‘Ottawa’ Jobless in Alberta: Tens of Thousands of Energy Professionals are Out of Work and Out of Hope
Geologist Ryan Lemiski, engineer Stephen Scott and geophysicists Brian Sondergaard and Marian Hanna did all the right things to achieve successful careers in the oilpatch. They studied hard and earned science degrees. They created huge value for their employers and volunteered in their spare time. They protected the environment through actions, not just words.
Now they are unemployed, members of a community of as many as 60,000 energy professionals laid off in Alberta since the beginning of the oil price downturn — that’s enough people to pack more than three Saddledomes.
Layoffs in their previously high-demand professions started when oil prices collapsed nearly two years ago as a result of Saudi Arabia’s war for market share. Headcounts continued to shrink as the downturn dragged on longer than anyone imagined. Now the job killers are homegrown: uncertainty from environmental policies by governments in Edmonton and Ottawa, a continuing lack of pipeline capacity, the failure of even a single liquefied natural gas project to get the go-ahead, higher taxes and new costly regulations.
This week’s Alberta government financial update provides a measure of the pain: Alberta’s economy is in the midst of the most devastating two-year contraction on record — 2.7 per cent in 2016, on top of 3.7 per cent in 2015 — worse even than the post-National Energy Program recession of 1982/1983.
Even though oil prices are slowly rebounding, there is no expectation that jobs will recover in oil and gas for at least another couple of years. And even then, any recovery would be a tepid one. Meanwhile, other sectors don’t want ousted employees from the oilpatch and the green jobs promised by politicians as part of their forced transition to cleaner energy to meet new climate change targets are scarce or not offered at all to those with oil and gas experience on their resumes.
“There is a real human tragedy here,” said Dan Allan, president of the Canadian Society for Unconventional Resources, who estimated there are 40,000 to 60,000 energy professionals out of work in Alberta based on feedback from his membership, which straddles all disciplines — geoscientists, engineers, finance and business specialists.
Alberta’s official unemployment rate — at 8.6 per cent in July, the highest in 22 years — doesn’t begin to reflect the staggering level of joblessness among professionals who until the downturn made up one of the biggest wealth-creation engines Canada ever had, Allan said.
“I get frustrated when I read ‘thousands of jobs lost,’” he said. “It’s not thousands. It’s tens of thousands. We trivialize it and it’s disturbing because this is a story that needs focus and attention by everybody.”
Lemiski, 33, studied for eight years at the University of Alberta to earn a degree in geology and a master’s in earth and atmospheric sciences.
He started his career six years ago as an exploration geologist at Talisman Energy Inc., but was laid off when the company ran into financial difficulties and cut its exploration program. He found work at Nexen Inc., owned by China’s CNOOC Ltd., as a petrophysicist, but that didn’t last long and he was back on the street in March.
At both companies he hung on “for dear life” to gain work experience, he said, but, like many young professionals, he was an easy target for downsizing, precisely because he needed training and development.
“It’s been an absolutely struggle for me since I started in this industry,” said Lemiski, who is a volunteer director at the Canadian Society of Petroleum Geology. “I worked six years. I have already been laid off twice.”
There is a real human tragedy here.
Lemiski has been looking for work both inside and outside the industry. He’s targeted employers such as Home Depot and the Calgary Police. Both told him they don’t hire oil and gas workers because they believe they’ll quit once oil bounces back.
“We have demonstrated as scientists and as professionals that we can learn other things,” he said. “But no one is giving us that opportunity. I hear a lot of talk about the government wanting to transition us into a different economy. It’s a lot of talk, but there is no action.”
Lemiski will leave Alberta if he and his wife, who has a good career in Calgary, find work elsewhere. For now, he has no hope of landing another job as a geologist, where a single opening draws thousands of applications.
He accepts that his industry has no choice but to cut costs in a very difficult environment. Still, he is disappointed with the way its leaders deserted their staff when the going got tough, and with the way Canadians in the rest of the country turned their back on the oilpatch.
“All we have ever done is worry about stakeholders, and the climate, and not damaging the environment,” he said. “No one comes and talks to us about what we can do, because we are associated with the oil industry.”
PetroLMI/ENFORM, which tracks labour market trends in the sector, said 145,000 people worked directly in oil and gas extraction, pipelines and services in the province on average in the first four months of 2016, down from 176,000 during 2014. Meanwhile, 17,300 were unemployed on average during the first four months of 2016, up from 6,500 during 2014. The rest left the industry by moving elsewhere or to other sectors, retiring, going back to school. The statistics do not include professional and scientific services contracted to the industry.
During the same period, the overall workforce in Alberta increased to 2.45 million, from 2.39 million, as employment grew in other areas.
Geologists and geophysicists were hardest hit, with unemployment estimated by their professional associations at 40 to 50 per cent. Their jobs are at the front end of exploration for new reserves, which is no longer being done as companies focus on producing what they already have, Allan said.
Philip Mulder, spokesman for the Association of Engineers and Geoscientists of Alberta (APEGA), said its geoscientists are faring badly in the current climate because they are predominantly employed in oil and gas, while engineers have more career options. Out of APEGA’s 56,000 professional members, 5,000 are geoscientists, the rest are engineers.
One of them is Stephen Scott, 46, who graduated 20 years ago as a civil engineer from Queen’s University in Kingston, Ont., then earned an MBA from Athabasca University in Alberta. His first job was in the transportation sector and he then moved to oil and gas through a consulting engineering firm.
His last job was at Cenovus Energy Inc., where he rose to management before getting the axe last October, after being reassigned to a new group and becoming a casualty of the company’s last-in, first-out practice.
Scott is done with oil and gas. “I think over the next several years growth is going to be suppressed, so I am looking at other industries with more growth potential,” said the volunteer hockey coach.
But that, too, has come with challenges. Non-energy employers aren’t receptive to former oil workers, he said.
Jackie Rafter, president of Higher Landing Inc., a career transition firm in Calgary that helps energy professionals prepare for and find new careers, said recruiters in other sectors shun energy professionals based on unwarranted stereotypes: they will leave once oil recovers, demand big paycheques and act “entitled.”
She said those successfully making the transition are playing up parts of their resumes unrelated to energy, such as volunteer experience, and degrees in the arts, computer science and even agriculture.
Rafter said non-energy employers are missing out on a huge reservoir of technical, scientific and analytic skills that are transferable.
“We are sitting on a gold mine” of unused talent, she said. “There is a massive re-education campaign that needs to happen, not just in Alberta but in Canada. Other industries need to know the value of an energy professional.”
Assumptions by recruiters about oil and gas workers’ wage expectations are a big hurdle, said Claudine Vidallo, a spokeswoman for PetroLMI/ENFORM.
There is a massive re-education campaign that needs to happen, not just in Alberta but in Canada. Other industries need to know the value of an energy professional.
“In 2015, oil and gas extraction workers made on average a 44 per cent higher hourly wage than the provincial average,” she said. “This could make it difficult for other industries to employ someone who came from oil and gas.”
Even those with low expectations aren’t getting work. At the University of Calgary, a top school for geosciences, engineering and business, campus recruitment has considerably slowed.
Many employers have shut down grad hiring programs altogether, said Colleen Bangs, manager, career services at the university. Some are still hiring new grads to avoid a workforce gap when the economy recovers, but “is it as plentiful as it was two or three years ago? Not at all. Not even close,” she said.
A further barrier is cultural. Oil and gas workers are associated with an undesirable industry following the continuing campaign against Canada’s oilsands.
Renewable energy companies are “like a cult,” Scott said. “If you don’t live and breathe and drink the purple juice, then they are not fans of taking oil and gas people because they come from dirty oil.”
He said oil and gas companies aggressively bolstered their workforces based on lavish growth projections, but when the bottom fell out, and bad decisions came home to roost, they just as aggressively pushed people such as him out the door.
“There is no consequence for those executives,” he said. “There is a consequence for Stephen Scott, because I am not working right now.”
He’s looking for work outside of Calgary, too, even if it means giving up his roots in the city and his wife’s employment. “At some point, I am going to need to find a job,” he said.
Switching sectors is not an option for Brian Sondergaard, who found oil and gas reserves worth billions of dollars during his 26-year career as an exploration geophysicist at 14 different companies. He’s particularly proud of a gusher he discovered in the Swan Hills area in northern Alberta.
The University of Alberta graduate’s last job ended two months ago, after the junior company he worked for, Striker Exploration Corp., merged with Gear Energy Ltd. It’s the third time in five years he’s been out of a job. His last paycheque was about half of what he made in better days, reinforcing the notion that oil and gas wages and salary expectations are declining due to the large number of unemployed.
“I knew it was coming since January,” the industry veteran said. “When they put our company up for sale, they didn’t even tell us. I found out in the Daily Oil Bulletin.”
Sondergaard has looked for work since, leaning on his vast industry network. There is nothing out there, he said. Those who are still working are concerned they’ll be next.
At 51 years of age, Sondergaard worries he’s “unhirable” because he has too much experience. He can’t go back to school because he needs an income. He can’t switch careers because all he knows and loves is geophysics. He can’t stay in Calgary because he can’t afford the high cost of living.
As a result, he’s leaving. He sold the recreation property where he hoped to retire, put his Calgary home up for sale, and is moving to the Dominican Republic with his partner for a couple of years, hoping for a rebound in the meantime.
The coming winter will be the toughest yet for oil and gas based on the dismal outlook for drilling activity, he predicted, based on feedback from employers.
“Most downturns have (lasted) one drilling season. We are now into the third, and predictions are that if anything happens, it won’t be until the end of 2017,” he said. “I wouldn’t have sold my cabin and sold out of Calgary if I thought it was coming back in the next couple of years.”
He adds: “I honestly don’t think it will ever be the same.”
But Marian Hanna, also a senior geophysicist, isn’t giving up. In her last job, Hanna, who is in her fifties, was the president of services firm ION Geophysical Canada. She was laid off a year ago when the Houston-based company closed its Calgary office, after 28 years of working for some of the sector’s largest companies and finding them reserves worth billions of dollars.
The volunteer president of the Canadian Society of Exploration Geophysicists (CSEG) and recent graduate of the corporate directors’ program at the University of Calgary’s Haskayne School of Business would like to land another leadership position. But she has been open-minded about other opportunities, given her broad experience in management, strategy and finance.
She has applied for all sorts of jobs, including as a strategic planner at the City of Calgary, but been unsuccessful so far. The main breadwinner in her family, she can’t afford to retire.
The University of New Orleans graduate worries about the road Canada had taken: selling oil at a discount to the U.S. and over-analyzing regulatory approvals for new pipelines, both of which are hurting its own economy and people.
Hanna fears the layoffs have been so deep that Canada will lack the knowledge to take advantage of energy opportunities.
As part of her work at CSEG, she approached governments to raise awareness about the consequences of their actions on energy jobs and the lack of a plan to help create new ones. “I got absolutely nowhere.”