Oilsands construction force to dip 84% by 2020
The oilsands sector is in danger of losing its reputation as a job-creating machine.
A new industry report shows the sector may require 84- per- cent fewer construction workers in 2020 compared to 2015 as project cancellations pile up amid a crippling oil-price environment.
“Overall workforce requirements for the oil and gas industry has been severely impacted by a reduction in investment,” said Carol Howes, vice- president of communications at Petroleum Labour Market Information, part of the industry-funded Enform based in Calgary.
As crude oil prices plunged, capital expenditures in the oilsands declined 30 per cent last year from $ 35 billion in 2014. Canada has led the world in project deferrals during the 16- month downturn, as oilsands projects with a combined production of three million barrels per day have been shelved, according to Tudor Pickering Holt & Co.
The freeze on new projects and expansions means the oilsands will employ just over 54,000 workers in direct construction, ongoing maintenance and operations jobs by 2020, a one per cent decline over the current figure. A May 2014 survey, albeit with a different methodology, had predicted jobs requirements of just over 68,900 by 2020.
While a number of highprofile projects such as Suncor Energy Inc.- l ed Fort Hills will continue to keep construction workers engaged, employment prospects further out look bleak in the oilpatch.
“The lack of oilsands capital investment to 2020 is likely to have an impact on production and operations employment growth after 2020,” the report said.
The downturn has taken the shine off Alberta’s jobcreating engine and has wiped out 100,000 direct and indirect jobs according to one industry estimate.
Recruitment c onsultancy Hays estimates Canadian oil and gas workers saw a 1.4 per cent decline in t heir paychecks l ast year, compared to a cumulative eight per cent growth over the previous five years.
“Hiring has pretty much seized, unless it’s for a business critical position,” said Neil Gascoigne, global busi- ness development expert at Hays, based in Houston.
“A lot of the E&P business are going through significant restructure and looking to further reduce costs, and wages and salaries are one of their high costs.”
As oil prices remain below US$ 40 per barrel, companies are finding it hard to find additional cost savings.
Companies like Cenvous Energy Inc. have already instituted wage cuts across the board, and more firms would likely follow.
“Companies have cut as much as they can without jeopardizing their actual business,” says Gascoigne. “They don’t really have a lot left to cut, so the next natural look would be reductions in salaries” if oil prices remain below US$45 per barrel.
But the mass j ob cuts could haunt the industry in the long- term, as the industry continues to face a shortage in many skill sets and a sizable chunk of the workforce is expected to retire over the next decade.
“We are expecting a large skills shortage, because we won’t have the right people at our disposal,” said Emma Monaghan, project manager at PetroLMI. “And the longer term the downturn, the less attractive it will be for people to come back.”
THEY DON’T REALLY HAVE A LOT LEFT TO CUT.