Posted May 24, 2018 08:53:29 The energy crisis gripping Canada’s energy sector has been in full swing since last summer, when the world’s largest oil company began drilling for oil in deep waters off the coast of B.C. in what would become the largest offshore drilling project in North America.
The price of oil has plunged more than 60 per cent since the summer, but the sector has also experienced a spike in demand.
And now, as Canada’s oilsands production increases and prices plummet, a new wave of industry layoffs has hit the industry.
In the aftermath of the last major downturn, the energy sector faced a glut of work, as new pipelines, steam turbines and liquefied natural gas plants were built to satisfy the burgeoning demand.
But as the sector’s supply chain began to crumble in response to soaring oil prices, a wave of layoffs and a shortage of skilled workers forced the sector to re-evaluate its business models and focus on other areas, including other forms of energy production.
Now, with the current downturn in oil prices and the impending return of the global economic cycle, many industry analysts are predicting that the sector will find itself in a period of slow growth for years to come.
“We will be in an economic downturn for a long time, maybe not forever, because we have been so focused on oil,” said Doug Porter, a senior analyst at CIBC World Markets.
“The price will continue to fall and that will force us to focus on our other activities.”
Industry insiders say that as the price of the commodity goes up, demand will go down and that the industry will have to find new ways to meet the increased demand.
“The downturn will force a reassessment of our business model and how we plan to provide for the long term growth of our industry,” said Steve Williams, a managing director with Energy East Partners, a Calgary-based energy consultant and investor.
But there is still a lot of uncertainty about the industry’s future, and as the downturn intensifies, many business leaders are also questioning the viability of their companies, and their ability to retain workers and continue to operate.
“I think the uncertainty that is out there about what’s going to happen in the energy market is really damaging to the entire industry,” Williams said.
“It’s going be difficult to keep people in their jobs.”
In some cases, there are already signs that this uncertainty is having an impact on the industry: With oil prices down to $25 per barrel, energy firms are already facing pressure to cut back on staff, and some are even planning to shut down.
The industry also faces a shortage in qualified workers.
“Right now, we have more than 2,000 people working in our industry who are looking for work,” said Porter.
“If you have a job that is available, there’s no shortage of people who are willing to do that.”
“The industry will continue in its decline for a while, maybe until the end of time,” he added.
In this video, Doug Porter explains why the oil and natural gas industry can’t keep its workforce at the current level of 2,200 people.
(CBC News)Some are also worried that the downturn could impact on future economic growth, which could lead to a dip in overall employment.
“That’s a really big concern,” said Williams.
“When you’re in the midst of this economic recession, it really does hit you hard.”
“We don’t have the ability to have enough people,” said Brian Hoey, a manager at a Calgary firm.
“You’re talking about a lot more people looking for a job than you’re seeing today.”
Even with these challenges, industry executives say that they remain confident about the future of the industry and that they are prepared for any eventuality.
“What we’re seeing now is a really strong market.
It’s not like this is the end.
We’re going to have a lot going on for a couple more years,” said Hoe, who added that he would still love to see oil prices rise even higher than they are right now.”
We’re not just here for the oil, we’re here to help create jobs,” he said.”
It’s not the end, we’ve got the oil to make things right.”