Oilsands construction workforce to plunge 84% by 2020, report says

Posted by: privatefinancetips in BLOG, Finance News Mar 27, 2016

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A new industry report shows the sector may require 84 percent fewer construction workers in 2020 compared to 2015 as project cancellations pile up amid a crippling oil-price environment.

“Overall workforce requirements for that gas and oil industry continues to be 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 located 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 during the 16-month downturn, as oilsands projects with a combined manufacture of three million barrels each 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 processes jobs by 2020, a one per cent decline within the current figure. A May 2014 survey, albeit with a different methodology, had predicted jobs requirements of approximately 68,900 by 2020.

While numerous high-profile projects for example Suncor Energy Inc.-led Fort Hills continues to help keep construction workers engaged, employment prospects further out look bleak within 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.

The downturn has taken the shine off Alberta’s job-creating engine and it has destroyed 100,000 direct and indirect jobs based on one industry estimate.

Recruitment consultancy Hays estimates Canadian oil and gas workers saw single.4 percent decline in their paychecks this past year, over a cumulative eight per cent growth over the previous 5 years.

“Hiring has pretty much seized, unless it’s for a business critical position,” said Neil Gascoigne, global business development expert at Hays, located in Houston.

“A large amount of the E&P business are dealing with significant restructure and looking to further reduce costs, and wages and salaries are among their expense.”

As oil prices remain below US$40 per barrel, information mill discovering it difficult 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 around they can without jeopardizing their actual business,” says Gascoigne. “They don’t really have a lot left to chop, so 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 industry within the long-term, because the industry continues to face lack in many skillsets along with a sizeable chunk of the workforce is expected to retire within the next decade.

“We expect a sizable skills shortage, because we will never have 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 individuals to come back.”

yhussain@nationalpost.com

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