Posted on 03/18/2015 5:30:12 AM PDT by thackney
This time a year ago, the oil industry's biggest problem was finding a way to deal with the “retirement tsunami” about to crash down on it as older oilfield workers hung up their cork boots to enjoy freedom-55. Now, with oil prices still in the doldrums, many of those same workers are lucky to be hanging onto their jobs, while others have been booted from the payroll as an ugly wave of layoffs takes hold.
One of the worst-affected areas is the Canadian oil sands, where a higher per-barrel cost of production than conventional sources has oil companies scrambling to cut capital expenditures and in several cases, put long-term projects on ice.
On Thursday one of the region's big players, Husky Energy, announced that about 1,000 construction workers employed by a contractor at its Sunrise oilsands project, would be issued pink slips. The bad news for the workers came a day after Husky said that it had started to produce from the $3.2 billion, steam-assisted gravity drainage (SAGD) Sunrise operation, which it co-owns with BP.
The layoffs by Husky followed Suncor's decision in January to cut 1,000 employees and Royal Dutch's Shell's announcement that it will shed close to 10 percent of the workforce at its Albian sands project – around 300 workers.
The Canadian Association of Oilwell Drilling Contractors, which closely tracks drilling activity, said in February that up to 23,000 jobs could be lost as the number of rigs fall. Since the price started dropping last September, about 13,000 positions in the Alberta natural resources sector, mostly oil and gas, have been eliminated, according to Statistics Canada.
The bloodletting among the oil majors and their vast web of ancillary services has of course extended to the United States – which appears to be taking far more casualties than Saudi Arabia in the battle for marketshare. In January oilfield services giant Baker Hughes said it will lay off 7,000 employees, about 11 percent of its workforce; that number was rivalled only by its competitor, Schlumberger, which let go 9,000 workers. Shell, Apache, Pemex and Halliburton are among major oil companies to issue recent pink slips to the growing army of unemployed oil workers. In the U.S., the worst pain is, not shockingly, expected to be felt in Houston. Assuming a one-third reduction in oil company capital expenditures this year and 5 percent in 2016, the hydrocarbon capital of the world could lose 75,000 jobs, in a city that has added 100,000 new positions every year since 2011, said a professor at the University of Houston.
The oil jobs nightmare is in fact spreading like a cancer. According to Swift Worldwide Resources, “the number of energy jobs cut globally has climbed well above 100,000 as once-bustling oil hubs in Scotland, Australia and Brazil, among other countries, empty out,” Bloomberg reported recently. Examples include foreign-trained engineers whose promise of employment at LNG plants in Australia have evaporated as projects get delayed; development projects halted in Brazil resulting in the closure of international schools and the relocation of workers; and 8,000 Mexican workers left without paycheques after Petroleos Mexicanos slashed contracts and purchases, Bloomberg said.
Of course, industry defenders say the oil and gas business is boom and bust by nature, and most veteran oilmen have gone through many a cyclical downturn and lived to fight another day. The question of whether or when the oil price will recover and all those laid-off workers are rehired is best left to the prognosticators. In the meantime, there is a danger in oil companies cutting too deep, according to oil and gas industry recruiters. They say firms that lay off too many workers will put pressure on older workers who may opt for early retirement. That could leave companies in the same situation as the 1980s, when an oil downturn meant few businesses hired and new graduates went into other more promising fields, leaving a serious talent gap.
“They will be very careful about reducing staff, because they’ve seen cycles like this before where commodity prices are weak for a certain period time, they lay off employees and they’re not well-positioned to get access to high-quality talent,” said Mike Rowe, vice president of exploration and production research at Tudor Pickering Holt, an energy investment and merchant bank, in a story run by CNBC on how the layoffs could come back to haunt the industry.
Anyone who ‘retired’ from a government job at age 55 should be forced to work for obamacare for free
The good news is, under Barry and his new ‘RAT party, every time a big layoff occurs, the unemployment rate drops. Whadda country!
I would even vote ‘no’ ONLY for her extremely professional NON-ANSWER to every question.
She is a master of political double-talk.
Trying to work with her in the future with the same kind of perpetual stalling would be a nightmare
Welcome to the real world.
You can report all over the place that the economy is booming, but if energy usage is way down, well, I guess one can make of it what they will.
Energy usage is not way down.
Energy demand continues to climb, globally and in the US.
On the oil side, the supply was growing faster than the demand and did so for a year and predicted to continue for another year.
SHORT-TERM ENERGY OUTLOOK
Global Petroleum and Other Liquids
World Liquid Fuels Production and Consumption Balance
http://www.eia.gov/forecasts/steo/report/global_oil.cfm
Not to worry. They have thousands of illegal immigrants inound to take those jobs who will also get free food, housing, healthcare and an education on your tax dollars while they pay none or claim 15 dependents and get back huge tax returns
If the Iran sanctions are lifted the supply will grow more.
By “down” I mean relatively speaking. Since the world population tends to grow exponentially, one would expect energy demand to do the same. but it’s not.
BTW, I went from a 5 minute walk to my desk from home in Seattle to an 80 mile drive from my home to my desk in Louisville, My demand is WAY up and my savings with these prices is HUGE. ;-)
Add the increase in US production of oil and the US section for 2014 of the World liquid fuels consumption graph in the article and it may explain our gasoline pricing right now.
Under threat of prison or death.
This is a loss of skilled jobs, not an openning of unskilled jobs.
US numbers are already included in the world numbers.
Yes, it is truly amazing, under the present method of accounting if everyone who is employed were to quit work and everyone refused to look for work the unemployment rate would be ZERO! On the other hand if everyone who is looking for work were to be hired on a government job unemployment would be officially ZERO, even though we would be much worse off. Of course if everyone who is now looking found a part time job working eight hours a week at minimum wage unemployment would still be ZERO! There are three kinds of liars, “Liars, damned liars and statistics.”
US numbers are already included in the world numbers.
The new normal? - No. Fundamental Transformation? - YES.
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