N.L. oil industry avoiding Alberta-style job losses
Petroleum association says job losses can be measured in the dozens, not thousands
Newfoundland and Labrador's oil industry is cutting costs and deferring some capital spending, but has avoided Alberta-style cuts that have resulted in thousands of job losses.
A recent report estimated some 35,000 Alberta oilsands jobs have disappeared in the last year. That's from a directed workforce estimated at nearly 150,000 in 2014.
The axe has not come down quite so hard on oil jobs in this province, where an estimated 10,000 people work directly in the industry.
"We're talking in the 100 range as opposed to tens of thousands of [job losses] in Western Canada," said Paul Barnes of the Canadian Association of Petroleum Producers.
Why has Newfoundland and Labrador's industry been largely spared?
Barnes and others say there are glaring differences between the provinces.
Alberta's oilsands projects are labour intensive, and when oil prices began tanking in 2014, companies started deferring or cancelling projects, and dramatically reining in spending.
While companies in Newfoundland and Labrador are in cost-containment mode, construction continues at a feverish pace on the massive Hebron Project, and the three producing offshore fields continue to pump oil.
The one glaring exception is the proposed White Rose extension project. Husky Energy announced late in 2014 that it was delaying a decision on the project for one year because of plummeting oil prices.
But while profits are obviously way down, companies have not seen fit to slash jobs, largely because a stable workforce is needed to operate, maintain and service the offshore.
"We haven't seen that type of construction slowdown in Newfoundland on projects that were already begun," said Sean Power, board chair of Newfoundland and Labrador's offshore oil and gas industry association (NOIA).
"As well, in Newfoundland we have producing fields and that hasn't changed. Those fields are still continuing to produce and the exploration activity has not decreased. In fact, over the next year or so it will probably increase."
Oil companies often make a point of saying they look far into the future when planning projects, and are obviously counting on a rebound in prices.
A trickle-down effect
But as companies trim costs, it has a trickle-down effect on the local supply and service sector.
Power said oil companies and suppliers are becoming more innovative to ensure the business carries on, but in a way that's smarter and cheaper.
That's also having an impact on sectors such as the hospitality industry.
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When times are good, money from the oil industry and its spinoffs flow freely into businesses such as restaurants and drinking establishments.
But there have been some notable signs lately of a slowdown, including the closure of several high-profile restaurants in downtown St. John's.
Bob Arniel, the owner of Chef to Go, said oil companies once accounted for 10 per cent of his business. But that activity has dried up.
"In recent years we've been doing a lot of team-building sessions with the oil companies. Cooking classes with the employees and with the managers and all that. Probably we would do two a week, and now in the fall we don't have any booked. So they're cutting back on that kind of thing, for sure," said Arniel.
More cuts likely
Meanwhile, Barnes said there are no guarantees that things have bottomed out.
"We will see some more cost-containment measures, likely some more layoffs throughout the country if the low oil price continues.
"No one can really say for sure how low the price will go or whether it will come back any time soon. So the speculation is we may see some more cuts."
As for Arniel, he's trying to stay upbeat.
He's offsetting the loss of oil company business by offering more cooking classes, and believes this downturn will reverse.
There's still lots of oil out there, so once the price goes back up, I guess things will be back to business as usual, hopefully," he said.
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