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As the winter drilling season gears up, it’s still unknown whether service and supply companies will have enough skilled workers to staff rigs and frac crews, or complete construction projects and turnarounds.
Some 52,000 direct oil and gas workers lost their jobs between 2015 and 2016. Many of those workers moved beyond ‘survival jobs’ and are wary of returning to an unpredictably cyclical oil and gas industry.
“You’re seeing retiring workers and people who have been displaced for a while now starting to change their mind about returning to the industry,” says Claudine Vidallo, team lead at Petroleum Labour Market Information (PetroLMI), a division of Enform.
This past spring, oil and gas service companies involved in fracturing and completions reported difficulties in filling positions. Vidallo’s team learned some companies had equipment sitting idle because of the lack of skilled workers.
Although hiring levels have increased, service firms are still finding it difficult to fill jobs because experienced workers have lost trust in the energy sector’s long-term employment prospects.
To fill the gap, the Petroleum Services Association of Canada (PSAC) has launched a new service, PSAC Connect, to help companies recruit and retain employees while also informing the sector about employment trends. “We’ve been working all spring, summer and fall to hire,” says PSAC President Mark Salkeld.
PSAC Connect initiatives bring the service community together through an array of round table discussions and workshops with industry leaders, research and insights. The program is expected to help companies become known as leading employers, attracting, recruiting and retaining a strong workforce.
Salkeld, who entered the energy sector as a heavy-duty mechanic, says the increasing use of robotics, artificial intelligence and other yet-to-arrive technologies poses a greater need for workers with different skills.
“When I started on the rigs, if I had a hard hat and a heartbeat, I was hired,” he notes. “But now, [the industry] is beyond that. … You need talent, you need skill, so it’s not just [a matter of] hiring anybody off the street who’s looking for work.”
Educational institutions play a role in helping train the next generation of oilpatch worker, although student enrollment has dropped during the past two years due to the downturn.
“We are down about 25 percent from last year [in enrollment],” says Bruce Reinders, chair of the Petroleum Engineering Technology (PET) program at the Northern Alberta Institute of Technology (NAIT). Last year, he notes, the program had about 450 applicants for 80 available seats. “This is our second year in a row that we have seen a drop. Historically, we might have a drop from one year to the next, but then it would come back up again.”
However, there is a silver lining, Reinders adds: “We are dropping from a really, really high number and our applicants before were based on $100-per-barrel oil. And so everyone was looking to the program or the industry with a lot of uneducated optimism.
We had an unrealistically high number before and so it is just rightsizing itself now.”
Part of the reason for the drop in applicants for NAIT’s PET program is all the “bad press” the oil and gas industry has received lately, Reinders says.
“One thing we are seeing is that the people who do apply are the people who understand the industry and the ones who understand it know [oil and gas] is a big part of Alberta’s economy — it is a huge component — and there are still jobs available, but they are just not as plentiful as they were when oil was at $100 per barrel.”
Lynne Allan, dean of the MacPhail School of Energy at Southern Alberta Institute of Technology (SAIT), says that while the programs at her school cater to the overall energy sector, and not just oil and gas, the school nonetheless feels the impact when industry struggles.
“The good news is that our graduate employment rates are in-line with past years,” she says. “Depending on the certificate or diploma, we still see anywhere from the nearly 60 percent to nearly 90 percent graduate employment rate.”
According to Allan, employers remain satisfied with MacPhail School graduates. “They believe in the hands-on learning they receive at SAIT and know they will be well prepared for jobs in the energy sector. They know as SAIT graduates they will be able to hit the ground running and make a positive contribution to our economy from day one.”
More serious alarm bells are being rung by schools running apprentice programs.
Plunging enrolments mean there will be a serious shortage of skilled tradespeople going forward, says Malcolm Haines, dean of the School of Skilled Trades at NAIT, Canada’s largest training institution for skilled trades.
“I believe we will face a future crisis,” says Haines. “The numbers we’re seeing tell us it will come.”
As an example of the significant drop in enrolments, he says NAIT’s welding program has seen seats for new trainees drop to 800 this year from 2,100 two years ago.
He says the welding program is a leading indicator, since most large industrial projects require a core number of welders.
“We’ve had a softening of the numbers in all of the larger trades areas,” he says.
Falling enrolments at NAIT, not only the largest trades training institution in Alberta but throughout Canada, are an indication of trouble to come, Haines says.
PetroLMI’s Vidallo says the service sector is being proactive in areas regarding labour issues. It leads the pack in labour planning because it has the most boots on the ground, he says. But it’s these workers who are the first in line to get hurt by industry cycles.
PetroLMI recent labour supply report makes a number of recommendations to industry and government on how to remedy the situation. “It’s important not to be reactive,” Vidallo says. “Time and time again, we see that if you wait for the labour shortage to happen, companies may compete for workers with monetary incentives.”
Since cost escalation is part of the problem behind industry cycles, a combined industry / government approach is needed to better understand the structural shift in oil and gas and its impact on future occupations, identifying the skills that will be in most demand, and effectively communicating those to job seekers and young people deciding on a career.
Industry and government also need to assist unemployed workers shift away from specialized oil and gas occupations and skills that support capital projects and expansion activity in favour of skills that tie into sustaining capital and resource play development, the report suggests.
Industry should be prepared to invest more in career transition than it has in the past to retool workers for reemployment in the most productive and profitable oil and gas basins, Vidallo says.
“Skills in the older generation of workers may become outdated because of technological advances. But you want to retain the knowledge and skill of this segment of the workforce,” he says.
At the other end of the demographic scale, industry needs to attract younger workers. The message to this demographic could highlight the clean technology and regulatory compliance roles that are available in the industry. “It’s time to be proactive,” Vidallo says.
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