Skills shortfall hits oilpatch

Oilfield service firms struggling to rehire after drastic cutbacks

Despite high unemployment, oilfield services companies say they are struggling to find workers in Western Canada as demand slowly picks up in the oilpatch.

Essential Energy Services Ltd., which laid off most of its staff earlier in the commodity price rout, said it had increased its workforce by 30 per cent, or 100 people, and was looking to take on more ahead of a “busier winter season.”

But the Calgary company said rehiring has been tough because many laid-off workers left the industry, while others moved away and are wary of returning until they see greater stability in the industry.

“Because the pool of available workers seems to be quite small, I think in the oilfield service business people are starting to steal from each other,” Garnet Amundson, Essential’s president and CEO, said in an interview. “That’s a dangerous situation. We have to then make sure you are very competitive with your peers in the industry.”

Amundson said Essential recently offered its workers a “small” wage bump in an attempt to retain them, but he declined to disclose the amount.

Essential is starting to rebuild after shedding most of its workforce earlier in the commodity price rout, slashing its head count from 1,000 in late 2014 to a low of 343 in March. Since then, the company has hired 100 workers and is still recruiting another 40 to 50.

Similarly, Trican Well Service Ltd. — Canada’s largest well completion company — said it hired 75 staff in the third quarter following a big downsizing, but it’s also struggling to find skilled workers.

The oil and gas services sector, which includes frackers, drillers and well site consultants, employs the largest labour pool in the industry, with 109,500 workers in 2014, according to labour pool forecaster PetroLMI.

But it has also suffered the greatest level of job losses due to low oil prices, having shed more than 20,000 positions as of 2015, according to PetroLMI’s latest jobs outlook.

Commodity prices began to fall late 2014, triggering a provincewide recession that led to mass layoffs and escalating unemployment in Calgary, the headquarters of many oilpatch companies.

The jobless rate in Alberta’s most populous city ballooned to 10.2 per cent in October, the highest it has been 1993.

It may appear absurd that one sector could be facing a labour crunch during a period of such high unemployment, but the oilfield services sector employs highly specialized workers, said Claudine Vidallo of PetroLMI.

“There are going to be available people (in the labour market) but for the types of skills that are required for particular occupations, there’s still going to be skill shortages,” Vidallo said.

Budgets for training workers and upgrading skills have either been scaled back or cut completely due to the downturn, according to PetroLMI.

Laid off workers may be hesitant to return to the sector because activity picks up during the winter drilling season before it slows down again in the spring, said Mark Salkeld, president and CEO of the Petroleum Services Association of Canada.

Trican Well Service said Thursday it saw a “meaningful increase” in demand for its services during the third quarter in what it believes is a sign of greener pastures after a two-year rout that has shaken the industry.

Oil and gas prices are stabilizing, which means demand will gradually rise through the winter, the Calgary company said in its thirdquarter earnings report.

“It’s a steady increase, but it’s not a boom,” Dale Dusterhoft, Trican’s president and CEO said in a conference call with analysts.

Trican said it hired 75 workers in the third quarter after slashing its labour pool and could hire more into early 2017, but it’s facing a tight market for skilled staff.

“Labour is tighter than all of us thought it would be,” Dusterhoft said during the call.

“There’s a lot of people who have left our industry and others who just want to see stability in the service industry before they re-enter it from other jobs that they may have.”

Trican said half of its equipment was parked and inactive in the three months ending Sept. 30.

Dusterhoft said the company is considering restarting some idle equipment early next year — potentially bringing on another 75 to 100 workers — but no decisions have been made.

Trican said in February after announcing the sale of its U.S. fracking division that its workforce would shrink to 1,740, down 75 per cent from its worldwide labour pool reported at the end of 2014.

The company has been busy shedding international holdings as it focuses squarely on its Canadian operations.

Trican said its revenues plunged by nearly 60 per cent in the third quarter over year-ago levels to $78 million due to adverse weather, customer delays and lower prices from its customers.

Essential collected $30 million in third quarter revenues, a 36 per cent drop from the same period in 2015, because of low activity levels and lower prices.

Officials representing the oilfield services sector say energy producers have not been passing on the gains from improved commodity prices.

Trican expects prices will improve into 2017 with increased demand for its services.