Copyright of the Daily Oil Bulletin 2017
Sponsored Content – All The Jobs Lost In The Downturn Won't Return, But Industry Will Struggle To Find Employees: PetroLMI Report
A moderate recovery in oil and gas activity in Western Canada won’t reabsorb all the workers that lost their jobs since late 2014 when oil prices crashed, but parts of the industry will struggle to fill positions, says a PetroLMI labour supply research report.
The Enform division cites fewer available workers and a mismatch between available skills and industry requirements as factors that could lead to a labour shortage in some segments of the industry.
“You can play the numbers game—how many people are unemployed versus how many jobs there are—but that’s not a real reflection of the market,” says Claudine Vidallo, team lead at PetroLMI.
Some 52,000 direct oil and gas workers lost their jobs in 2015 and 2016 when Western Canada’s oil and gas industry suffered its worst downturn in a generation. Many of those workers have now moved beyond survival jobs and are wary of returning to an unpredictably cyclical oil and gas industry.
PetroLMI’s labour supply research found that 26 per cent fewer workers indicated that they were unemployed and available for oil and gas jobs in the second quarter of 2017 compared to the second quarter of 2014. The total number of employed oil and gas workers also declined by 21 per cent in the same period.
“You’re seeing retiring workers and people who have been displaced for a while now starting to change their mind about returning to the industry. The longer they are unemployed, the more they’re going to think about leaving the industry,” Vidallo says.
Already this spring, oil and gas service companies involved in fracking and completions reported difficulties in filling positions. Vidallo’s team even learned that for some companies, equipment is sitting idle because the skilled workers who are required to operate it are not available.
“And that impacts the industry's recovery as a whole,” she says.
A number of factors are making oil and gas positions harder to fill. As the industry continues its shift away from exploration for conventional resources to production and development of tight reservoirs using horizontal multi-stage frac technology, certain engineering and geoscience professionals are falling out of demand.
The candidates who have the right skills may think twice about accepting a position when neither industry activity nor oil prices are stable enough for employers to make long-term employment or compensation commitments. Many service companies have also cut their wages in response to the protracted period of low commodity prices.
Some people even question the viability of Canada’s oil and gas industry with all the media doom and gloom around tough oil and gas economics, Canada’s loss of market share to U.S. producers, and the social and political popularity of alternative energy and the move to diversify Alberta’s economy.
Besides shedding light on a conflicted labour market with high unemployment and yet one that struggles to fill positions, the PetroLMI labour supply report makes recommendations to industry and government on how to remedy the situation.
“It’s important not to be reactive,” Vidallo says. “Time and time again, we see that if you wait for the labour shortage to happen, companies may compete for workers with monetary incentives.”
Since cost escalation is part of the problem behind industry cycles, a combined industry/government approach is needed to better understanding the structural shift in oil and gas and its impact on future occupations, identifying the skills that will be in most demand, and effectively communicating those to job seekers and young people deciding on a career.
Industry and government also need to assist unemployed workers shift away from specialized oil and gas occupations and skills that support capital projects and expansion activity in favour of skills that tie into sustaining capital and resource play development.
Industry on its own should be prepared to invest more in career transition than it has in the past in order to retool workers for reemployment in the most productive and profitable oil and gas basins.
“Skills in the older generation of workers may become outdated because of technological advances. But you want to retain the knowledge and skill of this segment of the workforce,” Vidallo says.
At the other end of the demographic scale, industry needs to attract younger workers. The message to this demographic could highlight the clean technology and regulatory compliance roles that are available in the industry. “It’s time to be proactive,” Vidallo says.
And the service sector actually is being proactive. It leads the pack in labour planning because it has the most boots on the ground. It’s these workers who are the first in line to get hurt by industry cycles.
“Companies in the industry recognize that returning to a tighter labour market could lead to increased competition for workers and potentially increased labour costs. So they see the need to be proactive, but tough economics are also at play,” Vidallo says.
The report is accessible by clicking here.