Canadian Occupational Projection System (COPS)

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 traditional pumping techniques and the production from surface shale or tar sands using non-conventional techniques. Non-conventional production is accounting for more than 50% of total domestic production. Canada is the fourth-largest producer of crude oil and the sixth-largest producer of natural gas in the world. Alberta has always been the dominant producer in the country, supplying about 75% of total production of oil and gas, followed by British Columbia (mostly gas), Saskatchewan (mostly oil), and Newfoundland-Labrador (oil). About 80% of crude oil and nearly half of natural gas produced in Canada are exported, mainly to the United States. On the other hand, more than one-third of the crude oil used in domestic refineries and about 20% of the natural gas consumed in the country are imported. The industry employed 101,500 workers in 2021, mostly concentrated in Alberta (83%), with a workforce primarily composed of men (76%). Wages are among the highest across the country, being more than twice the all-industry average. 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)
• 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)

The Canadian oil and gas extraction industry both prospered and endured in a time where the landscape of the energy market evolved under different forces since the early 2000s. Crude oil prices increased markedly from 2003 to 2008 as rapid economic growth in China and other emerging markets boosted global demand for energy products. Higher prices spurred investment in the industry and contributed to launch the development of Alberta’s oil sands. While production and prices fell significantly during the 2008-2009 recession due to sharp declines in global demand, they quickly recovered in the following two years. Thereafter, improved drilling and fracking technologies unlocked huge reserves of shale oil and shale gas in North America, especially in the United States who significantly reduced its dependence on imported energy. The increase in U.S. production and the shift in market power prompted OPEC-member countries to relax their output quotas to regain market share, leading to an oversupply on the global market and a sharp fall in crude oil prices in 2014-2015. Oil prices reached a bottom in 2016, before increasing marginally from 2017 to 2019. Despite the low-price environment, the industry’s output continued to grow steadily from 2014 to 2019, largely driven by increased production capacity in the oil sands resulting from many years of massive investments. Prices and production fell back in 2020, as global demand decreased sharply due to the lockdowns resulting from the spread of COVID-19. This situation was reversed in 2021 when supply disruptions coupled with increasing demand led to a substantial jump in crude oil prices. The resulting pace of growth in real GDP averaged a strong 3.2% annually over the period 2012-2021. However, growth in employment was much more modest, averaging 0.8% annually. This reflects significant job losses associated with lower investment and drilling activity following the oil price shock of 2014-2015, although employment rebounded firmly in 2021 in response to higher prices and production. Productivity also increased markedly in the past decade (+2.4% annually), contributing to most of the growth in output. Substantial improvements in productivity reflected major developments in hydraulic fracturing and horizontal directional drilling techniques and the fact that the production capacity in the oil sands has increased while becoming less labour intensive.

The outlook in terms of production and employment growth for the oil and gas industry is expected to weaken markedly over the projection period relative to the past decade, primarily reflecting limited production and pipeline capacity, as well as the trend towards electrification and clean energy. After surging in 2021, oil prices are expected to remain high in the near term as a lack of investment in North American oil over the past few years is limiting the ability of producers to increase supply. The Russia-Ukraine conflict is also adding a significant degree of supply uncertainty. In the first half of the projection period, a boost in conventional oil production due to high prices will lead to continued output growth. Going forward, as demand growth cools and global supply increases, crude oil prices are expected to fall gradually, before rising again, albeit modestly, leaving prices below the levels observed in 2021-2022 and resulting in a weaker outlook for Canadian oil producers in the second half of the projection period. 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. Another constraining factor is Canada’s limited pipeline capacity to further export to international markets. For example, during the Russian invasion of Ukraine in early 2022, Canada had limited capacity to respond managing an increase of just 300,000 barrels a day. On a more positive note, there is still some potential for increased development in the industry as evidenced by the Bay Du Nord Development Project which the government approved in April 2022. The completion of the Trans Mountain Expansion Pipeline will also allow for an increase in oil production, while the completion of the Coastal GasLink Pipeline is expected to increase natural gas production for export.

Overall, the outlook for the oil and gas industry is especially muted for Alberta and Saskatchewan, although Newfoundland and Labrador will be able to benefit from increased offshore production. The resulting pace of growth in real GDP is projected to average 0.8% annually over the period 2022-2031. This significant slowdown relative to the past decade is expected to lead to a decline in employment averaging 1.0% per year as productivity should continue to increase, albeit at a more moderate pace than in the past (+1.8% annually). Although productivity growth is projected to account for all the growth in output, employment will remain above the levels seen from 2016 to 2020, when the industry struggled with persistently low prices and a lack of pipeline capacity. Additional gains in productivity reflect advancements in extractive technology and modular facility design. However, productivity growth is expected to slow in the second half of the projection period due to the shift in the lifecycle of oil sand production (which is highly capital intensive) from its growth phase to its mature phase.

Real GDP and Employment Growth Rates in Oil and Gas Extraction

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

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