Shortage of rig workers could slow Canadian oilpatch recovery, industry warns

CALGARY – As Canada’s vitality sector seeks to capitalize on excessive oil and fuel costs and get well from a six-year downturn, a scarcity of rig staff threatens to curtail the business’s progress.

After years of depressed costs, layoffs, and consolidation, oil and fuel corporations in Western Canada are as soon as once more ramping up manufacturing — this time to satisfy rising world vitality demand as COVID-19 restrictions ease all over the world.

In response to The Canadian Affiliation of Vitality Contractors (CAOEC), there have been 175 energetic drilling rigs in Canada final week, in comparison with simply 75 in the identical interval final 12 months and 155 in 2019. With the North American benchmark West Texas Intermediate buying and selling this week at greater than US$80 per barrel — a seven-year-high — the variety of direct and oblique jobs within the oil and fuel companies sector is up 130 per cent year-over-year, stated CAOEC chief govt Mark Scholz.

“That’s a rise of 20,750 jobs, so the business could be very bullish on exercise,” Scholz stated in an interview. “However the problem is, we’re attempting to ramp up so shortly that we’re coping with capability restraints.”

Already, corporations looking for to extend oil and fuel output this 12 months are working into labour market challenges. Knowledge from PetroLMI, an business labour market data supplier and a division of EnergySafe Canada, reveals the unemployment fee within the Canadian oil and fuel companies sector fell from 17.7 per cent in September 2020 to three.7 per cent in September 2021. In Saskatchewan, the present unemployment fee amongst oil and fuel companies staff is actually zero.

“We’re already beginning to hear a few of our members point out to our shoppers, who’re the oil and fuel producers, that we don’t have any rigs out there. And it’s largely as a result of crew shortages,” Scholz stated. “So it’s going to have an effect on our means to extend manufacturing.”

PetroLMI vice-president Carol Howes stated the most important drawback going through the business is that whereas employment is up considerably, the dimensions of the oil and fuel service labour power stays largely unchanged from final 12 months. Traditionally, many rig staff in Western Canada have come from different components of the nation, notably the East Coast, and so they went house when the COVID-19 pandemic hit. Lots of these staff are reluctant to return to their jobs so long as the specter of the virus and its related travel-related challenges proceed, Howes stated.

However even earlier than the pandemic, the oil and fuel sector’s labour power was eroding. Between 2013 and 2019, pushed by collapsing oil costs, employment fell by 21,200, or 29 per cent, within the companies sub-sector. An extra 6,300 jobs had been misplaced in 2020, in accordance with PetroLMI.

“It has been constructing over the past variety of years, ever because the oil worth decline on the finish of 2014,” Howes stated. “We noticed layoffs beginning to happen, we noticed a decline in exercise, and loads of staff went elsewhere — whether or not that was to a unique province, a unique business or a unique job.”

Scholz stated staff have traditionally been drawn to the oilpatch due to the excessive wages, and he stated these wages have already elevated by about 10 per cent on common this 12 months as employers compete for labour. However he stated skilled staff who left the business as a result of pandemic or an oil worth crash-related layoff aren’t essentially going to be enticed again for a paycheque.

“I believe many staff are this as ‘OK, I could be making rather less per hour now, however I get to come back house day by day and I’m near my household and pals,” he stated. “They’ve made a acutely aware option to take a job with decrease total compensation, however with a way of life that’s extra in step with what they’re comfy with.”

Many staff can also really feel jaded after years of depressed costs, layoffs and instability within the sector, Scholz added. And whereas commodity costs are surging proper now, the sector continues to be in its early part of restoration, he stated.

“If you inform folks, ‘effectively, we’ve be just right for you for the following couple of months,’ that isn’t promoting effectively. Similar to everybody else, folks need to have stability and consistency at work,” Scholz stated. “I believe the business will seemingly get there ultimately, the place we’re capable of supply constant work, however at this level we’re nonetheless in this sort of middleman part.”

This report by The Canadian Press was first printed Oct. 13, 2021.

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