Don’t Give Up The Day Job: The World Still Needs Oil And Gas, And Its Workers
Oil and gas production will be needed for years to come — but who will run the rigs and work the wells?
Canada’s oil industry could be tens of thousands of workers short, according to government projections. Models by Employment and Social Development Canada across hundreds of occupation groups forecast 14,000 industry vacancies in the 2022-2031 period.
The same is true in the U.S. A recent Reuters report described the “scramble” among oil firms to secure workers at a time of widespread national labour shortages. According to data from the Bureau of Labor Statistics, there were nearly two job openings for every available American worker in December.
The U.S. oil and gas industry currently supports 10.9 million jobs, the American Petroleum Institute (API) says, with nearly 1.9 million new opportunities projected through to 2035.
Filling those roles may be problematic, however. The recruitment challenge could be compounded by the energy transition amid strategies to nurture new skills and jobs in moving to a low-carbon economy, which could erode the number of employees ready to report for work in oil and gas.
It is a challenge that energy firms will need to confront if they are to maintain output, develop projects and exploit opportunities.
Efforts to mitigate emissions, and to redefine the sector with environmental protection and new technologies such as carbon capture utilization and storage (CCUS), could play a part in helping to attract both the investment and new recruits the industry needs.
A recent JP Morgan report exploring energy trends in the decades ahead suggests fossil fuels will be needed “for many years to come” unless the world delivers on a set of ambitious pledges to decarbonize “at a totally unprecedented pace.”
Its 2023 Eye on the Market annual energy paper offers these words for territories with proved reserves in the ground: “Advice to a handful of countries with ample oil and gas reserves: the renewable transition is picking up speed, but don’t give up your day job.”
However, just as the transition may be diverting workers away from the oil industry and into new vocations, a similar trend can be observed in the availability and direction of investments.
‘Clean tech’ investment is now outpacing fossil fuel investment, JP Morgan notes, even before new U.S. and European energy bills. Yet, despite the advance of renewables, global energy use is still around 80 per cent reliant on fossil fuels, it adds.
The strategic importance of oil and gas in maintaining energy supply and security on a global level means diverting funds away from the sector and into new areas carries a risk.
Given fossil fuel growth scenarios, it would be “premature” to rely on renewable energy for more than it is organically capable of providing, JP Morgan notes.
While the ultimate path of oil and gas demand will be dictated by many things — from policy, economics and technology through to geopolitics, cost and nationalism — countries that constrain access to fossil fuels may regret it, it adds.
In March, the API also issued a statement saying the U.S. oil and gas industry needs “more investment, not less.”
The issue of workers and new talent being lost to the industry is gaining broader awareness.
In January, the Canadian Association of Petroleum Producers (CAPP) highlighted the issue in response to the federal government’s “just transition” plan.
“It is important the federal government recognizes Canada’s energy workers and Canada’s oil and natural gas resources will be needed for the foreseeable future to provide a source of safe, secure, affordable and reliable energy,” noted Lisa Baiton, CAPP president and chief executive officer.
An increasing trend toward automation, which has been shaping the industry for decades, might provide some answers, though not all. Ironically, it may well be efforts to decarbonize the sector that will help appease investors and lure the new talent the industry needs.
CAPP is forecasting upstream oil and gas production investments to hit $40 billion in 2023, surpassing pre-Covid investment levels and a third straight year of consistent growth. This includes additional spending in environmental protection measures, as well and emission reduction and abatement technologies like CCUS.
A report issued by BMO Capital Markets showed Canadian producers have invested an average of $1.2 billion annually since 2012 into research and development, much of it focused on reducing emissions. Canada’s upstream industry also spends over $3 billion annually in areas such as biodiversity habitat protection, air quality management and water protection.
Demographics means the industry must also offset the loss of skills from aging workers. The API is calling on millennials to grow into the next generation of engineers, scientists and skilled laborers — to become the problem solvers who will tackle the world’s energy challenges.
It says allowing investments in the oil and gas industry can also open good-paying job opportunities for minority groups and women, reflecting a more diverse American labour force.
It will be all hands on deck if energy firms are to successfully navigate the transition.