June 2016, Vol. 243, No. 6
Features
Modest Jobs Recovery in Canadian Oil and Gas Industry
Canada’s oil and gas industry should see some modest recovery between 2017-2020 due to renewed industry activity and the need to replace retiring workers, according to the Labour Market Outlook 2016-20 for Canada’s Oil and Gas Industry report, by PetroLMI, a Division of Enform.
“The industry underwent significant job losses in 2015 due to the rapid decline in oil prices, and that trend is continuing in 2016,” said Enform’s Carol Howes, vice president of Communications and PetroLMI. “Based on assumptions that oil prices will start to rise in 2017, some rehiring is expected to begin as capital investment resumes and there is a need to fill positions left vacant by retiring baby boomers.”
In 2016, industry employment is expected to contract by up to 24,400 jobs as prices remain low and spending cuts continue. Additionally, companies are not expected to fill positions left vacant by retirees in 2016. Instead, those vacated positions are more likely to be used as a way to reduce workforce numbers and further reduce costs during this period of continued low oil prices.
The Labour Market Outlook 2016 to 2020 for Canada’s Oil and Gas Industry provides an overview of workforce requirements by sector, including conventional exploration and production (E&P), oil and gas services, oil sands, and pipelines, as well as by key oil and gas operating regions. The report provides a range of labor market projections for the industry based on two scenarios, which include assumptions for oil prices, capital and operating expenditures, and industry activity. In a lower scenario, oil prices remain below US$60/bbl until 2020 and net hiring requirements for the industry reaches 46,435 jobs, assuming historical retirements remain the same. In a higher scenario, oil prices increase to the US$60-80/bbl range by 2020 and net hiring reaches 55,305 jobs.
The report, released April 22, is accompanied by the Labour Demand Outlook 2016 to 2020 for Saskatchewan’s Oil and Gas Industry and Exploring LNG in Canada: Workforce Requirements for Developing and Sustaining Canada’s Liquefied Natural Gas Sector.
“Every energy-producing region in Canada has been substantially impacted by the decrease in oil and gas employment,” said Howes. “But, as a result of the unique challenges and opportunities in each of these regions and sectors, the impact of the downturn – and, any ramp up once prices do rise – is somewhat different.”
Regionally, Alberta, the hub of Canada’s oil and gas industry, has been the most affected by the downturn, witnessing the largest drop in employment. Companies are expected to continue to find opportunities to reduce costs across operations in Alberta and the rest of Canada in order to survive. Investing in innovation and technology to drive efficiencies and productivity will be key to increasing profitability in the future, the report said.
In oil-based Saskatchewan, a positive business climate and collaborative relationship between government and industry is expected to position the province well to attract investment, once prices do begin to rise. In PetroLMI’s lower and higher scenario, by 2020, Saskatchewan’s net hiring is projected to reach 3,120 and 3,785, respectively.
Assuming one large LNG project proceeds in British Columbia and uses gas produced in the province, employment in the province is projected to fare better than Canada’s other key oil and gas operating regions, recovering to near 2014 levels. Net hiring in British Columbia during the forecast period is projected to reach 3,005 in the lower scenario and 3,690 in the higher scenario.
The oil and gas services sector employs the largest workforce in the industry and, out of all the sectors, has been the hardest hit by low oil prices. The conventional E&P and oil sands sectors were also unable to hold on to workers. However, the oil sands sector is expected to see some job growth through the forecast period due to the ongoing construction of late-stage projects. Meanwhile, with proposed pipeline project approvals remaining elusive, companies in that sector also restructured and laid off employees. Some pipeline companies may make further cuts. However, the overall employment outlook to 2020 for the sector is stable, provided planned projects are not deferred or canceled.
“It’s important to note, while the industry will regain jobs from 2017 to 2020, the oil price, capital investment and employment in the industry as a whole will not recover to 2014 levels,” said Cameron MacGillivray, president and CEO of Enform. “That being said, the loss of talent to other industries in Canada may have a significant impact on the oil and gas industry’s ability to attract and retain a skilled labor force once activity does ramp up.”
“The oil and gas industry will need to continue to find ways to attract the best and brightest Canada has to offer to maintain its competitiveness in the new cost-driven, technology-seeking environment we find ourselves in,” added Howes.
The report will be updated toward the end of the year to reflect 2016 changes to the oil and gas industry’s spending and production assumptions. PetroLMI’s market reports are available, for free, at careersinoilandgas.com. The reports are funded by the Government of Canada’s Sectorial Initiatives Program, the Canadian Association of Petroleum Producers (CAPP) and the Government of Saskatchewan.
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