Mullen blames layoffs on royalty grab

CALGARY — Western trucking and oilfield services provider, The Mullen Group, says it will be initiating 100 temporary lay-offs at several of its wholly-owned business units due to the uncertainty relating to oil and natural gas drilling activity in the region.

The trucking giant, Canada’s third largest, is reacting to the appreciating Canadian dollar as well as the chill blowing through the industry because of a proposed government plan to collect an additional $2 billion in royalties from oil companies.

“… Many of our oil and gas customers have made it clear that they intend on reducing their capital investments in Alberta if the recently announced oil and gas royalty proposal, known as “Our Fair Share” is implemented,” said Murray Mullen, Chairman and CEO. “In fact we have already seen demand for our services decline since the September 18, 2007 announcement. There is no doubt that if the royalty changes proposed are implemented … the oil and gas service industry, and the hard working employees that generate their livelihood from the industry, will bear an unfair burden of these changes.

Furthermore, says Mullen, the number of drilling rigs working in Alberta continues to decline, which is having a direct impact on several oilfield service business units. Natural gas drilling activity has been in decline for the past year due to lower natural gas prices which is quite typical for a cyclical industry.

Premier Ed Stelmach is now urging oilpatch companies not to overact by downsizing until at least his government’s final proposal is unveiled.

“I can only hope that Premier Stelmach and the members of the Alberta Legislature balance the need for increasing the Province’s royalty take with the need to attract continued investment in the oil and natural gas industry. If they find the right balance these lay-offs may only be temporary and we can get our employees back to work,” added Mullen.