By Irina Slav
Canada’s oil and gas industry could shed another 12,500 and more jobs this year, which would bring the total job losses over the past five years to 23 percent of the 2014 total, which stood at 226,500. These are among the findings of a report by PetroLMI, the labor market information service for Canada’s oil and gas industry, a division of Energy Safety Canada.
The reasons PetroLMI lists for the job losses expected for this year contain few surprises, and include “low commodity prices, a decline in capital spending and uncertainty over market access.”
“Many exploration and production and oil sands companies reported only limited capital and production guidance for 2019 because of the uncertain market conditions,” said PetroLMI’s vice president, Carol Howes, in a comment on the report’s findings.
This is the latest sign that Canada’s oil and gas industry has a long way to go before it recovers despite the efforts of the Alberta government, which last year imposed obligatory production cuts on oil companies operating in the province to arrest the decline in prices.
While the move turned out to be successful, it had a boomerang effect, making Canadian crude less appealing to refiners. Chinese companies, which went on a shopping spree when Western Canadian Select was trading at a US$50 discount to WTI per barrel, completely stopped buying it when prices began to rise. U.S. refiners—the largest market for Canadian heavy crude—also became less willing to pay more for the crude. This led to a buildup in crude oil inventories in February, despite the cuts.
The natural gas segment is not faring much better, according to the PetroLMI report. “Stalled progress on the development of new pipeline and liquefied natural gas (LNG) infrastructure projects, heightened uncertainty, however, and lowered investor confidence,” the report’s authors said.
By Irina Slav for Oilprice.com