Labour shortages in Canada’s oil and gas industry could curb its ability to quickly step in to fill a gap in supply left in the wake of U.S. sanctions against Russia, industry insiders say.
The sector has been struggling with a lack of workers since last year, when rebounding oil prices first spurred an uptick in drilling activity in the Canadian oilpatch.
By last fall, the number of direct and indirect jobs in the oil and gas services sector was up 130 per cent year-over-year — an increase of more than 20,000 jobs — while the unemployment rate in the sector had fallen from 17.7 per cent in September 2020 to 3.7 per cent, according to industry statistics.
But that was before Russia invaded Ukraine last month, sending oil prices soaring and leading U.S. President Joe Biden to ban Russian oil imports.
The world is now hungry for energy, and the U.S. specifically is facing a shortfall of approximately 700,000 barrels of oil per day.
While Canada’s industry has some ability to increase exports in the short-term — estimates vary between 200,000 to 400,000 additional barrels per day — it can’t turn on a dime, said Mark Scholz, president and chief executive of the Canadian Association of Energy Contractors (CAOEC).
“Even if there was a signal from our customers that they were going to put more money into the ground to take advantage of high prices, there’s no guarantee that we would even be able to supply the market with available rigs, based on the labour situation,” Scholz said.
Years of sustained low prices have led to significant “under-investment” in Canadian oil and gas, Scholz added, and now the industry is under-equipped to respond to soaring global demand.
“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.”
This report by The Canadian Press was first published March 11, 2022.
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