Hundreds of thousands of oil and gas-related jobs lost since 2014…some are coming back, many are not

Where have all the Canadian oil and gas workers gone? More than 52,000 direct jobs disappeared over the past three years, probably four or five times that number if we count indirect employment. Perhaps more importantly, as the oil patch finally returns to life after several quarters of improved prices and higher job numbers, where are the oil and gas jobs of the future?

Richard Santin is certainly worried about the future. The 54-year old journeyman electrician has only worked 12 out of the last 36 months – despite the modest recovery that began early last year – since Saudi Arabia drove down the price of oil in late 2014 and effectively ended the Alberta oil patch’s building spree. He used the time off to re-train as a solar panel installer, but the wages aren’t as good and the companies seem to prefer younger workers.

“I would say that I’m a little concerned about the future. In our industry, as you get older, they like the younger people, right?” he says. “The renewable energy sector…the jobs that are out there aren’t the nice well-paying jobs that we’re used to and that’s kind of something that’s being overlooked. So, yeah, I’m worried.”

Santin isn’t alone. Many Canadians working in the oil and gas are thinking hard about their future.

Some are tired of being away from their families for long periods, toiling on a drilling or service rig in rural Alberta or Saskatchewan or perhaps northeastern B.C., where the work is hard and dirty, the winters are long and frigid, and drug and alcohol addiction is rampant.

Matt Grzesiak started on a Saskatchewan drilling rig in 2005 and when the global economy nosedived in 2008 thanks to Wall St.’s financial shenanigans, he lost his job and almost went under, too. He hung on by his fingertips thanks to a job working with troubled youth back in his hometown of Prince Albert, and when the industry recovered 18 months later, he was back at work on the rig. But the latest bust caught him at a different juncture in his life. Now in his mid-30s, married with a child on the way, time with his family was more valuable than a big paycheque.

Matt Grzesiak values time with family and financial stability over high wages of oilfield work.

“Money’s tempting, but I look at my kids and it’s hard to leave. There’s temptation obviously. I miss the income,” he says. “I wanted something stable, something consistent. I knew human services [from the 2008 downturn] and now I’m a youth employment coordinator for people with disabilities. I’m not going back to the rig again.”

Others have different priorities. Life outside their working hours is just as important as career success. Their spouse may also have a career, which means more responsibilities at home,

Stability is now more important than high wages.

Then there are older workers, veterans of the oil patch, those who signed up out of high school, lured by the easy money, but who now  find themselves squeezed out of a job as new technologies replace unskilled and semi-skilled labour. Is there still a demand for experienced hands? Even if there is, do older workers without post-secondary training want to struggle to keep up in the modern, high-tech oilfield?  

Take Mike Johnston, for instance. The 40-year old lives in Swan Hills, a small town of 1,500 located 225 kilometres northwest of Edmonton, and a long-time oil industry service centre. Kids like him graduated high school and went to work on the rigs, or maybe for one of the service companies that were always looking for youngsters willing to endure long hours of arduous labour for big paycheques. They had their pick of jobs and while they understood boom and bust, they never expected oilfield employment to decline permanently.

Mike Johnston of Swan Hills, Alberta.

Seven years ago Johnston bought a “hot oiler,” a truck that pumps fluid into wellbores to remove wax buildups that impede the flow of crude oil. While technically a small business, he agrees that he is really just “a worker with a $200,000 toolbox.” Like most service companies, his rates and hours were slashed as much as 50 per cent during the downturn and they haven’t risen much during the recovery.

“I haven’t paid myself a wage in two years so it’s probably time to find something else to do, I guess. My wife’s a teacher, she’s tired of it. She thinks I should find something different to do. I have relatives who quit working on fracking (hydraulic fracturing) crews, tried doing something else and now they’ve gone back to work fracking,” he says.

“I think that there’s still room for qualified people, but I guess it depends on what I want to do, if I want to live away from home all the time or if I want to be close to home.”

To make matters worse, fracking companies now prefer bigger and more efficient trucks that can maintain high volumes of work at a lower cost, but Johnston can barely keep up with the equipment he has. Insurance alone will eat up 10 per cent of his revenue if he decides to eke out one more year in the field.

Like many Albertans, Santin senses the energy industry he grew up in is changing. The timeworn strategy of riding out the familiar cycles of commodity boom and bust don’t appear to be working because there may not be another boom for a very long while, if ever. This time really is different, he thinks.

Global Energy Perspective: Reference Case 2018. Dec. 2017. McKinsey.

“The economy is changing, it’s structural. I mean, we’re going to need oil. Where do we get our plastics from? But, say, for home consumption and commercial consumption, they’re going to try and use as many renewables as they can,” he says, a weary note in his voice.

Structural Change in the Global Energy Sector

The global energy system is changing. At the heart of those changes are new technologies that are transforming the ways in which we produce and consume energy.

At the risk of overly simplifying change of staggering scale and complexity, experts say there are two overarching trends at work: the long-term transition from fossil fuels to clean energy technologies that will take the better part of the 21st century to complete and the shorter-term adoption of digital technologies within the energy industry that are already enabling us to produce more energy with fewer workers.

The energy transition

Vaclav Smil is a Distinguished Professor Emeritus at the University of Manitoba, the foremost authority on energy transitions, and Bill Gates’ favourite author. He argues that modern society has been duped by Silicon Valley’s promise of Moore’s Law (in which computing power doubles every 18 months, an annual rate of 46 per cent) into thinking that technology change happens very quickly. In reality, it happens very slowly, particularly energy technologies, which evolve at about three per cent a year.

Prof. Vaclav Smil, University of Manitoba.

“Energy infrastructure is the world’s most elaborate and expensive, and the longevity and inertia of many large energy enterprises make it impossible for any large, complex national system (to say nothing of the global level) to reconfigure itself even in three or four decades,” he wrote in a 2015 Energi News op-ed.

Coal, oil, and natural gas currently supply 82 per cent of global energy requirements. Sometime between 2075 and 2100 that number will likely flip, with renewable energy powering our vehicles, heating and cooling our homes, lighting our office buildings, and driving our industrial plants, according to the International Energy Agency.

Public opinion polls show that most Canadians believe the global economy has begun an energy transition. In a Jan. 2017 national survey, Abacus Data found that 70 per cent want the country to “shift its energy use as quickly as possible to cleaner, lower-carbon sources of energy and away from fossil fuels,” though predictably energy-rich Alberta and Saskatchewan were most supportive of continued hydrocarbon consumption.

Source: Abacus Data.

The idea of an energy transition doesn’t sit well with many Albertans, who enjoy the highest per capita incomes in Canada thanks to the province’s prolific oil and gas resources. Some version of, “Just because you spell it with a capital E and a capital T doesn’t make it real,” can be found in many heated social media debates about Alberta and Canadian energy policy.

Fred Beach says the current energy transition is real, all right. The assistant director for energy and technology policy at The Energy Institute, University of Texas at Austin, points out that this one shares some characteristics with earlier shifts from one energy source to another, such as the shift from whale oil to petroleum in the 19th century.

“As petroleum became a replacement for whale oil, the whale oil industry didn’t agree there was going to be a change. They didn’t think they were going to go away and they kept accelerating their growth to where they actually ended up having a price crash in whale oil,” he said in an interview. “Just like the whale oil guys in the 1850s, the end is near, but the petroleum producers really don’t want to admit it yet.”

How near is the end of fossil fuels? Jessica Jewell is a research scholar in the energy program at the International Institute for Applied Systems Analysis in Vienna, Austria and a visiting associate professor in the field of energy transitions at the University of Bergen, Norway. She agrees with Smil that the current energy transition will take a very long time and points to Germany as an example.

Jessica Jewell, International Institute for Applied Systems Analysis in Vienna.

“Germany is really committed to its energy transition. It’s arguably the leader of climate policy, but it can’t phase out coal. One, because they invested in building new coal-fired power plants in the early 2000s. There’s a huge sunk cost in coal already,” she said in an interview.

“The second reason that they’re having trouble phasing out coal is that nuclear is being phased out at the same time.”

Like Smil, she says it’s very tempting to think the energy transition is going to happen quickly: “It is happening, but it’s happening at different speeds in different jurisdictions and a lot of it is probably going to take a lot longer than we expect if you look historically at how long transitions have taken.”

While the energy transition unfolds over the next 70 or 80 years, a variety of new technologies have already begun transforming the existing energy sector, with many interesting implications for energy workers.

New technologies affecting energy production

Not that long ago, public discussion of energy policy and strategy was fixated with “peak oil,” the idea that petroleum production would soon each its highest point, followed by “terminal decline” and rising prices as demand outstripped supply. Over the past 10 to 15 years, however, two technologies have been mostly responsible for the transition from an age of impending hydrocarbon scarcity to one of abundance: hydraulic fracturing, commonly called fracking, and horizontal drilling.

During fracking, fluid is pumped into a underground reservoir at high pressure to crack open fissures in the rock, which releases oil and natural gas to be pumped to the surface through wells drilled with a horizontal leg.

Prolific Permian Basin Reaches Second Production Peak in 2017, Eclipsing 1973 Levels by More Than 25 Million Barrels – IHS Markit.

Those advances ushered in the “shale revolution,” as the Americans like to call it, which transformed the United States from a waning oil and gas producer in 2005 to leader in global output by the end of 2017. West Texas’ Permian Basin, an old declining field by 2006, has become the  most prolific producer in the world thanks to fracking. From a low of approximately 900 million b/d in 2008, the Permian exceeded 2 million b/d last year and is projected by IHS MarkIt to pass 5 million b/d by 2022, an astonishing expansion.

And the US is only getting started, according to the International Energy Agency. “The US becomes the undisputed leader for oil and gas production for decades, which represents a major upheaval for international market dynamics,” IEA Executive Director Fatih Birol said in the agency’s latest annual energy outlook.

Canadian producers now recognize that in less than a decade the United States has gone from being our greatest customer to our greatest competitor.

While there may be a shortage of oil supply during the early 2020s because of the $400 billion cutback in global exploration during 2015 and 2016, the long-term trajectory sees consumption growing steadily to as much as 115 million b/d by 2040, boosted by rapid economic growth in Asia (primarily China and India), and no shortage of production to meet demand.

Upheaval in oil markets means a “lower for longer” price environment. In fact, executives like Royal Dutch Shell’s CEO Ben van Beurden are busy preparing for “lower for forever” prices in the range of $50 to $60. Canadian companies like Suncor Energy and Cenvous Energy have adopted this same worldview and are busy driving down costs wherever they can, determined to remain “cost-competitive” over the long haul.

Against the backdrop of a recovering market (aided in part by production cuts from OPEC and Russia that will be reversed in late 2018), the long-term prospect of abundant supply thanks in large measure to the Americans, and the imperative to be competitive in new markets Canadian companies are determined to tap as soon as possible, an old oilfield aphorism comes to mind: “at $100 oil engineers just worry about pumping as much as possible, at $30 oil they’re finally ready to listen to new ideas and new technologies.”

Unfortunately for Canadian oil and gas workers, many of those new ideas and technologies involve cutting labour costs.

Technology Trends Within the Oil and Gas Industry

“The good news is that Alberta oil and gas companies are figuring out how to prosper and thrive in a low-price environment. The bad news is that the strategies that are allowing them to do that involve using fewer people and creating fewer jobs,” says Gil McGowan, president of the Alberta Federation of Labour and co-chair of the Alberta Government’s Energy Diversification Advisory Committee.

Gil McGowan, president of the Alberta Federation of Labour.

“They’re doing that in part by introducing new technologies that allow them to process more with fewer people, but it’s also about process and organization. They’re finding new ways to squeeze out what managers call ‘efficiencies’ but for working people, it means fewer jobs.”

That bad news for oilfield workers isn’t exclusive to Alberta (or British Columbia and Saskatchewan). The pace of technological change in the global energy industry has accelerated far more than anyone anticipated, explains Ramanan Krishnamoorti, vice chancellor for research and technology transfer at the University of Houston.

Dr. Krishnamoorti has identified three macro technology trends (digitalization, big data/analytics, and automation) and two organizational trends (emergence of a global energy labour force, and the reluctance of younger workers to toil in the fossil fuels industry) that will increase labour productivity and lead to lower head counts in head offices and out in the field.

“I think this is a harbinger of what we’re going to see in many other fields. Energy is just the place where the cost structure was such that the winners cut costs faster than anybody else,” he said.

“That’s played out over the last five years and we see it playing out much more dramatically over the next 10 to 15 years in energy and beyond.”

Mark Salkeld, CEO of the Petroleum Services Association of Canada, points out that the Canadian industry is a little slower to adopt new technologies than other countries: “Some of this technology sounds like future think, maybe too much for the oil patch digest at this point in time.  We are famously known for taking our time to adopt and adapt but we do eventually.”

Carol Howes, vice president, communications and PetroLMI at ‎Energy Safety Canada.

Carol Howes of PetroLMI – an organization that tracks and measures labour trends in exploration and production, pipelines, the service sector, and oil sands production – says her data shows that adoption of new technologies is uneven across the Canadian industry.

“We found in our recent productivity study that should the whole industry adopt these technologies, that would have a much bigger than impact than currently because not everyone has adopted,” she said. The study pointed to a number of constraints that have slowed adoption, such as safety concerns, the need to update government policy and regulation, and a shortage of specialized skilled labour.

Big data/analytics

“Remote monitoring allows measurement of flow, pressure, temperature, power levels and other operating data to be monitored from well heads, metering points, down-hole gages, assessment wells, plants and facilities. It also allows for the remote control of operations including: flow control, steam injection, plunger lift pressure release, and a vast variety of other actions. This data is then integrated into data systems. The data is either acted upon automatically by the system based on a designed set of parameters and processes to optimize safe operation, or the data is provided to operators and supervisors for analysis, monitoring and action.” – PetroLMI, Sept. 2017 study, Labour Productivity in Canada’s Oil and Gas Industry.

Mark Salkeld, CEO, Petroleum Services Assoc. of Canada.

Salkeld says there is so much data coming from downhole and above ground sensors (e.g. Cenovus generates 5 to 10 million data points every 3 seconds from its operations) that global technology companies like IBM and General Electric are getting into the oil and gas services business to help producers harness all those ones and zeros.

“While they were pressuring up the well and running up the frack operation, frack pumpers used to have a person on each pump with a headset on talking to the control truck,” he said.

“Now, with AC motor drives and programmable logic controllers and Bluetooth communication – with all those applications, instead of 30 pumpers there are just two guys managing the pressures and being able to respond almost immediately to the data.”

Automation

“Companies have an increasingly vast amount of data available to improve and optimize operations. With machines learning and capturing how human experts process information and decision-making criteria, some tasks can be automated and or/performed more efficiently. This can also help improve human decision making.” – PetroLMI, Sept. 2017 study, Labour Productivity in Canada’s Oil and Gas Industry.

McGowan says the Alberta labour movement is very concerned about oil sands operators automating the gargantuan mining trucks and even SAGD (steam-assisted gravity drainage) fields.

Increased automation in the oil sands is troubling for us. On one hand, we recognize that oil companies have to compete and on an increasingly challenging economic landscape,” he said. “On the other hand, if there’s an ever-shrinking amount in it for Albertans in terms of royalties and jobs, it’s going to make it much more difficult for industry to justify, especially as concerns about the environment and climate change continue to be at the top of the agenda.”

Dr. Ramanan Krishnamoorti, University of Houston.

“Technologies are available today that allow to drill offshore with virtually no humans on the rig floor,” says Krishnamoorti.

“Everything can be done automatically and it can be done from control centres thousands of miles away in real-time for what is perhaps the most complicated, high-risk operation in offshore oil and gas,” he said.  “You’re simply taking the human element out of it, which allows us to bring the best expertise to do the drilling and to reduce the risk associated with a very complex job.”

Closer to home, Salkeld says robotic drilling rigs will be commonplace within 10 years: “The rigs are already technologically advanced, almost like an airplane cockpit and the driller is the pilot surrounded by touch screens and monitors, while the computer trips pipe and drills more efficiently than the human being.”

Global labour force

National boundaries no longer matter for international companies who are able to bring the most skilled people from around the world to build or operate their project, even if the workers or professionals never set foot in the country where the project is located

Photo: PetroLMI.

“One of the biggest changes of the past five to 10 years is the global nature of labour itself. We’re starting to see this in all aspects of upstream, downstream and midstream where having the talent in a particular geographical location is no longer the biggest driver for each of these companies to get the right people to do their work,” said Krishnamoorti.

“And this isn’t restricted to just the largest multi-national. We’re starting to see this happen across the board. Small EPC (engineering and procurement) companies are now global operations. We’re starting to see this similarly with midstream companies. They are no longer geographically forced to do anything with just the talent pool that might be available in, say Houston, Texas.”

What kind of jobs can be outsourced to other countries? Canadians may be surprised.

“In many of the energy companies we’re starting to see the number of lawyers dropping significantly because you’re starting to see law jobs outsourced to countries like India,” says Krishnamoori. “Human resources, economic modeling, back office operations, etc.”

Electrician Kyle Pilling is currently working on a project where the engineering was done in South Korea: “They do all the work over there, we have no problem using blueprints generated in another country,” he said.

Younger workers/older workers

“We still are not in a place where you can replace all of the human knowledge with just data scientists. You need people with deep disciplinary knowledge of petroleum engineering or chemical engineering or hydrocarbon engineering  to also have data analytics, cognitive computing,” says Krishnamoorti.

“That’s where the biggest challenges are today. It’s really being able to take that information, take the data and make it useful information, make it knowledge.”

Photo: PetroLIMI

Krishnamoorti worries that older workers are leaving the oil and gas industry without transferring their “deep disciplinary knowledge” to the younger, more digitally savvy employees. He says the latest downturn in the industry has been an eye-opener because companies have shed a lot of excess people that they couldn’t afford, but remaining workers are stretched to the limit and “there’s very little knowledge transfer that is happening within the industry.”

To make matters worse, younger workers are shunning fossil fuel industries, he says: “If the 20-year olds of today are not interested in learning things that are not in textbooks, that have largely come from experiential learning and are not captured into the digital transformation, then we have a challenge 40 years from now. Will we have the right workforce that can provide the solutions that we will so desperately need?”

Within the Canadian industry, older and younger workers have borne the brunt of job loss, while the 35 to 55 year old age group in the middle “has sustained itself a little better,” says Howes.

“Part of our job really is to explain to younger workers that there’s going to be opportunity going forward, in fact, some of these jobs will be more interesting from a technological point of view and from a skills point of view. But right now there’s certainly a concern that they’ve become quite discouraged by this downturn. We did a survey in the fall and certainly got that feedback.”

PetroLMI expects around 23,000 Baby Boomers will retire from the oil and gas sector over the next five years, assuming that historical trends continue. That trend will enable middle-aged and younger employees to fill the vacant positions.

“The majority of the retirements are expected where key knowledge or skills reside. Approximately 33% of these positions are operators (including drillers) and 25% are supervisors and managers,” according to PetroLMI’s labour productivity study.

“As well there will be a number of other key skill sets (such as engineers and trades) that are expected to retire and contribute to the industry’s knowledge loss, adversely affecting productivity.”

Impact on Alberta Energy Workers

To stay employed, oilfield workers have to be highly skilled and flexible, ready to work anywhere, the lifestyle and the rigorous technical requirements favouring younger workers like Kyle Pilling, a 30-year old journeyman electrician from Calgary. Like many Canadian tradesmen, he helped build the gigantic construction camps that dotted northern Alberta during the heyday of oil sands construction. That was followed by a stint at a northern Saskatchewan uranium mine, maintenance at an Edmonton area tank farm, and even a brief turn with a couple of partners in a solar installation business.

As fortunate as Pilling has been finding employment in Alberta, he doesn’t see foresee being an oilfield electrician for the long-term.

“I don’t think it’s a sustainable line of work. The Edmonton market, in particular, is flooded with individuals who are doing work for next to nothing,” he said, pointing out that there were six or seven thousand electricians working in Alberta at the height of the boom.

As part of the relentless drive to lower costs, employers are using unskilled labour in place of electricians, Pilling says, with just one journeyman on site to check their work and correct mistakes: “That company could’ve had eleven electricians working, but now has one with ten labourers working at $15 an hour, not $20-30, or depending on apprentice rates. The company cuts their cost, they can put out the product, they can do more competitive to bid, they keep the work.”

He also agrees with Dr. Krishnamoorti that digital technology is making workers more efficient: “We do our work on iPads now with laser scanning. We catalogue a job type with a bar code. Doing all my paperwork used to take me two hours to do a building. Because of the iPad, I can do two buildings in a single hour – or even three buildings depending on the size. It makes it much quicker and as a result you see that less demand for labour:

Energy Employment by the Numbers

The relative number of people employed in oil and gas and related sectors, compared to the total number of people employed across Alberta, with December 2012 as the baseline. Source: CBC graph/Statistics Canada Labour Force Survey data.

Alberta eyebrows were raised recently after a CBC story described how total provincial employment had recovered to pre-bust levels by the end of 2017, but resource industry jobs (oil and gas, mining, quarrying, forestry and fishing) lagged far behind, still down over 200,000.

What happened? Was the vaunted Alberta jobs machine broken? If it was, whose fault was it? Like most public debates these days, this one quickly settled along partisan fault lines.

The truth lie not in policy, but in a labour market imbalance created by the Alberta oil sands producers’ response to the downturn and the technology trends described above.

The Boom – 2008 to 2014

Direct employment in the Alberta Canadian oil and gas industry rebounded  after the economic downturn caused by the global financial crisis of 2008 and continued to create new jobs until 2014, reaching a peak of 225,000. The crash, however, had not affected all sectors equally, according to Claudine Vidallo, team lead, PetroLMI.

“During that whole 2008-09 downturn a lot of the services-related jobs were let go, but we actually didn’t see a lot of employment declines within the other three sub-sectors – exploration and production, oil sands and pipelines,” she said.

“In fact, the oil sands continued to experience labour shortages during that time but they were fortunately able to hire workers from other industries that were shedding workers, like forestry, for example.”

When growth really ramped up beginning in 2010, the service sector continued to have trouble finding enough workers, though the same was true of other parts of the oil and gas industry, too.

The Bust (and start of the recovery) – 2015 to Q2 2017

West Texas Intermediate reached a high of $107.95USD in July 2014 before crashing shortly after and plummeting below $50 by the end of the year, reaching a bottom near $27 in Feb. of 2016. As bad as those prices were for American producers, they were devastating for Canadian companies, which historically receive $10 to $15 less per barrel (the differential) because of lower quality and higher transportation costs.

Source: PetroLMI.

Total oil and gas employment was slow to follow prices, peaking at 224,820 in Q2 of 2014, then slowly dropping to 201,750 in Q4 2015, before bottoming out at 171,910 in Q2 2017.

But the aggregate numbers mask how hard the service sector was hit. Jobs reached their zenith at 108,120 by Q2 2014, but by Q1 of the next year they had dropped by almost 26,000, reaching their lowest point in Q2 2017 at 65,110. By comparison, exploration and production/oil sands actually added employees for all but one of the quarters between Q2 2014 and Q4 2015, before dropping quickly after and bottoming at 88,000 in Q4 2016, then adding 6,000 workers by the end of last year. Pipelines employment fared even better, beginning Q1 2014 at 5,400 and adding as many as 12,000 jobs at one point before finishing the period at 15,000.

When the bust began, oilfield services company learned from the previous downturn and tried to keep experienced technical and professional workers employed, focusing the layoffs on younger workers and those near retirement.

Claudine Vidallo, team lead, PetroLMI.

Vidallo adds that many companies had over-hired during the boom and the bust gave employers an opportunity to let go of lower productivity workers.

PetroLMI data shows that about 53,000 direct jobs were lost in the Canadian oil and gas sector, which doesn’t include other industries that supply products and services such as oilfield manufacturing, engineering firms, or construction.  

If indirect impacts are considered, according to Salkeld, it’s not hard to imagine hundreds of thousands of jobs lost across Canada.

The Recovery

By the end of July last year, there were just under 172,000 workers in the Canadian oil and gas sector. Those who kept their jobs during the bust probably had their wages reduced and benefits cut or eliminated altogether. “We scaled back wages by up to 30% in some cases. We cut bonuses, we cut benefits, we cut pension matching, we cut all these fringes to lower our cost because our customers were saying, ‘Get your cost down, get your cost down,’ sort of thing,” says Salkeld, speaking about the oilfield service sector.

By the end of the year, industry had added just over 10,000 new positions. Again, the numbers show that services had an outsized impact on hiring, just as it did on firing. Which, according to Salkeld, feels just like the beginning up every other oil and gas upturn.

Source: PetroLMI.

“It’s a typical recovery. Our members started to feel the pinch at the tail end of Q1 2017,” he said. “One of them lost a $15 million frack job because they couldn’t get the skilled people back to man another frack spread for the customer. Even with automation and the new technologies, we still need the people.”

In many ways, this isn’t a “typical recovery, according to Howes. She points out that companies are hesitant to rehire workers until oil prices further stabilize. Many are rebuilding balance sheets and paying down debt incurred during the bust.

Salkeld says the oil and gas producers have been doing the same thing for the past two or three quarters, fixing the financial damage that is always when prices go in the tank.

And just like other recoveries, they are reluctant to raise rates for the service companies until they absolutely have to.

“Our customers are only now, this winter, starting to give some of our members the rates back. And those are only those in in demand, like the pumpers or the drillers and some of the completion services,” he said. “Any of the water haulers or like the abundant supply of services in local towns of water trucks and vacuum trucks and welding shops and stuff like that. They’re not getting the rates back.”

Where this recovery differs from previous ones is that workers are not flocking back to the industry. Companies are having a hard time hiring in Alberta, for instance, because the economy has added jobs in other sectors and there are fewer unemployed. Provincial job numbers have returned to 2014 levels, lowering the provincial unemployment rate to 6.9 per cent in Dec., not close yet to the 5 per cent seen during the salad days of the last boom and still a full point over the Canadian rate, but the lowest since Oct. 2015.

Source: PetroLMI.

But like Matt Grzesiak and Mike Johnston, many oilfield service workers have left the industry or are reluctant to commit to a job that might last a year or two.

“I’ve talked to guys who were working construction and even as low paying as that might be, there’s still buildings being built and they need skilled labour and those guys are getting hired on,” says Salkeld.

“When we try to bring them back, they say, Well, you know what? I’ve got a five-year job in front of me that might make me not as much money as I was making in the oil patch but it’s steady and I’m home every night and it’s everything that I need at this point in time and you can’t guarantee me more than a winter’s work at this point so I’ll stick where I am.’”

PetroLMI estimates only one-third of workers will be re-hired over the next five years.

Conclusion

The Canadian oil and gas sector is finally recovering from the crash that began in late 2014, but the nascent recovery will be different this time around. The times have changed, technology has changed, and the industry itself has changed.

Many of the lost jobs are not coming back. As Carol Howes said during her interview, “2014 will probably be seen as the peak year of employment for the industry.”

Many of the jobs that remain, or the ones created over the next five to 10 years, will require different skill sets and expertise.

The Alberta oil sands – where all the production growth from now until 2030 will come from – is transforming from a hunter always looking for new sources of supply to a farmer trying to wring the most crop at the lowest cost from a given acreage of land.

Technology will play huge role in that process. Over the next three months Energi News will be reporting on other trends that affect the future of work in the Canadian oil patch, especially in Alberta, the epicentre of the industry.