Varcoe: ‘Just transition’ rhetoric adds to oilpatch labour crunch

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Precision Drilling Corp. ended final 12 months on a excessive observe, asserting Thursday that drilling exercise elevated 27 % in the course of the ultimate three months of 2022 — and was nonetheless rising in January — whereas the corporate exceeded its personal debt compensation goal.

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Precision, one of many nation’s largest drillers, now employs 5,600 employees around the globe, up about 25 % from a 12 months in the past.

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Because it appears to rent folks wanted to drill and preserve wells, the corporate — together with the nation’s oilfield companies business — additionally faces a labor problem: federal discuss of “simply transition” laws to serving to oil and gasoline employees transfer to different sectors.

“The power transition is an enormous political headline. It is going to take a long time, not years, a long time,” Precision Drilling CEO Kevin Neveu mentioned in an interview.

“The tone of among the charismatic political leaders . . . doesn’t encourage new entrants into the workforce. So, we needed to fight this by aggressively advertising our Evergreen (environmental) merchandise, and the issues we do to be a part of the answer. However which means additional prices, additional sources.”

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Precision Drilling introduced Thursday that it has paid down $106 million in complete debt in 2022, surpassing its earlier goal for the 12 months of $75 million.

The corporate additionally indicated the winter drilling season is getting hotter. It now has 78 vessels working throughout Western Canada, eclipsing final 12 months’s peak of 72.

Neveu expects the corporate’s rig rely to achieve round 80 within the coming weeks and stresses that the business is targeted on a “disciplined restoration”, in contrast to among the previous increase cycles.

The oilfield companies business has regained its footing after an extended downturn final decade and a painful interval of layoffs. It has additionally been hit by the pandemic and a collapse in oil costs, which brought about petroleum producers to chop budgets practically three years in the past.

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Nonetheless, exercise ranges have returned over the previous 12 months as each oil and gasoline costs have declined.

Based on the Canadian Affiliation of Power Contractors (CAOEC), by mid-December the variety of rigs working in Canada was up about 35 % from a 12 months earlier.

The group predicts that greater than 6,400 oil and gasoline wells will probably be drilled this 12 months, a bump of 15 % from 2022, resulting in a further 5,400 jobs within the business.

“The large problem, and what’s actually going to ban further development past 15 %, is simply the staffing challenges,” CAOEC President Mark Scholz mentioned Thursday.

BMO Capital Markets analyst John Gibson ecount on petroleum producers to extend capital spending by about 10 % this 12 months above 2022 ranges, even with oil and gasoline costs which have not too long ago fallen.

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“Throughout COVID, folks had been apprehensive about all these firms going beneath, and now the outlook for all their stability sheets is extraordinarily robust, particularly as we get to the top of this 12 months,” he mentioned.

But one of many ongoing issues dealing with the business is discovering sufficient employees, as 1000’s of individuals have left the sector prior to now decade.

As of November, the oil and gasoline business employed about 188,500 Canadians, up 1.3 per cent — or 2,500 jobs — from the identical time a 12 months earlier, in accordance with the PetroLMI division of Power Security Canada.

Throughout the identical interval, the business’s complete workforce shrank by 1.5 %.

Whereas jobs can be found, potential staff are involved in regards to the business’s long-term future in an period of decarbonisation.

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Federal Pure Sources Minister Jonathan Wilkinson informed CBC this week that the Liberal authorities will transfer ahead with its deliberate simply transition laws early this 12 months, an effort designed to assist employees transfer to new jobs in a low-carbon economic system.

“I am really fairly apprehensive that there are such a lot of alternatives . . . we is not going to have sufficient employees to fill the positions,” Wilkinson informed CBC.

An power transition is happening, however it should take many, a few years for the shift to unfold. In the meantime, employees are actually wanted within the oil and gasoline sector.

“It would not assist if we preserve listening to ‘simply transition’ and it is robotically understood that we’re transferring away from oil and gasoline and there is not any work to be discovered, which isn’t the case,” says Gurpreet Lail , CEO of Enserva, previously referred to as the Petroleum Companies Affiliation of Canada.

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“The fact of the matter is that right now you want work in oil and gasoline to rework into another type of power, in any other case it is not going to occur.”

Scholz factors out {that a} transition is already taking place, with many employees who drill for oil or gasoline additionally utilizing their expertise in areas resembling geothermal, helium and lithium extraction.

And discussions about switching oil patch employees, together with different indicators being despatched by Ottawa about the way forward for the power sector, aren’t serving to, provincial leaders say.

“It isn’t their jurisdiction,” Alberta Power Minister Peter Guthrie mentioned in a press release.

“Once they say they’ve a ‘transition plan’ for our oil and gasoline employees, which means they’re basically saying, ‘We’ll section out your oil and gasoline business.’ That is unacceptable.”

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Neveu identified that the drilling business is making progress in lowering its emissions. The sector can doubtless meet federal targets with expertise that already exists right now, though it should require capital funding and time.

“In all probability each employee within the business right now may in all probability retire from this business in 20 or 30 years and end their profession right here – if we handle that and stability each the environmental points with the safety of power,” he added.

“This implies we’ve got to work tougher to fight these messages. It simply frustrates me that we’ve got an organization technique and firm sources and firm prices related to preventing federal authorities narratives. “

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com