Mining and Oil and Gas
Extraction Industry
|
September 2008 |
The
Mining and Oil and Gas Extraction industry employed about 146,900 Albertans in
2007. The industry is expected to grow by a yearly average of 0.7 per cent,
employing about 152,000 in 2012. The 2007 unemployment rate was 2.5 per cent
(the average for all industries was 3.5 per cent).
The
Mining and Oil and Gas Extraction industry includes companies involved in
activities such as:
·
exploring
for crude petroleum and natural gas
·
drilling,
completing and equipping wells
·
operating
separators, emulsion breakers, desilting equipment
and field gathering lines for crude petroleum
·
mining
for coal, metal ore, and non metallic mineral mining and quarrying
·
other activities in the preparation of oil and gas up to
the point of shipment from the producing property.
Industry
Outlook
Information
adapted from the Mining and
Oil and Gas Extraction Industry
profile (September 2008)
According
to Canada's Oil Extraction Industry:
Industrial Outlook, Winter 2008, crude oil prices
are expected to remain well above historical averages. Current record prices
have been spurred by the devaluation of the United States (U.S.) dollar,
speculative and strong global demand growth, and geopolitical tensions in key
producing countries. The Outlook projects that non-conventional oil from the
oil sands will become the dominant form of production in Canada in 2009.
Production is expected to increase by 19.5 per cent this year. However, the
share of conventional oil in Alberta’s total oil production is projected to
decline due to the maturity of the reserves and natural depletion.
Along
with increased production in the oil patch comes increasing costs and the
situation continues to worsen as companies scramble to acquire the necessary
material and labour to complete their projects and extract the bitumen. In
2007, material costs alone, which accounted for roughly 70 per cent of total
costs, increased by 16.7 per cent. In 2008, total costs are projected to
increase by 17.4 per cent.
Coal
mining in the province should continue to strengthen over the medium term due
to the additional energy required by Alberta’s fast growing economy. Its long term
future is uncertain as continued pressure to reduce carbon emissions rises.
Research into clean coal technology is being undertaken by members of the
Canadian Clean Power Coalition to reduce greenhouse gas emissions and find ways
of using coal to power Alberta’s growing heavy industry through gasification
processes. Some companies have already announced intentions to develop and
research clean coal technology that would improve the operating performance of
coal and reduce the environmental footprint of the resource.
Information adapted from Alberta Career and Industry Outlook
(August 2008)
A catalyst for activity and
opportunity throughout most of the rest of the economy, this industry itself is
expected to post strong growth in the years ahead, particularly if oil prices
stay at, above or near historic levels.
Production life of conventional
oil wells has been extended due to marginal wells being more economic in the
high oil price environment. In addition, resources like crude oil, derived from
oilsands bitumen, are replacing declining production
from the conventional resource. It is estimated, for example, that conventional
oil will account for only one in every four barrels of oil produced by 2020,
compared to just over one in two barrels today. Oilsands
production, which now exceeds a million barrels a day, is expected to increase
three or perhaps even four times by 2020 and will account for about 80 per cent
of total Canadian crude oil production. Billions of dollars will need to be
invested in all areas of the industry to achieve and sustain these levels of
production. There are challenges—the short supply and high cost of skilled labour,
managing inflated capital and other costs and dealing with increasing calls for
industry to take on greater social and environmental responsibility.
Unconventional resources such as
coal bed methane are expected to offset declining production of natural gas
from depleting conventional reserves. Strong growth is forecast for Alberta’s
coal bed methane industry.
Coal mining in the province
should continue to strengthen over the medium term to help fuel Alberta’s
booming economy. However, the industry will need to continue to work on
reducing its environmental footprint. Aware of the public’s concerns and
convinced of coal’s potential, the Canadian Clean Power Coalition is conducting
research on coal gasification, which would enable industry to use coal as a
fuel source while minimizing its environmental impact.
Information
adapted from Building
and Educating Tomorrow’s Workforce: A Workforce Strategy
for Alberta’s Energy Sector (September 2006)
Alberta’s energy sector is a diverse and complex sector
comprised of numerous subsectors. This complexity, along with the energy
sector’s interdependence with other sectors of the economy, makes it somewhat
difficult to define. For the purposes of the workforce strategy, the sector has
been defined broadly to include businesses involved in:
·
exploration
and production of both conventional and non-conventional crude petroleum and
natural gas, including oil sands and coal bed methane
·
mining
for coal
·
electric
power generation transmission and distribution
·
oil and gas pipelines.
Alberta’s energy sector, as defined above,
encompasses a number of diverse sub-sectors:
·
Oil &
Gas. While production of conventional oil and gas has been declining, drilling
activity has increased significantly in recent years as the industry continues
to respond to a high price environment resulting from strong demand. Increased
drilling activity across the oil and gas industry is leading to increased
competition for the same pool of workers among firms involved in conventional
and non-conventional oil, and natural gas extraction.
·
Oil
Sands. It is estimated the oil sands will account for three quarters of
Alberta’s total oil production by 2008. Further expansion is planned with
billions of dollars being invested in developing this resource. The use of
mining and drilling (in-situ) techniques in the extraction process means that
the oil sands industry is in direct competition with other energy sub-sectors
for the same pool of workers.
·
Coal.
Although not nearly as large in terms of investment or employment as oil and
gas, coal has been, and continues to be, an important part of Alberta’s energy
sector. There are 11 major coal mines that operate in Alberta.
·
Electricity.
Alberta relies primarily on thermal sources such as coal (50 per cent) and
natural gas (38 per cent) for its generating capacity. The rest is comprised of
hydro, wind, biomass and fuel oil. Increased wind power generation is planned
in southern Alberta in the coming years. While Alberta’s generation capacity
has increased significantly in recent years, there has not been a major
transmission upgrade in 20 years. A comprehensive long-range 10 year
transmission plan has recently been prepared which identifies upgrades required
to keep pace with the province’s growth.
·
Pipelines.
As production from Alberta’s oil sands grows, pipelines will be integral in
exporting bitumen to new markets in the United States and Asia. New natural gas
pipeline routes are also being proposed from Alaska and the Northwest
Territories. These projects will place increasing demands on the labour market,
competing with other construction projects in western and northern Canada for
both skilled and unskilled labour. The Mackenzie Gas Project, for example, is
expected to require 5,000 workers over a four year construction period.
As well, a number of occupations in the oil and
gas, and electricity industries are experiencing the challenges of an aging
workforce. Forty per cent of the labour force in oil and gas supervisory,
engineering, technology and operations-related positions are 45 years and
older.
The energy sector also employs proportionally more
men than women. Men represent almost 75 per cent of the total workforce in
mining, oil and gas extraction while they only account for 55 per cent of all
employed Albertans. However, the numbers of women in mining, oil and gas
extraction are steadily increasing.
Occupations in the sector are wide-ranging with
varying education and skill requirements. While there are some positions that
do not require high skill levels, many occupations including engineers and
geoscientists require a four year bachelor degree or higher. Several
technologist positions including geophysical, petroleum engineering and
industrial engineering technologists require a two year technology diploma.
Many occupations are in designated trades requiring the completion of
apprenticeship training.
Average hourly earnings for workers in individual
energy sub-sectors are substantially higher than the provincial average.
Many observers agree that the global energy market
has moved into an environment of higher prices. As a result, forecasts are
predicting strong growth for Alberta’s energy sector.
The level of drilling activity in the oil and gas
industry is expected to remain relatively high over the medium term. This
prediction is in response to strong current and anticipated demand for oil and
gas resources and reflects the industry’s attempts to replace existing
conventional production. Drilling and service companies have experienced worker
shortages for several years due in part to the loss of their traditional labour
pool and lack of public knowledge of drilling and service occupations. In the
future, strong demand for labour coupled with anticipated rates of retirement
are expected to lead to continuing labour shortages in occupations such as
engineering, technology and operations-related positions.
In the oil sands sector, production is expected to
nearly double from 2004 levels by 2010, and then nearly triple to approximately
2.7 million barrels by 2015. This will lead to a significant increase in
employment for heavy equipment operators, process operators, heavy duty
mechanics and power engineers.
As more technological improvements are researched,
developed and applied to increase both conventional and non-conventional
resource recovery, highly skilled workers such as engineers, geoscientists,
technicians and environmental specialists will be in high demand.
Work in
this industry
Alberta
occupational profiles that describe various types of work in this industry are
listed in OCCinfo's Search by Industry: Mining
and Oil and Gas Extraction
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