Alberta’s tar sands/oil sands have shifted decisively into a “mature” phase of development in which job creation and capital spending will continue to lag and new technologies will replace a large share of the work force laid off due to “lower-for-longer” oil prices between 2014 and 2016, according to a new analysis this week by the Edmonton-based Parkland Institute.

The report has the province’s bitumen production increasing 41%, or 1.68% per year, between 2018 and 2040—a sharp contrast from the managed decline that will be needed to stabilize Canada’s greenhouse gas emissions, but still a far cry from growth of 376%, or 8.6% per year, between 2000 and 2018. But the rest of the industry’s story is written in its job and investment numbers since the oil price crash began.

“Peak employment for the Canadian oil and gas industry in the last decade came in 2014,” writes Parkland Research Manager Ian Hussey, in an online summary of the full report. “Industry employment then decreased significantly for three years, increased slightly in 2018, and then further declined in 2019. The net result is the Canadian oil and gas industry terminated an estimated 53,119 jobs from 2014 through 2019.”

Over that same period, “capital spending (CapEx) in the Canadian conventional oil industry saw an estimated decrease of 58.2% from 2014 through 2019, and oil sands CapEx experienced an estimated decrease of 64.6%,” he adds. “Oil sands operational spending (OpEx) experienced an estimated decrease of 15.7% from 2014 through 2019, while OpEx in the Canadian conventional oil industry was estimated to be 4.1% higher in 2019 compared to 2014.”

And with the only likely new tar sands/oil sands development, Teck Resources’ proposed Frontier mine, now off the table, “oil sands CapEx is not expected to bounce back to boom-time levels and is forecast to further decline in the next decade. This is because the massive CapEx of the growth phase of the oil sands industry is over.”

But cancelled projects are not the only cause of the job losses sweeping the industry and the province. Hussey lists four new technology developments that are reducing tar sands/oil sands companies’ work force requirements: driverless trucks, horizontal multi-well drill pads, information technologies that provide less labour-intensive supervisory control, data acquisition, remote monitoring, and analytics, and smaller, modular project designs.

“Besides the thousands of job terminations connected to the 2014 oil price crash and to industry consolidation since then, and the decrease in construction jobs connected to the more than 50% cut in capital spending, labour productivity gains in the oil sands and in the Canadian conventional oil and gas sectors are being driven by technological innovations and modularization,” he writes. “In short, ‘smarter’ capital spending through the development and use of various technological and modularization innovations means less engineering, construction, and operations jobs. Despite the growth in production, fewer and fewer employees are needed,” meaning that “the jobs that have been lost in recent years are likely not coming back.”

The analysis includes details on each of the Big Five tar sands/oil sands companies’ production, reserves, capital spending, and other economic performance, as well as their climate risk disclosures and risk monitoring.

“There is no indication from any of the Big Five that they believe that any of their current assets will be stranded during the global transition to a low-carbon economy,” Hussey notes, even though they “routinely test their business decisions against various possible future scenarios and how the effects of climate change and climate policies and regulations may affect their assets and business strategies in the coming decades.” 

That leaves it to the Alberta and federal governments to “decide on a course of action to manage our country’s transition to a net-zero-emissions economy by 2050,” he concludes. “Plans that take the global climate crisis seriously will necessarily involve the managed decline of oil and gas production in the next three decades.”