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12-27-2008, 10:09 AM
Saturday » December 27 » 2008
Drastic oilpatch spending cuts leave workers fearful for jobs
Jason Markusoff
Calgary Herald
Saturday, December 27, 2008
Multibillion-dollar spending cuts followed by a number of layoffs prior to Christmas have some hard-hit oilpatch players fearing widespread job reductions in the new year.
Suncor confirmed this week it has told several hundred contractors -- including engineers and other professionals -- not to come back for its Voyageur oilsands project as planned in early January, while executives spend much of the month deciding how exactly to trim $3 billion from its capital budget for the year, and how many contractors would need to return.
Petro-Canada also had to lay off some contractors and staff after it wasn't able to find other projects for all those who were planning the now-delayed Fort Hills oilsands upgrader.
Nicola Turley, a junior civil engineer, was cut from engineering and procurement giant Bantrel's staff four weeks ago, and she wonders if further rounds of layoffs will continue there and throughout the city if sluggish oil prices and grim forecasts continue in 2009.
"You don't get into this industry expecting to get to work your whole career with the company you started with," Turley said.
"I've been hoarding money for a while now. Once the U. S. economy crashed and oil started going down, I thought: Yup, it's coming."
A Bantrel spokesman could not be reached for comment this week.
Alberta and Calgary have avoided the employment declines seen this year by provinces that rely heavily on manufacturing such as Ontario.
But because the worst global economic crisis since the Great Depression has helped send oil plunging below $40 US a barrel -- more than $100 off its midsummer high and at levels not seen since 2004 -- a post-boom reckoning may be seen in the coming months.
TD Bank's financial outlook predicted this week that Alberta's economy will shrink by 1.8 per cent, a decline that will match Ontario's. That recession will bring Alberta's unemployment rate to five per cent, up more than a percentage point from what has long been the nation's lowest levels, the bank's economists wrote.
Slumping oil and natural gas prices, combined with high labour costs and a jittery credit market, have caused both Petro-Canada and Suncor to slash capital spending by a third for 2009.
Other major oil and gas firms have also sharply cut spending plans as "living within financial means" has become the industry's new motto.
Such cuts normally hit drilling companies and the trades first and hardest, but don't always spare head offices and professional contractors, said analyst Bill Gwozd of Ziff Energy Co.
"If you're going to defer a project for two years, perhaps you're also going to defer your procurement department for two years," he said.
Junior producers and oilfield services firms, without the same cash flow as the majors, have already been hurting. Quattro Energy Services normally employs 28 people around this time of year, but is down to 20 now and is bracing for more hardship, said president Derrick Jacobson.
"I would think everyone's going to make it through the first quarter OK, but I think after that you're going to see significant layoffs and downsizing and penny-pinching," Jacobson said.
Suncor's request that contractors extend their Christmas break into January follows the company's plans to delay completion of the Voyageur plant by a year, to 2013-14.
"What we're seeing now is kind of the result of that scaling back the pace," spokesman Brad Bellows said.
"So nothing has been decided,"he said of potential job cuts. "What we're asking now is just for a pause so that we can reassess and get a firmer picture of what the plan is going to be in 2009."
He added that Suncor is not considering layoffs to its own staff.
"In fact, really, with the normal course of business -- attrition, retirement --we'll be a hiring company in 2009," Bellows said.
Petro-Canada has redeployed the majority of workers on the Fort Hills upgrader project to mining and other operations.
"Unfortunately, not everyone could be redeployed and some people were affected, mainly contractors,"Petro-Canada spokeswoman Kelli Stevens said.
"But it's a pretty minimal number, because we still have a lot of work ahead of us on bringing down costs for the (Fort Hills) mine."
She did not provide a number of workers cut.
ATCO Structures has been the only prominent firm to publicly reveal its oil-patch-related cuts, saying earlier this month it would lay off 400 unionized carpenters after Petro-Canada told the firm it wouldn't need a 2,000-person work camp at the stalled Fort Hills mine.
Last year, Canadian Natural Resources Ltd. handed out pink slips at its Calgary head office shortly after it announced 2008 capital spending reductions, but had also declined to state the number of its layoffs.
In a mid-year economic review issued recently, Calgary Economic Development warned that energy companies' capital spending cuts would have a "trickle-down effect on other sectors such as engineering and design, legal and accounting, oilfield services, construction and manufacturing."
It predicted the national and city economies would strongly pick up again once commodity prices did.
Turley, who graduated as an engineer just as the boom began in 2004, had always known she would face layoffs in her career.
"It seems to happen every decade," she said.
"My father is an engineer, too. In the 1980s, we moved to Korea . . . and in 1992, moved to Kuwait for another slowdown."
© The Calgary Herald 2008
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Copyright © 2008 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.
CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.
Drastic oilpatch spending cuts leave workers fearful for jobs
Jason Markusoff
Calgary Herald
Saturday, December 27, 2008
Multibillion-dollar spending cuts followed by a number of layoffs prior to Christmas have some hard-hit oilpatch players fearing widespread job reductions in the new year.
Suncor confirmed this week it has told several hundred contractors -- including engineers and other professionals -- not to come back for its Voyageur oilsands project as planned in early January, while executives spend much of the month deciding how exactly to trim $3 billion from its capital budget for the year, and how many contractors would need to return.
Petro-Canada also had to lay off some contractors and staff after it wasn't able to find other projects for all those who were planning the now-delayed Fort Hills oilsands upgrader.
Nicola Turley, a junior civil engineer, was cut from engineering and procurement giant Bantrel's staff four weeks ago, and she wonders if further rounds of layoffs will continue there and throughout the city if sluggish oil prices and grim forecasts continue in 2009.
"You don't get into this industry expecting to get to work your whole career with the company you started with," Turley said.
"I've been hoarding money for a while now. Once the U. S. economy crashed and oil started going down, I thought: Yup, it's coming."
A Bantrel spokesman could not be reached for comment this week.
Alberta and Calgary have avoided the employment declines seen this year by provinces that rely heavily on manufacturing such as Ontario.
But because the worst global economic crisis since the Great Depression has helped send oil plunging below $40 US a barrel -- more than $100 off its midsummer high and at levels not seen since 2004 -- a post-boom reckoning may be seen in the coming months.
TD Bank's financial outlook predicted this week that Alberta's economy will shrink by 1.8 per cent, a decline that will match Ontario's. That recession will bring Alberta's unemployment rate to five per cent, up more than a percentage point from what has long been the nation's lowest levels, the bank's economists wrote.
Slumping oil and natural gas prices, combined with high labour costs and a jittery credit market, have caused both Petro-Canada and Suncor to slash capital spending by a third for 2009.
Other major oil and gas firms have also sharply cut spending plans as "living within financial means" has become the industry's new motto.
Such cuts normally hit drilling companies and the trades first and hardest, but don't always spare head offices and professional contractors, said analyst Bill Gwozd of Ziff Energy Co.
"If you're going to defer a project for two years, perhaps you're also going to defer your procurement department for two years," he said.
Junior producers and oilfield services firms, without the same cash flow as the majors, have already been hurting. Quattro Energy Services normally employs 28 people around this time of year, but is down to 20 now and is bracing for more hardship, said president Derrick Jacobson.
"I would think everyone's going to make it through the first quarter OK, but I think after that you're going to see significant layoffs and downsizing and penny-pinching," Jacobson said.
Suncor's request that contractors extend their Christmas break into January follows the company's plans to delay completion of the Voyageur plant by a year, to 2013-14.
"What we're seeing now is kind of the result of that scaling back the pace," spokesman Brad Bellows said.
"So nothing has been decided,"he said of potential job cuts. "What we're asking now is just for a pause so that we can reassess and get a firmer picture of what the plan is going to be in 2009."
He added that Suncor is not considering layoffs to its own staff.
"In fact, really, with the normal course of business -- attrition, retirement --we'll be a hiring company in 2009," Bellows said.
Petro-Canada has redeployed the majority of workers on the Fort Hills upgrader project to mining and other operations.
"Unfortunately, not everyone could be redeployed and some people were affected, mainly contractors,"Petro-Canada spokeswoman Kelli Stevens said.
"But it's a pretty minimal number, because we still have a lot of work ahead of us on bringing down costs for the (Fort Hills) mine."
She did not provide a number of workers cut.
ATCO Structures has been the only prominent firm to publicly reveal its oil-patch-related cuts, saying earlier this month it would lay off 400 unionized carpenters after Petro-Canada told the firm it wouldn't need a 2,000-person work camp at the stalled Fort Hills mine.
Last year, Canadian Natural Resources Ltd. handed out pink slips at its Calgary head office shortly after it announced 2008 capital spending reductions, but had also declined to state the number of its layoffs.
In a mid-year economic review issued recently, Calgary Economic Development warned that energy companies' capital spending cuts would have a "trickle-down effect on other sectors such as engineering and design, legal and accounting, oilfield services, construction and manufacturing."
It predicted the national and city economies would strongly pick up again once commodity prices did.
Turley, who graduated as an engineer just as the boom began in 2004, had always known she would face layoffs in her career.
"It seems to happen every decade," she said.
"My father is an engineer, too. In the 1980s, we moved to Korea . . . and in 1992, moved to Kuwait for another slowdown."
© The Calgary Herald 2008
Close
Copyright © 2008 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.
CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.