Retraining oil and gas workers sounds like an easy solution, but the reality is incredibly complex
It was on Monday, Oct. 21 — Election Day — that Jeff (not his real name) got his layoff notice from Husky Energy Inc., the Calgary-based oil and gas company. The coincidence of the timing wasn’t lost on him.
“I had voted Conservative literally hours before I was informed I would lose my job … because I knew a Conservative government would help our oil and gas sector and get that damn pipeline built,” he said.
The election results — a minority victory for a Liberal Party that has long been viewed by many in the West as not supportive of the oil and gas industry — only added to Jeff’s feeling of hopelessness that day. He is in his late 40s and had worked at Husky in their head office for a little more than 20 years, primarily in an administrative role, although he said he gained significant technical know-how about the sector over the years.
“I kind of knew this was coming, because everyone around us has been losing jobs over the past five years,” he said. “I just didn’t think it would be me, right on that very day.”
Canada’s oilpatch has been struggling since oil prices bottomed out in late 2014, so its troubles are not exactly a new development. Roughly 50,000 jobs have been lost over the past five years, and an estimated 7,600 positions are at risk of being lost in 2019, according to Petroleum Labour Market Information, a division of Energy Safety Canada. The unemployment rate among young men in Alberta is now at a whopping 19.9 per cent, up almost four percentage points from a month ago.
Policymakers have been scrambling to keep up with the traditional energy industry’s downturn and quell a brewing sense of resentment and hopelessness in the Western provinces. On the election trail, the rhetoric of “retraining oil and gas workers” to transition to jobs in renewable energy or cleantech was frequently touted as a solution, but the reality of that transition is incredibly complex, and involves far more than just retraining.
For starters, renewables and cleantech are not growing at a pace that can absorb the hundreds of jobs that the oilpatch is shedding monthly. There is also the question of skill sets, since working as a reservoir engineer does not exactly qualify someone to scoop up a job on a solar farm, simply because of how technically different those industries are. Salaries in the oilpatch — even in an administrative position like Jeff’s — are also comparably high, a disincentive for many to seek work outside the industry.
“The jobs are not returning,” said Cheryl Knight, the former chief executive of PetroLMI who is now an independent consultant researching labour trends in the Canadian energy sector. “So the answer to the question of how to help underemployed and unemployed oil and gas workers is individual in some ways. It depends on how motivated the person is, how much training is required, and how much time it takes to get there. It is not as simple as saying, ‘We’ll just retrain people.’”
The jobs are not returning
Knight has spent nearly three years researching what kinds of jobs are being lost in the oilpatch and what sectors could potentially absorb the newly unemployed. They include, but are not confined to, petrochemical manufacturing, cleantech and power generation from both renewable and non-renewable sources such as wind and solar energy.
Rooftop solar programs created roughly 4,300 private-sector jobs, contributing $850 million to provincial GDP, between April 2017 and March 2019, according to data from the provincial agency Energy Efficiency Alberta.
Over time, the solar industry could have the capacity to create up to 10,000 jobs, said David Kelly, chief executive of SkyFire Energy Inc., one of the largest solar providers to residential and commercial buildings in Alberta.
“I just hired six people over the last three weeks,” Kelly said. “There are many ongoing jobs in electrical and maintenance work. Just about every electrician I have hired has done work in oil and gas.”
Such news might seem promising, but resource economist Sven Anders, a professor at the University of Alberta, cautions it is unlikely that the renewable energy sector alone will be able to generate the number of jobs needed to absorb job losses in the long run.
“Take wind, for instance,” he said. “There is going to be a lot of employment for the period in which the wind farm is being built. But once that construction has been completed, you basically just need a handful of engineers for maintenance.”
Knight’s research shows that tradesmen coming from oil and gas have highly transferable skills and employment opportunities in wind and solar, but project managers and design engineers are more likely to require renewable energy experience.
Kelly said that perhaps 30 per cent of his workforce comes from oil and gas, but most of them are electricians because they have the most transferable set of skills between both industries.
Adam Yereniuk, director of operations at Kuby Renewable Energy Ltd., another solar company in Alberta, said it has been difficult to find the right employees, especially those who have the technical know-how to work in solar.
“We try to hire out of NAIT and SAIT, because we know those graduates have specific knowledge,” he said, referring to the Northern Alberta Institute of Technology and the Southern Alberta Institute of Technology, two popular polytechnics that offer specific programs tailored toward retraining oil and gas workers.
But complicating the hiring process is that wages in the solar and wind sectors are simply not as high as in oil and gas.
“We don’t really hire directly from oil and gas, because we just cannot compete with the wages that sector pays. I can’t pay as much as Suncor,” Yereniuk said.
Case in point, Oksana Treacy, a project manager at SkyFire who formerly worked at Encana Corp., had to invest in pursuing a master’s degree in sustainable energy at the University of Calgary, in addition to taking a pay cut, before she could enter the solar industry.
“I was laid off right at the beginning of 2015, and I looked for a job unsuccessfully for about a year,” she said. “I leveraged all my contacts in oil and gas, but not a single person was hiring.”
Treacy said she felt her oil and gas experience was not taken seriously when she tried to apply to renewable companies.
“There was just so much competition,” she said. “I was lucky that I had been making good money and I could afford to retrain myself.”
Bruce Wilson, a former engineer at Royal Dutch Shell PLC., who currently works as a consultant for Iron and Earth, a B.C.-based organization that helps transition oil and gas workers into the renewable energy sector, believes that the potential of renewables is being severely understated.
For one thing, he said, clean energy costs are continuing to fall. He points to a research study conducted by the Rocky Mountain Institute that shows how wind, solar and energy technologies have improved and dropped “precipitously” in price, so much so that clean-energy portfolios comprised of these technologies are currently cost-competitive with new natural gas power plants, and provide the same reliable service.
“If we make a conscious decision to power our world, our industry and our homes with renewable energy sources, we could create that demand for jobs,” Wilson said.
But in the meantime, that leaves thousands of people without jobs. PetroLMI data show the bulk of the job losses in the oil and gas sector over the past five years have come from those involved in exploration and production, and oil and gas services. In other words, the engineers, geologists and business and project management staff that help find new oilfields.
There was a sharp increase in jobs related to pipeline services in late 2017 and early 2018, because of the number of pipeline projects ramping up back then. The former NDP government in Alberta forecast that the expansion of the Trans Mountain pipeline could bring the region an additional 15,000 jobs.
But Knight notes that these jobs will be unsustainable in the long run if they don’t directly involve the de-carbonization of the oil and gas sector.
The re-elected Liberal federal government has pledged to turn Canada into a carbon-neutral nation by 2050, in line with international climate goals. Whether or not that will materialize, most climate experts agree that meeting even part of that goal will require a monumental shift in Canada’s fossil fuel industry that sees it either transitioning into renewables or making massive investments in emissions-reduction technology such as carbon storage.
Energy companies in Alberta and Saskatchewan have started focusing heavily on investing in clean technology innovations such as carbon offsets, methane emissions reductions and environmental regulation compliance, all potential sources of new employment for those already in the sector.
Clean technology ventures related to the oil and gas sector accounted for $615 million in GDP and generated more than 4,500 jobs in 2018, according to Calgary Economic Development.
“Many of the services and occupations required to implement cleantech already work in oil and gas, and they pay well,” Knight said.
For example, chemical, mechanical or environmental engineers, as well as welders and electricians should be able to seek direct employment in any kind of venture related to reducing methane-emissions.
But these jobs are focused on innovations designed to reduce emissions, not eliminate them altogether, and are ultimately still in the oil and gas industry.
“We can’t have it both ways,” Wilson said. “You can fix the problem of jobs with five bucks now or 10 bucks later. We will ultimately need to transition out of the oil and gas industry altogether.”
To be sure, there are also startups sprouting up in Calgary dedicated to non-oil and gas cleantech solutions, such as using hydrogen as a low carbon fuel, particularly for heating, transporting energy and lower-emission vehicles. But in the short term, these startups do not generate nearly enough jobs to compensate for those lost in the oilpatch.
My uncle, my brothers, we all work in oil and gas. We’ve done this forever
Jeff, former Husky Energy employee
“Cleantech employers are small employers and they operate completely differently in terms of how they hire and who they hire,” Knight said. “There are a lot of word-of-mouth introductions that happen and those who don’t have existing networks in cleantech do not do well in that ecosystem.”
That leaves people such as Jeff, the Husky Energy employee who was laid off on Election Day, feeling “lost” as to what to do next with his career. Granted, he worked in an administrative role at Husky, so transferring his skills might perhaps be easier for him, but he is reluctant to leave the oil and gas sector.
“The idea that the sector is shutting down — because that’s what I hear people saying — is just very difficult for me to process,” he said. “My uncle, my brothers, we all work in oil and gas. We’ve done this forever.”
Understanding the West’s pride in their homegrown industry is something that Anders at the University of Alberta believes is severely lacking from any of the political decisions or announcements focused on the oil sector. For example, the Liberals in their most recent budget pledged a multitude of tax credits under the banner of “The Canada Training Benefit” program with the aim of helping transitioning workers from one sector to another.
“These people, their livelihoods and cultures are built around this industry,” Anders said. “Ultimately, the people of Western Canada need to be told that ‘Yes, we value you for what you are doing, but we would like to help you make that next step’, without giving them the impression that we don’t care about how proud they are of their fossil fuels.”