Oil sands job recovery begins, companies shift spending from expansion to operational efficiencies

Vacancies due to retirement eligibility could result in more job openings than industry activity

CALGARY, ALBERTA – Canada’s oil sands sector has experienced sustained cost-cutting, restructuring and deeper than anticipated job cuts in 2016, but a modest recovery of about 3,400 net jobs is projected over the next four years as companies shift their spending from expansion to maintenance, repair and optimization of their operations, according to the Oil Sands Labour Demand Outlook to 2020 Update report, released today by PetroLMI, a Division of Enform.

Employment is forecast to grow by approximately six per cent, or about 3,400 jobs, from an estimated 63,800 in 2016 to 67,200 in 2020.

Jobs in on-site construction and module fabrication will decline by 6,500 but will be offset by an increased requirement for 9,900 workers to support ongoing operations, maintenance and turnaround activities.

“The prolonged decline in oil prices has had a deeper and longer impact on workforce requirements than many expected. With additional reductions in capital spending as well as the strain of the Fort McMurray wildfires on some companies, the result is a delay in a more significant recovery,” says Enform’s Carol Howes, VP of communications and PetroLMI.

The forecast is an update to PetroLMI’s February 2016 Labour Demand Outlook to 2020: Oil Sands Construction, Maintenance and Operationsand is based upon new production, capital expenditure and labour productivity assumptions.

“However, some companies with expansion projects underway before the downturn benefited from cost reductions and were able to accelerate their construction. As a result, they’ve begun to hire workers in preparation for moving those projects into operation in 2017 and 2018,” said Howes.

Since 2014, with the decline in oil prices, oil sands capital expenditures have dropped by nearly 50 per cent to $18.1 billion in 2016.

Oil sands companies have focused on improving their cost structures, including labour productivity, by decreasing the number of employees while simultaneously maintaining, or even increasing, production.

The majority of the oil sands sector’s capital spending over the next four years is expected to shift from growth and expansion towards maintenance, repair and optimization of operations in order to drive operational reliability and efficiency.

With current oil sands construction projects nearing completion and no new major projects on the horizon, demand is expected to increase for occupations such as heavy equipment operators and welders, while occupations more closely connected to growth-related capital spending such as some engineering roles, geoscientists, construction managers and estimators, are expected to experience below-average growth.

Going forward, oil sands operators are also expected to rely more heavily on independent and third-party contractors for a variety of work.

During the forecast period, vacancies due to retirement eligibility could result in more job openings than industry activity.

Based on the historical retirement rates and workforce demographics seen in the past, companies may need to replace up to 3,200 of their retiring workers, particularly for operations jobs that are permanent and long-term, bringing the total requirement to 6,600 workers.

“Alberta is an energy province and we will always be an energy province. Our oil sands operators are world leaders when it comes to technological innovation and the ability to overcome challenges, and there has been no shortage of challenges over the past few years. From the wildfires in Fort McMurray to plunging commodity prices, oil sands operators are demonstrating once again their resilience. I’m pleased to see this growth forecast, which will mean good jobs for hard-working Albertans when they need it most,” said Christina Gray, Alberta Minister of Labour.