Oil-related jobs expected to take big hit, study finds
Low energy prices could wipe out a quarter of positions in Canada
A quarter of the jobs directly and indirectly tied to the Canadian oil and gas space could be wiped out this year, as the pain of low oil and gas prices ripples through the Canadian economy.
According to a forecast published Tuesday, as many as 185,000 jobs — or 25 per cent of the 720,000 workers in Canada linked to the oilpatch — could be affected as the industry navigates through the severe downturn.
“Many of the losses would take place in Alberta and would impact those employed in oil and gas extraction and related construction (58,000), followed by oil and gas support services (21,000),” said the report, from Petroleum Labour Market Information, a unit of Calgary-based Enform, supported by six industry associations.
About one-third, or 60,000, jobs, could be lost outside of Alberta, including an estimated 20,000 jobs in British Columbia and 14,000 jobs in Ontario, the report said.
“Not all of the job losses would necessarily be at the end of this year, it may go into next year as well,” Carol Howes, director at PetroLMI, said in an interview, noting that the forecast is modelled on an expected 37 per cent decline in capital expenditures of oil and gas firms this year.
The cancellation or postponement of a number of oilsands projects would see 75,000 jobs cut — almost 40 per cent of total jobs lost — in oil and gas engineering construction firms, which perform the majority of the work related to development projects.
Canadian Natural Resources Ltd. said it would freeze work on the first phase of its 40,000-barrel-per-day Kirby oilsands project. Cenovus Energy Inc. is also slowing down the development of its Narrows Lake, Telephone Lake and Grand Rapids projects.
The oilfield services sector would see an estimated decline of 26,000 jobs, similar to the Canadian Association of Oilwell Drilling Contractors’ forecast of 23,000 job cuts.
“185,000 does seem like a high number, but they are looking at direct and indirect job losses, and it’s across the country over a period of 12 months,” said Todd Hirsch, chief economist at ATB Financial. “When we start to sum up all of that and we don’t see a price correction, it could be a reasonable assumption of job losses in that order of magnitude.”
West Texas Intermediate slid for a fifth day in a row Tuesday, closing at US$57.23 on concerns of oversupply and a higher U.S. dollar, and pulling back from gains made over the past month. Goldman Sachs Group Inc. expects WTI to bottom out at US$45 per barrel by October, while Citigroup Inc. has a less bearish US$56 target.
Alberta added 12,500 net jobs last month, which analysts credit to an increase in election-related hiring. The province’s natural resources sector lost 3,500 positions, while construction, down 3,800, and manufacturing, down 2,500, were also in decline, according to official data.
Alberta isn’t the only province that will suffer if low oil prices persist. Companies in Ontario and British Columbia that service the oilpatch will also not be spared, with fabricated metal product manufacturers, architectural, engineering services providers and building suppliers expected to be the worst hit by the downturn, according to the PetroLMI forecast.
“The outlook for 2016 and beyond is still uncertain, and there are no indications that the industry will recover as quickly in 2016 as it did in 2010,” the report notes.
But employers are mindful that the industry faces a structural labour shortage and many companies are looking at ways to ride out the downturn without shedding too much staff.
Trican Well Service Ltd. said last week that while it cut 44 per cent of its North American workforce in the first quarter, most of the impacted jobs were in the U.S.
“In Canada, we did take the approach of rolling salaries back a little bit more and retaining more of our people, because Canada has been such a tough labour market for a number of years,” Trican CEO Dale Dusterhoft told investors.
Companies are also offering unpaid vacations or four-day work week to cut costs without losing employees.
“We are conscious once the oil price turns around, there will be a labour shortage going forward,” Howes said. “Attracting workers who had gone elsewhere did become a big issue following the 2008-09 downturn.”