Alberta oil patch labour force of 100,000 by 2030 isn’t hard to imagine. Big drop from peak of 171,300 just a decade ago
Last week, Suncor announced plans to lay off 1,500 employees, nine per cent of its head count, while Imperial Oil will cut 200 jobs. Hard to imagine more layoffs aren’t on the way. Volatile crude oil prices are partly to blame. But the real culprit is a decade-long trend affecting most oil and gas workforces: technology change.
“Does it take as many employees as we once had in the upstream oil and gas business to produce amounts of crude oil that are presently in demand by the marketplace?” Texas Alliance of Energy Producers economist Karr Ingham told me back in 2018. “I’m not sure the answer to that question is yes.”
Turns out the answer was a resounding, no. Over the past nine years, Texas lost 110,000 upstream oil and gas jobs. Alberta lost 45,000 – from 171,000 to 126,000 – over the same period. Those jobs are not coming back. In fact, as Suncor and Imperial demonstrate, employment numbers appear poised to continue falling.
In late 2020, I interviewed Lance Mortlach of international consulting firm EY about his study that showed Canadian oil and gas employment would drop 30 per cent (roughly 50,000 jobs) by 2040. There’s also a radical change in how oil and gas employees do their work. Increasingly, computers and machines are actually doing the work and humans are supervising the technology.
“We continue to see examples of process automation like the heavy haul trucks in oil sands,” Mortlach said. “That’s a great test case, and I think shovels will follow suit.”
What he meant by “shovels” was physical, repetitive jobs, especially if there is an opportunity to increase worker safety. For example, pumpers used to drive from well to well each day checking that the equipment was working properly and that there were no significant leaks. Now, monitoring well performance is increasingly done remotely using sensors (including video cameras) that send data to the cloud, where head office technicians download and analyze it using sophisticated analytics software.
Jobs that require “windshield time,” as they call it in the oil patch, are a thing of the past.
Engineer Dave Shook has spent the last 20 years designing the automation systems that the oil companies are using to eliminate jobs. He said in 2020 that he wouldn’t be surprised if the job losses forecast by Mortlach happened by 2025.
“Things have moved fast. When I said a year and a half ago [in an earlier interview] that I was the guy putting people outta work, it’s because I advise companies about where they can go in the future,” he said. “A lot of companies right now, the stuff that we were suggesting they do two years ago, they are fully on board with, they are just rolling out as a modern way of doing business.”
The “modern way of doing business” also includes preparing for a more competitive future. As noted energy economist Dr. Phil Verlager told me in a recent Energi Talks interview, oil and gas is a sunset industry. Peak oil demand is only a few years away. As consumption declines, producers will be squeezed by prices that will be lower and more volatile and capital will become even harder to get than it is now (and for smaller companies it is very hard to get).
To survive, Alberta’s oil companies will have to become even leaner and more efficient than ever. CEOs are promising investors lower break even costs, so low that some oil sands producers will become a very competitive barrel, perhaps even able to compete with the best of Tier 1 American shale producers.
And that trend, more than any other, is driving the oil and gas industry to eliminate jobs.
How low can the Alberta oil patch headcount go? The provincial industry lost 45,000 jobs from 2014 to April, 2023 and now sits at 126,500, according to Calgary-based PetroLMI.
If Mortlach and Shook are right, a labour force of 100,000 by 2030 isn’t hard to imagine. That’s quite a drop from the peak of 171,300 just a decade ago.
Alberta needs to confront an uncomfortable truth: the oil and gas jobs machine is broken. That should be reason enough for the owners of the provincial hydrocarbon resource, the people of Alberta, to rethink how the resource should be exploited. Perhaps it’s time for those owners to ask if there is a better, higher-value use for oil and gas in the rapidly approaching low-carbon economy.
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