Suncor layoffs signal pain ahead

Major layoffs have been rippling through the global oil and gas business for weeks, with big cuts announced at big companies like BP, Chevron Corp., Marathon Petroleum Corp. and Royal Dutch Shell.

The trend has now landed in Alberta.

Pipeline giant TC Energy eliminated an unspecified number of jobs in its Canadian gas operations last week, followed by Friday’s grim news Suncor Energy will cut up to 15 per cent of its workforce — almost 2,000 positions across the country — within the next 18 months.

“It just continues to go on in the sector,” said analyst Phil Skolnick at Eight Capital in New York.

“They are not going to be the only ones that we see doing that … as long as oil prices continue to be where they are, and stock prices continue to be doing what they are doing.”

With benchmark U.S. oil prices sinking to $37.05 (U.S.) a barrel on Friday and the S&P/TSX Capped Energy Index dropping 56 per cent this year, it’s not a shock that job losses are now occurring in the Canadian oilpatch.

Perhaps the only surprise is that it took this long to arrive at some companies.

“You are going to see more of this coming in the fall,” said oilpatch veteran Brian Schmidt, CEO of Tamarack Valley Energy.

“My experience is when one company does it, you know that every company is looking at it. They all have the same price signals,” added Richard Masson, an executive fellow at the University of Calgary’s School of Public Policy and former CEO of the Alberta Petroleum Marketing Commission.

To be clear, it’s not like the industry has avoided painful cuts this year.

Job losses struck the oilfield services sector first as oil markets collapsed in April amid a global price war between OPEC and Russia, and as the COVID-19 pandemic undercut energy demand.

Drilling companies saw activity plunge this spring while Canadian oil and natural gas producers carved more than $8 billion out of their capital spending plans.