Canadian Occupational Projection System (COPS)

NAICS 2131

This industry comprises establishments primarily engaged in providing support services, on a contract or fee basis, required for the mining and quarrying of minerals and for the extraction of oil and gas, such as drilling activities. It also includes establishments engaged in the exploration for minerals, other than oil and gas, such as taking ore samples and making geological observations at prospective sites. The industry is essentially oriented toward the domestic market as most of its production is supplied within the country. It employed 76,500 workers in 2021, mainly concentrated in Alberta (66%), followed distantly by British Columbia (9%) and Saskatchewan (9%), with a workforce primarily composed of men (84%). Key occupations (4-digit NOC) include:

• Oil and gas well drillers, servicers, testers and related workers (8232)
• Contractors and supervisors, oil and gas drilling and services (8222)
• Oil and gas well drilling and related workers and services operators (8412)
• Managers in natural resources production and fishing (0811)
• Underground production and development miners (8231)
• Oil and gas drilling, servicing and related labourers (8615)
• Supervisors, mining and quarrying (8221)
• Transport truck drivers (7511)
• Heavy-duty equipment mechanics (7312)
• Construction millwrights and industrial mechanics (7311)

The performance of the industry is closely related to capital spending in exploration and extraction activities from the mining and fuel industries. The fuel industry represents the most important contributor, with output in support activities for oil and gas extraction about four times the output in support activities for mining. The number of wells in operation and new drilling projects are key drivers for support activities and both are highly dependent on the prices of oil, gas, metals and minerals, which in turn are driven by global demand for energy and commodity products. The surge in prices observed prior and after the global recession of 2008-2009 resulted into major investments in the fuels and mining sectors, leading to a burst in various support activities, such as drilling, excavating, building and pumping wells for oil and gas field operations. After peaking in 2013-2014, output in the industry fell drastically in 2015-2016, recording a cumulative decrease of 46% in only two years, as a result of sharp declines in both crude oil prices and metal and mineral commodity prices, which led to major investment cutbacks, particularly from oil producers. While output partially recovered in 2017-2018, in line with a marginal rebound in energy and commodity prices, investments remained well below the levels observed in 2014. Output contracted again in 2019 and the decline amplified in 2020, as global demand fell sharply due to the lockdowns resulting from the spread of COVID-19. The situation was reversed in 2021 when supply disruptions coupled with increasing demand led to a substantial jump in prices, although the rebound in output was not strong enough to offset the large declines recorded in 2015-2016 and 2020. This resulted in both real GDP and employment declining at an average rate of 2.8% per year for the full period 2012-2021, with most of the job losses occurring from 2013 to 2017. Employment in the industry reached a bottom in 2020, before increasing marginally in 2021. With employment declining at the same pace as real GDP, productivity remained essentially flat, on average, in the past ten years (0.0% annual growth).

Over the period 2022-2031, real GDP growth in support activities is projected to return to positive territory, averaging a strong 2.9% annually. While this appears to be a significant improvement relative to the previous ten years, a large part of the growth is expected to occur in the short term, driven by notable increases in drilling activity in 2022-2023 in response to higher oil prices. Going forward, growth is expected to slow, due to weaker prospects in oil and gas extraction, and to shift towards support and exploration activities in mining. Indeed, as demand growth cools and global supply increases, crude oil prices are expected to fall gradually and remain below the levels observed in 2021-2022, restraining investment growth from oil producers. The trend towards electrification and clean energy will also limit long-term growth prospects as consumers and businesses shift towards lower emission sources of energy. A key limitation on the expansion of the oil and gas industry in Canada will be the federal government’s 2030 Emissions Reduction Plan, which targets a reduction in greenhouse gas emissions of 40 % below 2005 levels by 2030 and net-zero emissions by 2050. This is expected to restrict future oil and gas exploration and development activities as the industry adapts to meet government targets. On the other hand, there are several drivers of growth for support and exploration activities in mining. In Budget 2022, the federal government announced a Critical Mineral Strategy intended to prioritize the development of 31 key minerals used in the production of clean energy, with special emphasis on lithium, graphite, nickel, cobalt and copper. The goal of this $3.8 billion commitment is to enable Canada to develop domestic value chains, especially around the production of zero-emission vehicles, as well as to reduce the impact of future supply chain disruptions (such as those observed during the pandemic of COVID-19). The strategy also includes a 30% Critical Mineral Exploration Tax Credit for specific expenses related to mineral exploration within Canada. This is expected to stimulate growth in the mining segment of the support activities industry.

Given that support services for oil and gas extraction have a much higher weight than support services for mining, the subdued outlook for oil and gas extraction over the longer term will weigh on real GDP growth in the overall industry, with average annual growth falling from 8.2% in 2022-2023 to 1.6% in 2024-2031 (resulting in 2.9% for the full period 2022-2031). Nevertheless, renewed growth in output is projected to lead to a significant rebound in employment, averaging 2.6% annually over the period 2022-2031, with about half of the gains occurring in 2022-2023. That said, real GDP is not expected to return to the level observed in 2014, while employment will remain well below its historical high of 2013. Productivity growth is expected to improve slightly relative to the past decade, essentially driven by a large increase in 2022. The shift in output growth towards the less productive segment of support activities for mining is expected to weigh on productivity growth in the industry as soon as 2023, resulting in an average growth rate of only 0.3% annually for the entire projection period.

Real GDP and Employment Growth Rates in Support Activities for Mining, Oil and Gas Extraction

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.