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Oil prices may have been leveling off recently, but don’t tell that to TransCanada Corp, a pipeline company which this week laid off 185 people from its Major Projects department.
In an e-mail on June 23, TransCanada spokesman Mark Cooper said, “This morning 185 workers within the major projects department were advised that their positions have been eliminated. This includes approximately 100 full-time employees who have been advised that their positions have been eliminated.” The rest, he said, were contractors with the pipeline company.
Cooper said they layoffs were “designed to ensure we move forward with our $46 billion [US$37 billion] capital growth plan in a way that meets the needs of our customers, while allowing TransCanada to remain competitive and deliver incremental value for our shareholders” – in other words, to save money because of the deep decline in the price of oil for the past year.
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The spokesman said TransCanada, the second-largest Canadian energy pipeline company, has more than 6,000 full-time staff working around North America, but couldn’t say how many of them were working in the Calgary offices of the Major Projects department. Some of the dismissals affected department employees outside the city.
The Major Projects department is in charge of developing TransCanada’s largest ventures, including the proposed Keystone XL pipeline, which would move Canadian oil sands to the U.S. coast along the Gulf of Mexico, and the C$12 billion Energy East Line, to move crude from Alberta to refineries in eastern Canada and an export facility on the country’s Atlantic coast.
But Cooper's e-mail stressed that the layoffs weren’t related to any specific project.
“We need to provide the lowest cost services to our customers, many of whom have been deeply affected by the current environment, and we are taking a thoughtful and deliberate approach to determining how we can make our company even stronger and ensure we are positioned for success as we move forward,” Cooper wrote.
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Because of the drop in energy prices, the Canadian Association of Petroleum Producers says it expects industry spending to decline by more than US$20 billion this year.
As a result, more than 20,000 people have been laid off. And the Canadian Association of Oilwell Drilling Contractors says it lowered its forecast for drilling production in Alberta, indicating that even more dismissals are in store.
Canada’s oil industry has been hurt further because its status as the leading exporter of oil to the United States is being eroded by the shale boom south of the border, which is reducing U.S. reliance on Canadian oil.
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TransCanada wasn’t the only Canadian energy company to announce layoffs this week. The oil and gas producer Encana Corp. of Calgary said June 23 that it anticipated some reductions in its workforce, but it said the layoffs would not be the result of lower energy prices but to conform with the company’s restructuring.
Jay Averill, a spokesman for Encana, said he couldn’t put a specific number on the impending layoffs, but said it would be “nothing near” the scope of dismissals required by a previous restructuring in late 2013, when the company shifted its focus from gas to oil and reduced staff by about one-quarter. He said the company was making the current changes “regardless of the commodity price.”
By Andy Tully Of Oilprice.com
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Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com