30% fewer jobs in Canadian oil patch by 2040 (or sooner)? New report on automation, digital tech

Rating: High school and post-secondary

Summary: Markham interviews Lance Mortlock, Canadian oil and gas leader for EY Canada, about a new joint study with PetroLMI titled, “Preparing for the future now: Rethinking the oil and gas workforce in 2040.” Digital technology is quickly transforming oil and gas companies. Workers will need new skills and training, and by 2040 there will be far fewer of them. Be sure to watch the video interview with Dr. Dave Shook, an engineer who specializes in oil field automation, who believes change is happening more quickly and that Canadian job losses will reach 30% in 2025.

Related stories:

EY study: Rethinking the oil and gas workforce in 2040

Technology and the 21st century energy worker in Canada: Where are the jobs?

Dr. Dave Shook: Digital tech destroying thousands of Canadian oil/gas jobs 

Suncor deal with Microsoft sign that digital technology is transforming Canadian oil patch

Get ready, Alberta, a Tsunami of new technology is transforming the oil/gas business model…and killing jobs

This interview has been lightly edited.

Markham Hislop: I first began reporting on digital technologies in the oil and gas industry about three years ago. There were a lot of skeptics at that time. Fast forward to 2020 and digital technology is changing the way oil and gas workers do their jobs, what kind of jobs they have, and even if they have a job. So Ernst young and Petro LMI, based in Calgary, have come up with a new study on automation and digital technologies in the oil and gas industry. We’re going to be talking to the author of Lance Mortlock from E & Y. So welcome to the interview, Lance. Why don’t we start with an overview of the study, please?

Lance Mortlock: As you point out, we teamed with Petro LMI and really the objective of this study was to look at the long-term what does automation look like specifically in the upstream Canadian oil and gas sector. And so we kind of narrowed the focus on that particular area where we had good access to data and we identified those jobs within that area that we wanted to assess in more detail. And so developing a set of criteria for understanding the level of potential automation in the future, we assessed each of these jobs and each of these competencies and asked, “what would that look like in 20 years time?” So by 2040, what’s the level of automation and that’s the results that are outlined in the study that I think we’ll get into in a moment here.

Markham Hislop: Your numbers, are very surprising even to me, for instance, by 2040, you think that approximately 50 per cent of upstream jobs will be automated and the staff numbers could be reduced by as much as 30 per cent. That’s quite significant.

Lance Mortlock: Yeah. Actually it’s 30 per cent of jobs and 50 per cent of competencies. The number of competencies that align to a job can be more than one, right? So you’ve got a particular job in the oil and gas sector. And that job is made up of a number of different competencies. Some competencies are easier to automate when compared to others, and we outline the details of that in the report.

But the number of jobs, we’re saying 30 per cent of jobs based on the criteria that we used in the assessment would be automated either way. When you look at the numbers, it’s staggering. It is a high proportion of jobs. I’ve been actually talking about for the last few years, if we have to get into a recovery mode, this notion of a jobless recovery…even when we recover, it’s not like thousands and thousands of jobs will return to the economy because I think if anything, what we’ve seen in the last year in particular with COVID-19 is the acceleration of the use of technology to drive efficiency and effectiveness in organizations.

Lance Mortlock: So rather than hiring people back, the question that management teams are asking themselves is how can we use technology in a different way, now, next and beyond to drive greater efficiency in the organization,

Source: Preparing for the future now: Rethinking the oil and gas workforce in 2040,” By EY Canada and PetroLMI.

Markham Hislop: I’ve interviewed some other executives about this topic and one of them was a drilling rig manufacturer. I noticed that drilling is a competency most likely to be automated. He told me that they are making automated rigs that will have no workers on the floor. and they will have a couple of individuals working out of a shack next to the rig, basically supervising the computer, making sure that it’s doing what it’s supposed to be doing. And he said, that will be kind of a metaphor for a lot of this change is that now workers instead of doing, they will be supervising the doing by machines. Is that fair to say?

Lance Mortlock: Yes it is. And I think when you, when you look at decision-making processes there are different worlds that exist. So there are those activities and processes that are purely AI-driven and there really is no human supervision required. There’s this kind of hybrid world where machines and humans work together in what I call a collective intelligent way to drive outcomes that equate to one plus one equals three when humans machines come together.

And then there are those human-driven decisions that are enabled by AI and IT. And there’s no right or wrong answer here. It simply depends on the activity, depends on the capability and the technology, whether it’s AI or machine driven or human driven or a combination of both. But the drilling example that you share, is a great example of what we can continue to expect to see. It’s not simply a matter of automating back office jobs and services in IT, finance, supply chain HR and so on, but actually hardcore front office work in operations, maintenance, drilling completions. We continue to see examples of process automation. You look at the automation of the heavy haul trucks in oil sands. That’s a great test case, and I think shovels will follow suit.

Markham Hislop: Another thing that I’ve been told in interviews is that the nature of work is going to change. We talked about supervising machines, but these new types of jobs will be very data intensive. There’ll be data attached to every part of a job. And the ability to use software will also be important. Is that accurate?

Source: Preparing for the future now: Rethinking the oil and gas workforce in 2040,” By EY Canada and PetroLMI.

Lance Mortlock: That’s a good characterization. We’re going to need in the next 20 years, different types of skills and capabilities. So data science, computer software programming, business analytics, people with artificial and machine artificial intelligence, machine learning skills and capabilities, for sure.

And then we’re going to need some kind of interesting new roles as well around functional translation. So how do we translate what the machines are telling us in terms of the data and the progress or processes they’re executing into things that we can understand as regular mortals that perhaps aren’t as tech-savvy as is everyone. So you’re going to need these kinds of translator roles.

There’s going to be new skills and capabilities, but make no mistake, it’s not like a job lost in say drilling translates to a job, on a one for one basis sitting in the shack next to the drill rig. We’re going to end up, and this is what the report outlines, fewer jobs in this space overall. I don’t believe, and some might disagree with me, that we’re going away going to end up with an equivalent number of jobs or, or growth.

Like I said, this sense of a jobless recovery. The economy might be doing well, the industry might be doing well, production might be increasing, but I actually think we’re going to see a reduction in the total number of jobs in the upstream sector in Canada.

Markham Hislop: If you were talking to a high school student or someone who maybe was in a post-secondary technical training or university, what advice would you give them if they were looking for a job in the oil patch, in terms of the kind of education and training they should take?

Lance Mortlock: The first thing I would say is the more education and training that they can get under the belt the better. I think looking at areas like business analytics and being able to apply business analytics, to engineering disciplines, and other say subsurface disciplines is important. I would view that the pure disciplines of engineering without a data science or a business analytics module or co-op or some kind of extra curricular activity, I would avoid that.

I would look for opportunities where you can build skills that are multidisciplinary in nature. Those are the sorts of people that I think are going to be in high demand in the future.

Markham Hislop: Let’s talk about existing workers now, because I’ve run into my fair share of people like petroleum engineers or geoscientists who find themselves redundant and their jobs are not coming back. So if let’s say that you’re a 40 or 50-year-old worker in those areas, what kind of skills should you be acquiring to make yourself valuable in this digital environment?

Lance Mortlock: It’s interesting you should ask that. My wife who, like me, has been in the oil and gas sector more than 20 years, she was just made redundant. She’s a geologist petrophysicist, kind of in that subsurface space, in her mid-forties, and, in a situation where she’s looking for a job now. And you one of the things that she’s doing is saying, okay, “how do I build computer programming and data science and analytics skills and capabilities?”

All kinds of courses are offered by the Alberta government, some of them free and some of them, you pay for. She happens to be doing a course right now with IBM, building new skills and capabilities, hoping to pivot. And I think we’ll see more and more examples, like my wife, who have a tremendous amount of skills and capabilities but need to augment that with new skills that are required in the future.

The second thing that I would say is I think there’s an opportunity to consider skills that are transferable to other sectors, whether it’s geothermal – which is a hot topic – hydrogen, renewables, and other areas. I think the skills that a lot of our workers in the industry have, are transferrable to other areas with the right kind of training, of course.

Markham Hislop: I’ve also been told that people in the oil and gas industry that even though the acquisition of these new skills, companies would also like to see the deep industry knowledge. So if you’ve been around, like your wife has got 20 plus years of experience, adding the new skills and the new expertise to her existing skillset, and then having that deep knowledge of the industry as a whole, makes her actually a more valuable employee. What’s your take on that?

Lance Mortlock: I would agree, the more that you can bring to the table in terms of experience, training, the better and the more marketable you are to perspective employers. Although h ope’s not a strategy, I do hope somewhat as we get into Q1 and Q2 next year (2021), with the rollout of vaccines, that there’s a lot of pent up demand and capital sitting at the side, waiting to be invested in general in the Canadian, the North American economy. We will start to see you demand recover and a recovery in the economy at large. That will create activity in the new year that I think we’re all looking forward to.

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