- Outlook 2021-2023
Getting Displaced Oil and Gas Services Workers Back to Work: Oil and Gas Site Reclamation Programs
Government funding injection expected to sustain and create jobs across Western Canada
From 2021 to 2023, a portion of the job growth in the oil and gas services sub-sector will be driven by the decommissioning, closure and reclamation of inactive and orphan well sites funded by the industry, the federal government and the provincial governments of British Columbia, Alberta and Saskatchewan.
A large portion of the funding comes from the federal government’s $1.7 billion economic stimulus program announced in April 2020. The Government of Alberta will distribute its $1 billion share through its Site Rehabilitation Program with an additional $200 million provided to the Orphan Well Association (OWA). OWA is a non-profit organization in Alberta that manages the closure of oil and gas wells, pipelines, facilities and the remediation and reclamation for sites that have no legal or financially responsible owner. The BC Oil and Gas Commission will distribute $120 million and Saskatchewan will issue its $400 million in work through its Accelerated Site Closure Program.
Broad Indigenous participation in the program is expected with British Columbia, Alberta and Saskatchewan all stressing the importance of involving Indigenous communities. In addition to the employment and business opportunities this will create for these communities, the energy industry also benefits from local Indigenous knowledge, including deeper understanding of the land and traditional land use.
Everyone is going after this opportunity in Saskatchewan and the challenge will be how companies can differentiate themselves in what will be a very competitive marketplace for this work. For Tomahawk, we believe our Indigenous ownership, our deep networks in the Saskatchewan energy industry, which is vital to bring all the services needed for site closure work together, and our deployment of innovative technology will set us apart.Lance Fugate, Vice President of Operations with Tomahawk Energy Services, an Estevan, Saskatchewan-based energy services firm
As one example, Tomahawk uses mobile 3D-mapping to create realistic models of their clients’ assets so they easily understand the scope of work to be done and can provide quality assurance along the way.
Alberta’s program has been popular. As of February 2021, 36,000 companies have applied and $300 million has been distributed to 600 Alberta companies. Funding is available to oilfield service companies in the form of grants that will cover between 25% and 100% of a project’s total costs, with up to $30,000 per site. Companies that receive a grant have until December 31, 2022 to complete the work.
Did you know?
Depending on the complexity of the decommissioning and closure requirements, approximately 35-50 services employing 41-57 individuals are needed in closure of a single well. In Alberta,5,300 additional oil and gas services jobs are expected to be created through the Site Rehabilitation Program.
Source: Petroleum Services Association (PSAC)Well Closure Workforce Study, Updated December 2019
Funding gives oil and gas services sub-sector a boost
Employment in the oil and gas services sub-sector was hard hit by the economic downturn and the collapse in oil prices. Between August 2014 and February 2020, employment fell by 31% — in other words, three in 10 oil and gas services workers lost their jobs.
Then, as measures to prevent the spread of COVID-19 were implemented in March 2020, the employment situation deteriorated further. As demand for oil and natural gas declined significantly, it contributed to further job losses. Between February and August 2020, employment in the oil and gas services sub-sector plummeted by another 25% — a loss of 19,800 jobs.
The funding has given the sub-sector a much-needed boost – sustaining jobs in 2020 that may have been otherwise lost. For 2021 the certainty related to funding for site decommissioning and closure work is providing some predictability for that line of work.
What is site reclamation? Site reclamation involves closure and restoration work on wells, pipelines and oil and gas sites. Activities include closure work on inactive wells and pipelines, environmental site assessments, remediation and reclamation (returning disturbed land to a usable state once oil and gas operations have wound down), and preparation of applications for remediation and reclamation certificates. The site reclamation programs’ goals are to immediately get specialized oil and gas labour force back to work; accelerate site abandonment and restoration efforts; and quickly complete a high volume of environmentally significant work.
Labour shortages looming
The government-supported site decommissioning and well closure work combined with some increased drilling activity due to better commodity prices, is creating some stability. Many oil and gas well servicing companies which are starting to rehire are already finding they have exhausted their call-back lists of experienced workers who left for other industries. Companies are having to become more creative in recruiting workers including offering employee referral programs, ramping up their training, and planning longer lead-times to fill positions and onboard workers.
Alberta-based Precision Drilling Corporation, for example, which was quick to take advantage of the site reclamation work, is reporting labour shortages.
Our Canadian well-service segment is experiencing an increase in demand, driven in part by the Canadian well abandonment program, but also a broad-based increase in customer demand…and labour has gotten very tightPrecision Drilling CEO Kevin Neveu, as reported in the Daily Oil Bulletin.
A broad range of occupations are involved in site decommissioning and closure work — from environmental advisors tooil and gas well servicing operators and labourers, to heavy equipment operators, to regulatory specialists. Learn more about these and other occupations on the Career Directory.
Resources for more information
- Outlook 2021-2023
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