Calgary-based Imperial Oil announced last week that it is laying off 200 staff, just a day after the ExxonMobil subsidiary agreed to hand over business management of the mammoth Syncrude Canada tar sands/oil sands mine and upgrader to project partner Suncor Energy.
“The oilsands, refining, and energy retailing company, which has been reluctant to cut staff during the current and previous industry downturns, also confirmed Wednesday it has reduced the number of contractors it employs by about 450 since the start of the year,” The Canadian Press reports. “Imperial is 69.6% owned by U.S. [fossil] energy giant ExxonMobil Corp., which said in October it would cut its global work force by about 15%, equating to about 14,000 jobs.”
Imperial spokesperson Lisa Schmidt said Imperial couldn’t yet say where the job axe would fall. “There has been study work under way globally to assess the potential for further cost reductions from structural efficiencies and lower activity levels across our business,” she told CP in an email. “This work includes an evaluation of work force requirements around the world on a country-by-country basis, including in Canada. Imperial has been engaged on this work with ExxonMobil.”
A day earlier, Suncor and Imperial announced the end of a 14-year contract that had Imperial seconding staff to the Syncrude operation. The process is expected to be complete by the end of next year.
“There will be layoffs,” said Suncor President and CEO Mark Little. “It’s a heartache when we have a downsizing related to this,” and “we’re still just in the process now of starting to work out the details associated with it. But there’s thousands of people that work for Syncrude and most of them are operating the facilities—and all that is unchanged. It’s really the administrative side.”
Little said he expected to save C$300 million per year by consolidating Syncrude and Suncor operations in procurement, IT, and human resources.
“We’ll put those teams together and it’ll be stronger,” he said.
The Globe and Mail casts the takeover, the first major change in Syncrude’s governance in 50 years, as the end of a process that began in 2009 when Suncor acquired a 12% stake in the operation. That increased to 49% in 2016, when Suncor bought out Canadian Natural Resources Ltd.’s share for $6.6 billion. A couple of months later, Suncor purchased another 5% from a U.S. fossil.
“The owners have worked for a couple of years to try and figure out how we make Syncrude the most globally competitive business that it could possibly be, and the conclusion is to have Suncor operate it,” Little told the Globe.
“We can’t continue to duplicate work. We need to find better ways to move forward,” he added. “We need to be able to figure out how to generate more cash from these businesses, and working together and taking this step makes a lot of sense.”