Oil and gas sector to shed 24,400 more jobs in 2016, says new report

A new outlook on the labour requirements of the Canadian oil and gas industry is shining a light on the longer term costs of the downturn and tougher environmental policies combination: Layoffs will continue this year, and industry overall will not return to its 2014 employment peak even when prices rebound.
Source:     Time:25 Apr 2016

 
A new outlook on the labour requirements of the Canadian oil and gas industry is shining a light on the longer term costs of the downturn and tougher environmental policies combination: Layoffs will continue this year, and industry overall will not return to its 2014 employment peak even when prices rebound.

Prepared by PetroLMI, a division of Calgary-based Enform, the report predicts 24,400 oil and gas jobs will be lost this year due to continuing cuts in investment, consolidation and bankruptcies, bringing the total direct job losses since the beginning of the downturn to between 44,700 and 52,600.


In 2014, before oil prices collapsed, the sector employed nearly 230,000 people directly. Some 30,000 lost their jobs in 2015, shrinking overall employment to about 200,000 people. Of these, 160,000 lived in Alberta, 10,600 in British Columbia, 12,400 in Saskatchewan and 17,000 in the rest of Canada.

The majority – 89,000 – worked in oil and gas services; 69,000 in exploration and production; 10,000 in pipelines; and nearly 30,000 in oilsands.


With oil prices forecast to rebound in 2017, some re-hiring is expected as investment resumes and to fill positions left vacant by retiring baby boomers, according to the Labour Market Outlook 2016 to 2020 for Canada’s Oil and Gas Industry, funded by the federal government and by the Canadian Association of Petroleum Producers (CAPP).

In its conservative scenario, oil prices remain below US$60 per barrel until 2020 and the sector hires 46,435 people. In its higher growth scenario, oil prices increase to the US$60–$80 per barrel range by 2020 and net hiring reaches 55,305 jobs.

The group estimates the sector will support an average of 660,825 to 715,250 direct, indirect and induced jobs annually until 2020.

An estimated 100,000 direct and indirect jobs have been lost so far due to the oil price crash, according to CAPP and the Canadian Association of Oilwell Drilling Contractors.

“Every energy-producing region in Canada has been substantially impacted by the decrease in oil and gas employment,” said communications vice-president Carol 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.”

Alberta, which took the brunt of the job cuts and houses most industry headquarters, will see the slowest ramp up as companies continue to reduce costs and as the oilsands sector shifts from significant expansion to operational efficiency and reliability. Pipeline companies have also restructured and laid off employees as proposed major projects keep getting delayed. Their workforce requirements are expected to remain stable, barring project cancellations.

Saskatchewan, with its “positive business climate and collaborative relationship between government and industry,” is expected to be in better shape to attract investment.

British Columbia could see a return to pre-downturn levels if one large liquefied natural gas project proceeds and uses natural gas produced in the province, according to the report.

The energy sector will emerge leaner, but that won’t mean it will be more competitive, as that will depend on whether it can achieve a higher level of social and environmental performance, which in turn depends on attracting the best and brightest to come up with innovative solutions.

“It’s important to note that, 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.

“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 labour force once activity does ramp up.”

As in previous downturns, the severe job cuts have resulted in an exodus of talent that will be hard to lure back.Exploration and production companies are also concerned they have had to cut hiring of new graduates, that that they will have difficulties attracting new entrants, that retirements resulted in the loss of technical experience, the report said.

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