The oilsands sector is within danger of losing its reputation like a job-creating machine.
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A new industry report shows the sector may need 84 per cent fewer construction workers in 2020 compared to 2015 as project cancellations stack up amid a crippling oil-price environment.
“Overall workforce requirements for that oil and gas industry has been severely influenced by a reduction in investment,” said Carol Howes, vice-president of communications at Petroleum Labour Market Information, area 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 planet in project deferrals throughout the 16-month downturn, as oilsands projects with a combined production of three million barrels each day happen to be shelved, according to Tudor Pickering Holt & Co.
The freeze on new projects and expansions means the oilsands will employ approximately 54,000 workers in direct construction, ongoing maintenance and operations jobs by 2020, a 1 per cent decline within the current figure. A May 2014 survey, albeit with a different methodology, had predicted jobs requirements of just over 68,900 by 2020.
While numerous high-profile projects such as Suncor Energy Inc.-led Fort Hills will continue to help keep construction workers engaged, employment prospects further out look bleak in the oil patch.
“The insufficient oilsands capital investment to 2020 is likely to have an impact on production and processes employment growth after 2020,” the report said.
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The downturn has had the shine off Alberta’s job-creating engine and has wiped out 100,000 indirect and direct jobs according to one industry estimate.
Recruitment consultancy Hays estimates Canadian oil and gas workers saw single.4 percent decline within their paychecks this past year, compared to a cumulative eight percent growth over the previous 5 years.
“Hiring has virtually seized, unless it’s for a business critical position,” said Neil Gascoigne, global business development expert at Hays, located in Houston.
“A lot of the E&P business are dealing with significant restructure and looking to further keep costs down, and wages and salaries are one of their high costs.”
As oil prices remain below US$40 per barrel, information mill discovering it hard to find additional financial savings.
Companies like Cenvous Energy Inc. have previously instituted wage cuts across the board, and more firms may likely follow.
“Companies have cut as much as they can without jeopardizing their actual business,” says Gascoigne. “They don’t really have a great deal left to chop, therefore the next natural look would be reductions in salaries” if oil prices remain below US$45 per barrel.
But the mass job cuts could haunt the in the long-term, as the industry continues to face lack in many skillsets along with a sizeable chunk of the workforce is expected to retire over the next decade.
“We expect a large skills shortage, because we will never possess the right people at our disposal,” said Emma Monaghan, project manager at PetroLMI. “And the long run the downturn, the less attractive it will likely be for people to come back.”
yhussain@nationalpost.com
Twitter.com/YAD_FPEnergy
