After years of being a magnet for job seekers, Canada’s oilpatch is turning into a bit of a no-go place — and that’s making a recovery harder.
Drilling and equipment providers are finding it a tough sell to lure workers back to Alberta’s gravel roads and remote camps, where temperatures can drop below minus 40 degrees, after massive job cuts in the past years left lasting bad memories. Many who had moved there returned to their home provinces and found jobs in construction, mining, fishing or forestry.
As producers seek to shift back to growth gear, the labour shortage adds another headwind to an industry challenged by high costs and middling crude prices. While an OPEC-driven market improvement from last year’s doldrums means oil-service providers are in high demand again, they now have less sway to attract drivers to haul equipment and crews to man fracking rigs.
“We’re firing up more rigs, we’re firing up more frack spreads, and we need more crews and more equipment, but those extra people aren’t coming back,” said Mark Salkeld, president of the Petroleum Services Association of Canada.
The company is aiming to hire 200 people by the end of the summer, but expects to miss that target, he said. Once the new workers are hired, they’ll require at least two months of training before they’re turned loose in the field.
“We can’t really get them all as quick as we want,” Dusterhoft said in an interview. “So it probably delays our growth a little.”
While the industry is no longer in a position to offer the kind of salaries paid when oil sold for more than $100 a barrel, there’s more to workers’ reluctance than just money. Some who were fired during the downturn took jobs in other sectors that may pay less, but feel safer, said Garnet Amundson, CEO of Essential Energy Services Ltd.
“When we went to try and bring some of those folks back, the most common question we got was, ‘Do you have steady work? If I come back, how do I know I’m not going to be laid off in three or six months again?’” Amundson said.
Essential, which rents tools and provides coil tubing services, ran only about a third of its pumps and rigs through the first quarter and left some revenue on the table, Amundson said, without quantifying how much. The company hopes to expand to 500 employees by the end of the year, up from about 340 as of March 2016, he said.
Canadian service firms aren’t the only ones having problems staffing up. Independent U.S. producers underspent their first-quarter budgets by as much as $2.5 billion collectively, largely because they couldn’t find enough fracking crews to complete all the wells they planned to drill, according to Infill Thinking LLC, a research and consulting firm.
The nature of the work itself is also keeping wage earners away from Alberta. Jobs require long hours on the road or weeks away from home in remote locations of a sparsely populated province that’s bigger than France, with winter temperatures close to Siberia’s.
While that lifestyle appeals to some, it discourages those who have families, said Janet Lane, director of the Human Capital Centre at the Canada West Foundation, a public policy think tank.
“It’s very well-paying, but it’s very hard work,” Lane said. “The isolation, the lack of connection can be very hard on people.”
Until those slots get filled, the oil and gas producers that hire companies like Essential Energy Services and Trican may have to pay more to secure crews. Seven Generations Energy Ltd., a gas producer operating in Alberta’s Montney formation, paid about 10 percent to 15 percent more for pressure-pumping services in the first quarter, compared with the fourth.
Chief Operating Officer Marty Proctor noted the higher rates account for less than 2 percent of Seven Generations’ well costs and won’t throw off the company’s budget. The company also may have a leg up in securing services because it stayed active during the downturn, providing its suppliers with work while rivals cut back, and it pays its bills on time, he said. Still, the drive to increase production won’t be without hiccups.
“OPEC agreeing to control supply was a little unexpected, and as a result, we hadn’t all prepared for the resultant increase in commodities prices and therefore the extra demand for supplies and services,” Proctor said.
Service companies are working to adjust. Essential Energy has found success with a referral program, while Trican is stressing the opportunities for new hires to turn their jobs into lifelong careers.
The best cure would be a sustained recovery in oil prices that would allow companies to pay the premium wages that attracted workers before the bust, said Canada West’s Lane. But that may be a little too much to wish for.
05.24.2017
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