Canadian Occupational Projection System (COPS)

Industrial Summary

Oil and Gas Extraction

NAICS 2111

This industry comprises establishments primarily engaged in operating oil and gas field properties, such as exploration for crude petroleum and natural gas, drilling, completing and equipping wells, and other related activities in the preparation of oil and gas. It includes both the production from wells using normal pumping techniques and the production from surface shale or tar sands using non-conventional techniques. Canada is the fourth largest producer of crude oil and natural gas in the world. Alberta has always been the dominant producer in the country, supplying about 77% of total production of oil and gas, followed by British Columbia (mostly gas), Saskatchewan (mostly oil), and Newfoundland-Labrador (oil). Over three quarters of crude oil and about half of natural gas produced in Canada are exported, mainly to the United States. The industry employed 91,400 workers in 2016, mostly concentrated in Alberta (80%), with a workforce primarily composed of men (72%). Key occupations (4-digit NOC) include:

  • Oil and gas drillers, servicers, testers and related workers (8232)
  • Contractors and supervisors, oil and gas drilling and services (8222)
  • Petroleum engineers (2145)
  • Central control and process operators, petroleum, gas and chemical processing (9232)
  • Managers in natural resources production and fishing (0811)
  • Purchasing agents and officers (1225)
  • Geoscientists and oceanographers (2113)
  • Mining engineers (2143)
  • Geological engineers (2144)
  • Power engineers and power systems operators (9241)
  • Geoscientists and oceanographers (2113)
  • Heavy-duty equipment mechanics (7312)
  • Construction millwrights and industrial mechanics (7311)
  • Industrial instrument technicians and mechanics (2243)
  • Steamfitters, pipefitters and sprinkler system installers (7252)
  • Oil and gas drilling, servicing and related labourers (8615)
  • Geological and mineral technologists and technicians (2212)

Between the early 2000s and 2014, the industry was spurred by rising global demand and soaring prices for energy products. Major investments were made to upgrade existing projects and to develop new projects, mainly in Alberta, but also in Newfoundland-Labrador, British Columbia and Nova Scotia. While production fell significantly during the 2008-2009 recession due to sharp declines in global demand and prices, it quickly recovered during the following two years, before falling again in 2012 as a result of lower activity in gas extraction. Production bounced back in 2013 but crude oil prices fell by more than 50% in the second half of 2014 and remained relatively low in 2015 and 2016 due to the oversupply on the global market. This resulted in a rapid decline in investment and drilling activity, but output continued to grow, largely driven by increased production capacity in the oil sands following many years of massive investments. The resulting pace of growth in real GDP averaged 1.7% annually over the full period 2007-2016. Employment also recorded large fluctuations over the past ten years, posting significant decreases on three occasions: 2009, 2013 and 2016, often lagging the effect of declining prices. Nevertheless, growth in employment was positive for the overall period 2007-2016, averaging 1.1% annually.

After three consecutive years of oversupply, global crude oil markets are finally moving back into balance. Stronger demand in coming years will put some upward pressure on prices but, with still-elevated inventories and ample spare production capacity, prices increases are expected to be modest. In the short term, the industry will remain in survival mode, with profitability remaining elusive for many firms. Investment should continue to be soft as cash flow continues to weaken and large capital projects that were previously under way begin to wind down. Over the medium term, export pipeline constraints are expected to ease, given the slew of recent approvals. However, failure to expand pipeline capacity in a timely and cost-effective fashion could result in increasing crude volumes moving via rail and in lower realized prices for Canadian producers. Over the projection period, most of the growth in the industry’s output is expected to come from the oil sands, mainly from in-situ operations, as oil sands production capacity is projected to increase by roughly 40% relative to 2016’s capacity. Meanwhile, conventional oil production (non-oil sands) is expected to decline slightly due to the gradual depletion of the Western Canadian Sedimentary Basin, while natural gas production is expected to be dampened by quickly rising production and competition from U.S. producers resulting from shale gas extraction. In 2016, North American natural gas prices were at their lowest levels in fifteen years. Not only the U.S. gas market is moving toward self-sufficiency, but the U.S. liquified natural gas (LNG) export projects are competing directly with proposed LNG export projects in Canada. The recent cancellation of the Pacific NorthWest Project has significantly reduced the potential of British Columbia to export liquified natural gas (LNG). Despite the gloomy outlook for exports, domestic demand in Canada is expected to increase, supported by power generation and oil sands projects, the fastest growing sources of natural gas consumption. Real GDP growth in the overall oil and gas extraction industry is projected to average 2.1% over the period 2017-2026, a slight acceleration from the previous ten years due to higher production capacity in the oil sands. In comparison, employment growth is projected to slow significantly, averaging 0.6% per year, as low energy prices will force the industry to maintain and strengthen the gains in productivity achieved in recent years. Faster growth in productivity are expected to be driven by technological improvements, particularly for the extraction of non-conventional oil and gas (such as the use of hydraulic fracturing and horizontal directional drilling techniques for shale and tight oil and gas extraction), and the fact that the production capacity in oil sands and offshore fields is increasing while becoming less labour intensive.

Real GDP and Employment Growth Rates in Oil and Gas Extraction

Figure showing the annual growth of real GDP and employment over the periods 2007-2016 and 2017-2026 for the industry of Oil and Gas Extraction. The data is shown on the table following this figure

Source: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

Text Version of Figure Real GDP and Employment Growth Rates in Oil and Gas Extraction, 2007-2016 and 2017-2026, in Percent
  Real GDP Employment
2007-2016 1.7 1.1
2017-2026 2.1 0.6

Source: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

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