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Still in the countdown on industry jobs
GARY PARK For Petroleum News
Downsizing in Canada’s petroleum industry seems destined to continue, with one observer predicting that another 24,400 oil and gas jobs will be eliminated this year, due to reduced capital spending, consolidation and bankruptcies.
That forecast by PetroLMI, a unit of Calgary-based Enform, would add to total direct employment losses over the past two years of between 40,000 and 52,600. (Some analysts have put the losses of direct and indirect jobs at 100,000).
Todd Hirsch, chief economist at ATB Financial, takes a similar view.
He said it may take until the fall “before some bloated staffing levels are tackled. Many companies are getting employment levels down to the bare bones and over the spring and summer there will be more layoffs.”
Of the 230,000 people directly employed in 2014 before oil prices started their slide, an estimated 30,000 lost their jobs in 2015, leaving 89,900 in oil and gas services, 69,000 in exploration and production, 30,000 in the oil sands and 10,000 in pipelines.
Price recovery in 2017? A labor market outlook for the 2016-20 period funded by the Canadian government and the Canadian Association of Petroleum Producers is counting on a recovery of oil prices in 2017, leading to some re-hiring as capital spending recovers and to fill jobs left by those who retire.
The outlook said that if oil remains below US$60 a barrel over the next four years, the industry will hire 46,435; at US$60-$80 net hiring will run to 55,305.
The best hopes rest with Saskatchewan whose government has created a “positive business climate and collaborative relationship” with the industry, while British Columbia could receive an employment lift if only one LNG project leaves the starting line, the report said.
But Cameron MacGillivray, chief executive officer of Enform, told the Financial Post that even if some new hiring occurs in 2017-20, oil prices, capital investment and employment as a whole will not return to 2014 levels.
He said those who have found work in other sectors “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.”
Substantial spending cuts The road ahead has been marked by Canada’s 27 largest producers who cut their spending for 2016 by an average 32 percent, with ARC Financial projecting a decline in cash flow to about C$17.5 billion this year from C$72 billion in 2014.
“We’re going to see all kinds of innovation in cost cutting,” said ARC Vice President Jackie Forrest. “Unfortunately headcount is one of the first approaches they take.”
Stephen Poloz, governor of the Bank of Canada, said it could take more than three years to recover from the shock caused by low oil prices.
He said it will take that long “before we’re settled at that new place where the energy sector will have shrunk relative to the whole economy and the rest of the economy will have grown to fill that space.
“Whenever we get some good, there are three or four reasons why it might not be for real or might not last,” he said.
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