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Canada's Oil Patch Bracing for “Retirement Tsunami”

Canada's Oil Patch Bracing for “Retirement Tsunami”

How many hipsters can you cram onto an oil rig? It might be fun to watch them try, but the correct answer is probably zero. Why? Because bearded, environmentally-conscious men in their 20s no longer consider “roughneck” to be a viable summer job, let alone a gateway into a petroleum engineering career. Truth is, most would rather swill coffee at Starbucks than work in an industry many in their generation blames for ruining the planet.

But as the so-called “millennials” eschew Big Oil in favor of more politically-correct professions, the Canadian oil and gas industry is finding its baby boomers retiring, without young people to replace them. The result? The industry is bracing for vast shortages of labor and skills, just as the need for oilfield jobs is gathering speed.

Forget “peak oil.” In Canada, they're talking about peak retirement.

That's according to a recent report from consulting group Mercer LLC, which found that 81 percent of Canadian oil and gas companies consider “technical skills gap” to be a problem for their businesses. The issue is not enough technical workers – welders, pipe fitters, boilermakers, heavy equipment operators, etc. – to replace retiring oil patch employees. In Canada the average age of a welder is 56.

“It’s the great crew change – the aging workforce and the retirement tsunami that's coming,” said Graham Dodd, one of the principals at Mercer who was quoted recently by The Financial Post.

The situation isn't any better in the boardroom. According to Mercer, 55 percent of companies surveyed said that they had trouble filling management and leadership positions. More troubling is the fact that most companies do not seem to have any solutions to the problem. According to Mercer, of the 56 percent of companies that said they have a workforce-planning process to identify gaps, only 27 percent said their process provided solutions to close gaps.

Instead, many companies are resorting to poaching employees from their competitors. The survey showed that Canadian oil companies filled 70 percent of new jobs by stealing workers from the competition, compared to 66 percent by oil companies in other parts of the world, according to numbers from Mercer reported by the FP. Only 10 percent of new recruits came from colleges and universities.

Related Article: ‘Green’ Oil Refinery Planned For Canada’s Pacific Coast

The problem isn't restricted to Canada, either. The Mercer survey says that while the global oil and gas industry will add over 530,000 positions over the next five years and 1.1 million over the next decade, over half of the world's largest petroleum-producing countries will not have an adequate supply of talent to fill those jobs.

So what happened, to leave oil and gas companies so unprepared to replace crucial human resources? Since the early 1980s, the industry has seen a wave of consolidations that not only produced a group of new major oil companies, but also massive layoffs.

BP's acquisition of Amoco in 1998 and Arco in 2000, combined with Exxon's purchase of Mobil in 1999, eliminated almost 24,000 jobs. All told, mergers and acquisitions that took place during the 1990s resulted in the disappearance of roughly a million oil and gas positions, according to a report by Deloitte titled “The Talent Crisis in Upstream Oil & Gas.”

As employment declined, so did enrolment in petroleum engineering and geosciences programs, and while enrolments in U.S. schools have ramped up recently due to the shale oil and gas boom, in Canada new graduates are not likely to be enough to fill the growing labor demands.

A May report by the Petroleum HR Council showed the oil sands and related construction sector will need to hire an additional 25,000 workers over the next decade, and in British Columbia, the provincial government has set an aggressive timetable to build up to five LNG plants by 2021. An analysis by Grant Thornton, an accounting firm, estimated that an LNG industry in B.C. could create over 100,000 jobs – assuming the industry ever gets off the ground.

European countries do a better job of integrating training, labor and industry to produce the results demanded by the market. If governments in Canada can learn from that model, and oil and gas companies get on board, the industry could make significant progress in closing skills and labor gaps.

And why wouldn’t they? If companies want to remain productive and profitable, they really don’t have a choice.

By Andrew Topf of Oilprice.com

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  • adanac on June 30 2014 said:
    I doubt anyone is as fed up, as I am? I keep hearing of the shortage of labor in this country. This is an out and out blatant lie.

    My son is an, Electronic Engineering Technologist, Bachelor of Science degree, Electronic Engineer. He was laid off, his resource along with others. He has been sending out hundreds and hundreds of resumes, for seven months. He was short listed several times. The best candidate for a multitude of jobs. He called one company he was short listed with and they had 4,000 applications, for *ONE* job. Shortage of labor my @$$.

    Foreign resource workers have, free transportation, housed and fed in camps. They send their money home, that money isn't even spent in Canada. Their cost of living in their countries, is a fraction of Canada's cost of living. One province in China, the minimum wage is $236 per month. What does $236 pay for in this country? Canada has the highest cost of living, in all of the America's.

    Canadians don't have the perks foreigners do. We have to live on, what we earn. We don't have free transportation nor, are we housed nor fed. We have to pay our way at the job site which costs a fortune and pay for the family and home, you have had to leave behind. How can anyone move their family closer to their job site and buy a $300,000 to $600,000 house on $18.00 or $25,00 per hour? Tomorrow, you may have no job, a foreigner may be given your job. Corporations also make sure the rotations are as crappy as they can make them, so workers don't have enough time to go home. So, then you see? They can't fill those jobs so, we must bring over more, cheap foreign labor.

    After a time with non-stop bs. I began tracking job postings. When the job posts time out? The same jobs are posted, over and over again. So again we see? Those jobs can't be filled so, over comes the foreigners AGAIN. As Harper has more and more foreigners trained, to work in the oil patch and mines? More and more Canadians will be laid off.

    When there are 4,000 applications for one job, there is no shortage of labor. Canadians are being discriminated and lied to, by both Harper and Kenny. If we can see the crap going on, so can Harper and Kenny.
  • CalgaryNW on June 30 2014 said:
    Who writes this stuff? The same organic material keeps being recycled. I an a well-qualified boomer whose job disappeared, and I would like to help out for 3-5 years, but I cannot even get a nibble. The HR departments are Millenials who want to hire their too-cool friends rather than foggie boomers. Oh well, keep paying into the CPP pool, I just wish I cold be of assistance.

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