Resurgent U.S. energy sector looks to Canada for equipment bargains

On a warm day in Nisku, Alta., a procession of huge excavators line up for a chance to parade across a platform, urged on by the rapid patter of an auctioneer.

Every 45 seconds or so, another machine rumbles forward, is quickly sold, and then makes way for another giant piece of equipment.

Some of the bidders at the Ritchie Bros. auction are located in the local crowd of spectators. But thousands of others are keeping tabs online, their bids and location tracked by a big digital board.

Many are American.

As the Canadian energy industry still tries to find its feet, a strong U.S. greenback and booming oil business has Americans looking north for equipment.

At this April sale, one of the largest in Canada, nearly a third of the value of all the oilfield transportation equipment sold is destined for the United States.

That’s the kind of equipment that moves rigs around for drilling. Around 30 per cent of oilfield transport equipment was sold to American buyers at a recent Ritchie Bros. auction in Nisku, Alta. 1:14

Much of the equipment sold is destined for North Dakota or Texas — two states where the growth in shale oil development is so big that it’s re-shaping the global energy landscape.

Colorado is also hungry for equipment.

Gina Crews, who works for Pacific Customs Brokers, said up to 30 people a day have dropped by her booth at the auction seeking advice on how to import equipment into the U.S.

“Anything that moves, they’re buying it,” Crews said.

“Here, you get a lot of trucks a lot of heavy equipment that seems to be needed in the south [where there is] a bit of a boom going on.”

Brian Glenn, senior vice president of sales Canada, for Ritchie Bros., said the influence of the American shale sector is at work.

“A lot of the activity in the buying public that was even here on site was Texas-based,” he said.   

“They love it. I mean, well, they’re always in a good mood anyway, but they like the way their dollar goes a long way here in Canada.”

It’s a different scenario from a couple of years ago when the collapse in oil prices resulted in a drop in oilfield activity on both sides of the Canada-U.S. border.

“Early on, particularly here in Alberta and Saskatchewan, when the crunch hit, there was a rush to market — there was a flushing of equipment quickly in big swaths,” Glenn said.

“That tended to die down in 2017 as owners — whether they’re individual [or] corporate — had a wait-and-see mentality as far as what the sector was going to do.”

Now, however, a lot of the equipment that’s been sitting idle is going on the market and it’s not struggling to find a home. Glenn said Canadian equipment, constructed to work in freezing conditions and meet stringent regulations, is attractive on the international market.

“The technology, the quality of the product, is second to none,” Glenn said. 

Many of the bids come the United States, particularly North Dakota, Texas, Colorado and Missouri (Kyle Bakx/CBC)

In Canada, however, Glenn said there’s still some concern as some major energy projects remain in a “bit of state of limbo” and the sector tries to figure out what the future holds.

“And it ebbs and flows,” he said.

“We’ve seen Americans come up to Canada for years to buy equipment and vice versa when their market particularly softens off and … our buyers are going down there and bringing it back.”

Rob Reeves, owner of Alberta-based Global Power Systems, which buys and sells oilfield equipment, has been sitting on up to $3 million of inventory that he bought in the downturn.

Now, he hopes things are beginning to turn the corner.

The five-day auction includes everything from tires to skid steers to fuel tanks. (Kyle Bakx/CBC)

“We’re just starting to see some action on the oilfield equipment. The drilling companies, they’re not really wanting to buy a lot yet until they start to see some stability in the land drilling,” he said.

“Until we get oil to market, I think they’re all going to be kind of shy about, you know, investing in new rigs or even refurbishing rigs.

“I think we’re at the bottom and now we’re starting to head our way up.”

Glenn said there are some positive signals and he’s noticed another generation of people entering the oilpatch and willing to invest in the future.

“There are a lot of young guys in there this week [that] spent a lot of money,” he said.

“That’s a positive sign.”

SOURCE: CBC.ca

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