- The Energy Mix - https://www.theenergymix.com -

Labour Shortages Choke Canadian Oil Production as Prices Soar

As oil and gas prices continue to skyrocket in the wake of Russia’s invasion of Ukraine, Canadian fossil companies’ hopes for a lucrative 2022 are being undercut by labour shortages.

Back in November, the industry forecast some 6,457 wells to be drilled this year, up 27%, from last year, reported OilPrice.com. The acceleration would bring another 7,280 workers into Canada’s oil patch, according to the Canadian Association of Energy Contractors (CAOEC) drilling forecast.  

At the time, CAOEC CEO Mark Scholz told BNN Bloomberg that “the best is yet to come in Canada’s [fossil] energy sector”—pending resolution of a very big labour problem.

Confirming that many oil workers had decamped, Scholz said he foresaw “labour constraints” as the “biggest risk in our forecast.” He added: “The big unknown is, are we going to find all the people to staff 2,010 rigs in the first quarter?”

Five months later, as prices spike well over $120 per barrel, and post-pandemic global consumption soars, that “big unknown” is haunting the industry.

CBC News writes that many oil and gas service operations in Alberta are operating at 60% capacity, despite trying to lure workers (back) into the oil fields with promises of more flexible hours and better work-life balance.

They have their work cut out for them, with two-thirds of Canadian oil and gas workers saying they want to retrain in the renewables sector, according to a mid-summer survey by Iron & Earth. Their decision to switch is driven in part by a desire for financial stability that’s alien to the boom-or-bust oil sector—at least for the rank-and-file who service the rigs. It has always been another story for Big Oil brass and shareholders.

Sami Hayek, CEO of Edmonton-based Pitbull Energy Services, told CBC that while labour shortages have been “an ongoing issue,” it has “never been this bad” to find truck drivers. 

CAOEC CEO Scholz told the Canadian Press that labour shortages will limit Canada’s ability to step up and fill the 700,000-barrel-per-day shortfall being experienced by the United States after President Joe Biden’s ban on Russian oil imports.

He estimated that an export increase of 400,000 barrels per day to the U.S. would be the maximum possible over the short term.

Scholz said the Canadian oil sector is ill-prepared to respond to global demand because of its failure to invest in Canada during years of rock-bottom prices.

“We’ve seen a lot of money leave the industry, and when you see that much money leave an industry, there’s going to be consequences,” he said. “It’s impacted our ability to attract people into the industry, to grow as an industry.”

The oil and gas sector needs to get better at attracting and retaining workers, especially underrepresented communities like Indigenous people and immigrants, said Gurpreet Lail, president of the Petroleum Services Association of Canada. She claimed it was politics—with details that actually pointed to the realities of the global climate emergency—that led to workers, especially younger ones, staying away in droves.

“The downturn absolutely affected our ability to attract people to the sector,” said Lail. “But what actually took us over the tipping point was the rhetoric coming from our own federal government that said this industry is a dying industry. We need to start changing the narrative a little bit so that young graduates understand oil and gas is here to stay.”