Calgary’s Labour Market: What is the new reality?

Presentation by Carol HowesVP, Petroleum Labour Market Information Division of Enform

Petroleum Labour Market Information (PetroLMI) Division of Enform• PetroLMI merged with Enform in 2013; was former Petroleum Human Resources Council

• We are a leading resource for labour market information and insights in the Canadian petroleum industry

• Our labour market data, knowledge and expertise also assists Enform in further aligning its training and safety services with industry needs

• Enform’s Fort St. John office open since 2006; we work with industry, WorkSafeBC, BC Oil and Gas Commission, Northern Lights College

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Our LMI Expertise

Labour Market Outlooks: Longer-term employment and hiring projections using a proprietary, industry-validated modelling system for:

• Labour demand and supply projections for upstream and mid-stream sectors

• Key operating regions - BC, AB, SK, Rest of Canada (RoC)

• Petroleum industry sub-sectors: exploration and production (E&P), oil sands, oil and gas services, and pipeline transmission

HR Trends and Insights: Provide intelligence on current and short-term labour market conditions and HR trends within Canada’s oil and gas industry.

Occupational Profiling: Provide detailed information on occupations and career planning and mapping, including tools and resources

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Outlook by Sector• Oil Sands shift from period of significant expansion to phase focused on operational

efficiency and reliability.– Laid off significant amount of workers for the first time since 2003

• LNG Sector remains potential bright spot for the industry.– To be successful, Canada’s emerging LNG sector will need to be competitive in an

established global market. • Oil and Gas Services Sector has been hardest hit by the decline in oil prices.

– Lack of work combined with renegotiate price on the work that does exist – seems that there is little let to cut and E&P sector will have to look elsewhere for cost-savings

• E&P has not held onto workers during this downturn as they have done in the past.– Swift and widespread cost and job cuts in 2015 and more is expected.– Companies high-grading assets; selling non-core assets and cutting capital further –

jobs going with the assets and capital cuts• Pipelines have restructured and laid off employees as major infrastructure projects, and

therefore market diversification, remain elusive.

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PetroLMI Fall 2015 Survey

• In October 2015, PetroLMI surveyed 156 companies about their current workforce challenges and recruitment strategies

• 36 companies representing 63,000 to 83,000 responded to the survey

• Companies represented were from different oil and gas and related sectors across Canada

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Survey Results

• 57% of respondents are currently decreasing their workforce

Is your company currently increasing, decreasing or maintaining its current workforce?

N:33

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Survey Results

• 44% of respondents say that 11-25% of their staff have been affected by the current economic environment

• Almost 40% of companies are reducing staff by more than 25%

What percentage of employees were affected?

N:33

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Survey Results

• Half of the respondents expect further lay-offs and/or projects cuts in the next six months.

Response Chart Percentage CountYes 50% 15No 30% 9Don't know 20% 6

Total Responses 30

Do you expect any more lay-offs and/or project cuts in the next six months if a similar economic environment persists?

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• While only 17% of respondents said worker productivity was decreasing (n:30), 26% said company productivity was decreasing (n:31)

Survey ResultsHow are your worker and company productivity levels being impacted by the current business/economic environment?

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Survey Results

Top three occupations at risk:

• Engineers• Accounting/Finance• Heavy Equipment Operators

Response Chart Percentage CountYes 50% 16No 34% 11Don't know 16% 5

Total Responses 32

Are your staff who are eligible to retire actually retiring?

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Outlook for 2016 – 2020

• 2016 – Expected to be more of the same as 2015– More focus on productivity and profitability improvements through cost-cutting,

process improvements and organizational efficiencies.

• 2017 - 2020

– Relatively small number of jobs created in oil sands as late stage projects near completion.

– Age-related attrition likely to increase hiring requirements.• Loss of experienced workers may also have a negative impact on productivity.

– Attracting workers into the industry while containing costs may be challenging.– LNG a potential industry bright spot but not a certainty.

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Oil Sands Labour Demand Outlook to 2020

• Oil sands sector employs significant number of construction, operations and maintenance workers from across Canada.

• Sector has been hardly hit by decline in oil prices since November 2014.

• Oil Sands companies have cancelled projects, reduced their workforce and shifted focus to cutting costs and finding operational efficiencies.

Transition into Maintenance Phase

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• Oil Sands sector is moving from a growth and expansion phase into a phase focused on improving the reliability and performance of existing operations.

• Significant number of workers will be required, though at a lower rate than previously projected, as companies continue to place priority on maintaining operations efficiencies while reducing costs.

• Cost management is a critical factor for companies in deciding a maintenance workforce strategy.

• The need to maintain existing operations will drive ongoing and turnaround maintenance employment demand.

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Top 10 Oil Sands Operations Occupations with Greatest Net Hiring Requirements

Top 10 OS Occupations

Heavy Equipment Operators (except crane) (7521)

Power engineers and power systems operators (steam-ticket required) (9241)

Heavy-duty equipment mechanics (7312)

Facility operation and maintenance managers (0714)

Drilling coordinators/production managers (0811)Industrial electricians (7242)

Industrial Electricians (7242)

Engineering Managers (0211)

Millwrights (7311)

Petroleum, gas, chemical process operator (9232)

Instrumentation Technicians (2243)

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LNG Labour Demand Outlook to 2020• Development of LNG will require a significant construction labour force.

• LNG export sector will have the greatest long-term impact on BC’s upstream and midstream employment.

• Hiring for LNG likely to begin in advance of operations to ensure staff are properly trained and available for start-up activities.

• LNG sector will increase the demand for skilled trades involved in ongoing and turnaround maintenance.

• Considerable occupational similarities across LNG value chain: construction, maintenance and operations.

Transferability of OccupationsThere are many occupational similarities across the LNG-related value chain. Investment in occupations that support short-term development of the sector as well as longer-term sustainability will likely produce greatest returns.

Occupations Pipeline Construction

Facility Construction

Ongoing & Turnaround

MaintenanceE&P Petroleum

ServicesNatural Gas Processing

Pipeline Operations

Boilermakers ✔ ✔CarpentersCrane and hoisting equipment

✔ ✔ ✔

Electricians ✔ ✔ ✔ ✔ ✔ ✔ ✔Insulators ✔ ✔ ✔Ironworkers ✔ ✔ ✔Labourers

Millwrights ✔ ✔ ✔ ✔ ✔ ✔ ✔Process operators ✔ ✔ ✔ ✔ ✔Pipefitters ✔ ✔ ✔Purchasing agents and officers

✔ ✔ ✔ ✔ ✔ ✔ ✔

Shippers and receivers ✔ ✔ ✔ ✔ ✔ ✔

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Transferability of OccupationsOccupations by NOC

Pipeline Construction

Facility Construction

Ongoing & Turnaround

MaintenanceE&P Petroleum

ServicesNatural Gas Processing

Pipeline Operations

Civil engineers (2131) ✔ ✔ ✔ ✔ ✔Mechanical engineers (2132) ✔ ✔ ✔ ✔ ✔ ✔Electrical and electronics engineers (2133)

✔ ✔ ✔ ✔

Chemical engineers (2134) ✔ ✔ ✔Drafting technologists and technicians (2253)

✔ ✔ ✔ ✔

Land survey technologists and technicians (2254)

✔ ✔ ✔

Non-destructive testers and inspection technicians (2261)

✔ ✔ ✔ ✔

Inspectors in public and EH&S (2263)

✔ ✔ ✔ ✔ ✔ ✔ ✔

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Preparing for “Lower for Longer”• Low prices to last longer than previous downward cycles

• Potential challenges of attracting workers into the industry after economy picks up.

• Loss of skills and expertise through retirements.

• Companies need strategies beyond short-term cost cutting tactics to endure the “lower price for longer” environment and to maintain a competitive advantage when prices recover.

• Inability to implement and invest in strategies and actions that improve efficiency and productivity will negatively impact profitability.

• Talent management and acquisition strategies will need to align with overall business model of cost management

Continuum of Strategic Response to a Prolonged Economic Downturn

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Economic Conditions

Low and/or declining commodity prices in a high-cost environment.

Continued low prices with some improvement in cost environment.

Profitability improves but long-term cost containment is required to maintain competitive advantage.

Company Actions and Impact

Cost reduction and preservation of cash is priority, resulting in:

• Deferral, delay and cancelation of projects

• Selling of non-core assets; unused equipment and materials

• Cancelation or renegotiation of service and supplier contracts

• Rollback of all discretionary spending

Implementation of low cost-high value improvements to reset cost structure such as:

• Consolidation of job functions and roles

• Streamline processes to accelerate efficiencies

• Data analysis to improve evidence-based decision-making and identify opportunities to drive efficiencies

Investment in more expensive innovation/technology to drive cost reducing efficiencies and address key technical and business challenges. Innovation and technology likely to focus on:

Increasing the automation of some operations functions

Gathering of data to support decision-making across job functions.

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Continuum of Strategic Response to a Prolonged Economic Downturn

Economic Conditions

Low and/or declining commodity prices in a high-cost environment.

Continued low prices with some improvement in cost environment.

Profitability improves but long-term cost containment is required to maintain competitive advantage.

Impact on Workforce

• Contractor layoffs• Employee layoffs• Wage freezes and cuts• Reduction of benefits,

bonuses and other “perks” • Increase use of job

sharing, unpaid leaves etc. to preserve jobs

• Fewer workers required to do same work

• Valued characteristics:- Adaptability- Technology savvy- Business acumen; understand

cost implications associated with actions

• Demand for predictive and preventative maintenance workers

• Selected hiring for key positions

• Fewer of some types of workers may be required

• Shift in requirements drive training and development

• More tech-savy and highly skilled and knowledgeable workers needed

• May drive increased use of contracted expertise until company builds own capacity

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Upstream Technology is Driving Changes to Midstream and Downstream Activities ….

10 years ago ….SeismicExploration & ProductionWellsite constructionDrilling & CompletionsWell servicingGathering linesAbandonment and remediation

Natural gas processingUpgradingStorageMainline pipelines

RefineriesPetrochemical plantsNatural gas utilitiesGas stations

Today ….SeismicExploration & ProductionWellsite constructionDrilling & CompletionsWell servicingGathering linesAbandonment and remediation

Natural gas processingUpgradingStorageMainline pipelinesNatural Gas Liquids FacilitiesRail and Truck TerminalsWater and waste treatment

RefineriesPetrochemical plantsNatural gas utilitiesGas stationsLNG processing facilitiesLNG fueling stations

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Oil and Gas Industry Priorities

The following three industry priorities likely to drive change in workforce requirements:

• Accessing technically complex unconventional reserves

• Balancing performance and cost management to achieve profitability

• Achieving market diversification to grow the business

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An Oil and Gas Worker Needs to…

• Be comfortable with technology• Have business acumen• Be innovative• Be able to negotiate successfully• Strive for continuous improvement• Be highly skilled at reading, numeracy,

communication and problem solving• Plan and execute projects of all sizes• Be aware of the regulatory and compliance

implications of projects

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Occupational Information and Tools

The Tool

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