Thanks to technological advances and modular facilities, leading oilsands companies are increasing bitumen production while cutting the numbers of people they employ and spending less money, says a new Corporate Mapping Project report published this morning by the Parkland Institute.
More than 34,000 oil and gas workers in Alberta have lost their jobs since the 2014 oil price crash, and there’s very little evidence to indicate those jobs are ever coming back, said Ian Hussey, author of The Future of Alberta’s Oil Sands Industry: More Production, Less Capital, Fewer Jobs.
“Oilsands capital spending is forecast to further decline in the next decade,” Hussey said. “The massive capital spending of the growth phase of the oil sands industry is over.”
“That and recent trends in extractive technologies and facility design cast further doubt on oil sands employment increasing significantly in the future,” he continued.
The report argues the oilsands industry has shifted from a growth phase that began in 2000 and petered out in 2018, to a mature phase that began last year. “Bitumen production grew 376 per cent from 2000 through 2018,” the report says. “The Canadian Energy Regulator predicts bitumen production will grow 1.41 million barrels per day by 2040, or 41 per cent over 2018 levels.”
But between September 2014 and January 2020, the industry cut 34,572 jobs. Meanwhile, oilsands capital spending saw an estimated decrease of 64.6 per cent. “The massive capital spending of the growth phase of the oil sands industry is over,” Hussey said.
At the same time, the same industry that is cutting expenditures and jobs is also the fastest-growing source of carbon emissions in Canada, he said.
“Given the urgent need for science-based emissions reductions, Albertans have to ask if it’s worth it to continue betting on the cost-cutting and job-cutting oil sands industry, or if now is the time to position our province to more fully benefit from the ongoing global energy transition,” Hussey concluded.
The Parkland Institute is a non-partisan public policy research institute in the Faculty of Arts at the University of Alberta. The Corporate Mapping Project is a six-year research and public engagement initiative jointly led by the University of Victoria, the Canadian Centre for Policy Alternatives B.C. and Saskatchewan Offices, and the Parkland Institute. The research was supported by the Social Sciences and Humanities Council of Canada.
And there’s the rub: capital spending and job creation on the Tarsands is in a perceptious decline no matter what Kenney claims. Campaigning and winning over high school drop outs with pick up trucks has pushed Kenney into defending a reality that no longer exists.
Of course Kenney is talking environmental reclamation projects because the O&G industry has polluted Alberta so badly, cleaning up the mess is now the growth industry. While it maybe the only way Kenney will be able to get any financial support from PMJT, after the months of insults, tantrums, and meathead stunts, will Trudeau even respect Kenney and his sudden change of heart? I suspect that Trudeau would prefer to talk to Doug Ford rather than Ken-Doh.
While Doug Ford isn’t the sharpest knife in the drawer, he was prudent enough to stay away from Andrew Scheer’s train wreck of a campaign, knowing that Trudeau and the Liberals would come out on top.
Canadians wisely kicked the CONs to the curb twice; Alberta not so bright.
For more than ten years Alberta’s oil industry has worked at increasing export capacity through increased pipeline capacity. There are pipelines now under construction but the delay led to many multi national oil companies(7 that I can think of) divesting their oil sands assets.
It depends on your outlook how you will react to this report. What I see is this. Critics say that oil sands oil is too expensive to produce. Companies in the oil sands have responded by increasing efficiency and producing 70% more oil per employee, one reason why less people are employed but this has lowered the cost of production per barrel to a more competitive level. Most investment now is in SAGD instead of open pit mines. Requires less capital and has a lower cost of production. So what I see is an industry that has responded to its critics. It has lowered cost of production and lowered the amount of GHG’s produced per barrel all while still being able to slowly expand and increase oil production. If your a politician after reading this report you will realize that less new jobs will come from the oil sands than you had hoped.
A few months ago, Bloomberg News reported that oil would have to drop to US $9 to $10 per barrel for gasoline cars to be competitive with electric cars. For diesel they reported that oil would have to sink to $17 to $19 a barrel. So, it looks pretty clear there will be few, if any, new tar plants created in Alberta.
Since the tar and oil and gas are owned by the citizens of Alberta and are not renewable like farm land or natural areas, it is time to tax the existing plants at Norwegian rates and use the money to clean up the mess they left across Alberta and in the Boreal.
With a little prudence an Alberta government that is not run and populated by oil company apologists could even save a bit for the future and plan for a renewable low carbon future.
The report is not surprising. A lot of the jobs were in the construction phases for the oil sands projects, so if things go slower in the future, this will likely result in fewer jobs. Also like many other industries, conventional drilling and the oil sands are using more technology, so the same activity or level of production can be conducted with fewer workers.
While the report does not address this directly, this ultimately leads to an interesting political question. A lot of the political support in Alberta and elsewhere for the oil industry is because they were seen to create a number of relatively well paying jobs, both directly and indirectly. If that changes, I wonder if the political support for the industry may diminish somewhat.
Mar 11 2020 — Andrew Coyne — Globe and Mail
“The sudden collapse of world oil prices has focused much attention on the province of Alberta and its finances. Rather less attention has attached to Newfoundland and Labrador. Sliding toward bankruptcy even before the current crisis, the province may soon be hurtling over the proverbial fiscal cliff. Alberta’s net debt as of last year stood…..”
https://www.theglobeandmail.com/opinion/article-canadas-biggest-fiscal-crisis-isnt-in-alberta-its-in-a-province/
The article is behind paywall, so people won’t be able to read the whole thing unless they paid. But Andrew Coyne is mentioning Newfoundland and Labrador as being in far bigger conundrum than Alberta. I would have to agree…..
There is only ONE way through this mess now. I don’t know that the mentally-challenged troll playing the Premier and his cabinet of slobbering idiots have the capacity to understand this but the PM does. As does other leaders around the globe who have been hit hard with the reality of this pandemic.
That way is through spending. Spending! Lots of spending! Billions of dollars of spending!
First, the very first is spending lots of time & money on information collection and dissemination. This is completely contrary to Kenney’s policy. Without this first step, there is not a snowballs chance of anything but infection and death.
Second, bread and circuses. But mostly bread. Hungry people are not interested in entertainment.
This means jobs; lots and lots of jobs.
In Alberta, 2 areas need massive financial support; reclamation and infrastructure.
The need for oilfield reclamation is such that every single petro-worker, whether young or old, whether still in school or years of experience, can go to work on this oilfield reclamation project today and stay with it until they retire. The need is massive, unimaginably so.
How it gets paid for is another story. But the Kenney gov’t can start with 10,000 workers and a few billion dollars.
The infrastructure in this province has never been rationalized. Klien handed out construction contracts on the basis of buying votes so of course, there never was any needs assessment nor any quality control follow-up. Since the end of the last spike in oil prices, maintenance costs are easily and always cut from budgets under pressure.
Project management has never been a respectable profession in this province; project funds and completion requirements are always political considerations. Often the politician doing the considering has no training and never in their life had a budget greater than 6 figures.
All in, the infrastructure in this province is in dismal shape, as evidenced by the hiways all across the province. Not just roadways either, flood and waterways infrastructure, provincial facilities (hospital, school & staff buildings), utility delivery and discharge and of course, recreation facilities. Now is the time to stop dismantling these provincial resources and to start to maintain them and build them up.
How this gets paid for is as obvious as it’s proven; borrow the cash to build up your assets. A few billion dollars today will not only have the immediate benefits required for this crisis but long term benefits for the Albertans of the future.
This is it. The money will get spent. Only question is, on what?
Can Kenney pull his head out and do what a responsible leader must do? I really doubt it!
Whatever you do, don’t tell Kenney. He’s likely to invest our pension money in typewriter repair, or betamax technologies.
Maybe Alberta should diversify it’s economy by expanding the bible college industry.
The report fails to call the companies on the numbers games they are playing to make their GHG intensity seem lower.
The report tactfully describes the essence of bitumen industry discretion: keep the prospect of profit, but get rid of workers at the same time—in other words, separate the prospect from jobs so workers don’t get their hopes up and industry won’t suffer a run on its teetering value.
The recommendation for “science-based emissions reduction” isn’t all that confessional; after all, even emissions-reduction based on Biblical canon would be as welcome in this context of retreat-in-good-order.
The twenty-year growth rate forecast for bitumen production is less than one-eighth the rate of the previous two decades, but I dare say even that significantly sweetened percentage way of putting growth is a castle founded on much the same sand as bitumen is extracted from.
Doubtlessly the industry has factored into its forecasts the public subsidies, tax and royalty breaks it would like to keep—that is, the largess susceptible to unpredictable policy shifts in a potentially changing democratic climate. Suggesting that the provincial government should reconsider social services cost-cutting reaction to the downturn in bituminoid prospects is a silky way of saying maybe the government should instead take care of the 35,000 workers who’ve lost their jobs due to the downturn and won’t likely be getting them back as industry does a bit of cost-cutting of its own by way of automation and other job-killing efficiencies. Certainly industry wouldn’t want these orphaned bitumen miners and smelters, or their families who depend on them, to take out their penurious fury on the service-slashing, belt-tightening UCP, layer of all those golden-egg subsidies, tax and royalty breaks, in any kind of concerted democratic way. In this circumstance, industry appears to prefer the previous NDP government’s policy of maintaining social services during economic bad times—that is, when they are especially needed.
We understand why industry has to say these things as tactfully, discretely and sweetly as it can: it doesn’t want the government which lays it so many golden eggs to cook its own goose by inflicting additional pain on laid-off bitumen workers who might then question why needed public services are being cut while corporations are given handsome tax breaks. Industry is thus compelled to justify those subsidies Alberta taxpayers so generously grant: its production forecasts have to be put in rosier terms than a measured retreat from a dying paradigm by forecasting merely a reduced growth rate instead of real production decline which might incite panic or even a wholesale change of partisan diapers.
But as gentle as this report tries to be, there’s barely any sugar-coating to the statement that “Albertans have to ask themselves if it’s worth it to continue betting on cost-cutting and job-cutting oil [sic] sands industry…” and, further, to ask themselves if a governing party which almost completely denies an energy transition is real and underway by global necessity is the right one to position the province to “more fully benefit” from the shift.
While Canada and the rest of the world are working hard at battling the corona virus Jason Kenney goes on T.V. from the Calgary airport crying how hard the oil and gas companies have it in Alberta and wants the Feds to kick in money to them. Does Kenney think he will get any pity from the rest of Canada or anyone else in the world. This is what Albertan’s voted for, the worst Premier in Alberta’s history.