Reality Of Commodity Prices


In some ways, the past months can best be described by the Trammps, in that it has been a bit of a, “Disco Inferno.” We read every day about cuts in staff, projects being delayed or shelved, and where the pundits think WTI, Brent, and WCS prices will go in the near and medium term. We continue to see friends disappear from the industry at an alarming rate who have oil and gas expertise that will be diffcult to replace. In a somewhat contrarian view, Plains Fabrication is choosing optimism. 

While many are just, “Knocking On Wood,” and waiting for the rebound that may never come, Plains is operating on the premise that lower oil prices are a new reality and more a permanent resetting. The bottom line is bitumen, from the WCSB, is costly to produce within the framework that has been established by the industry itself. That being said, there is still spend in 2015 and 2016, certainly more brown-field than green-field and seemingly focused on In Situ recovery, but the fact remains, we are continuing to build and expand. While we are not as excited as the pointer sisters, we do see, “Good Times,” ahead.

As prices decline, Plains continues to invest in honing and improving internal processes that drive the prices we charge to our clients. Improved efficiency, plant automation, looking at everything with new eyes, and increased employee training improves us as a company and positions us to work with all stakeholders to deliver a lower cost solution. However, we cannot forget there must be a balance between PRICE and COST, and it is now more critical than ever we all see and factor in these differences in our decision making process. We need to work together and give full weight to the balance between cap-ex and op-ex and consider long term operating costs before anything else if we are to improve the resiliency of our industry. We need to start thinking more like, “We Are Family,” and less like, “Don’t Stop Till You Get Enough.” Taking advantage of each other at various points in the volatility cycle we live in will not improve our industry or keep it alive.


Plains continues to invest in honing & improving internal processes that drive the prices we charge


Certainly, some of the businesses closing their doors or deciding to temporarily remove themselves from the purchasing mix may have been operating fairly well, but the bulk of those seceding from the ranks of Alberta manufacturing likely only existed because of the high prices and capacity of the industry. When prices are high, differentials are good, and there is a time pressure to complete projects, it seemed almost anyone could open a fabrication shop and start bidding and building. Moving forward, there is no room for inefficiency, closing our minds to ways to improve, or simply sticking our heads in the sand and hoping for the best. The good old adage hope is not a strategy that applies very well at this juncture. It is the responsibility of all of us to work with only the best partners at all levels, and the current move to reduce the number of trusted partners in the supply chain is certainly supported by Plains.

Thankfully, new business is all around us. Trust based relationships, high product quality, and the agility of Plains Fabrication means we have access to a good percentage of the business currently being transacted. Certainly, commodity prices are low. We read about them practically every day. That being said, we cannot control WTI or Brent prices, the spread to WCS, or the exchange on the Canadian dollar in the U.S. and global markets. We CAN control our own business, which includes how and where we choose to expand and which new markets to attack, while at the same time improving efficiency both internally and externally. We continue to invest in our people, processes, and plant to achieve these goals.

The-New-Reality-of-Commodity-Prices-Oilfield-pulse-october-2015We ALL need to understand the flow of investment cash in the future will be directly linked to our willingness and ability to truly collaborate AS AN INDUSTRY on identifying areas where we can all improve. We must all focus on cost and value and not get misled by lower up front pricing designed to escalate as a job moves forward. Rather than Gloria Gaynor’s, “I Will Survive,” our mantra needs to be, “Ain’t No Stopping’ Us Now.”

Developing your people and maintaining your core values and culture should also be part of your core.

Stephen Mackisoc
Chief Operating Officer







Originally published in the 

October 2015 issue of Oilfield PULSE