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 traditional pumping techniques and the production from surface shale or tar sands using non-conventional techniques. Non-conventional production is now accounting for about 70% of total domestic production. Canada is the fifth-largest producer of crude oil and the fourth-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 92,000 workers in 2018, mostly concentrated in Alberta (84%), with a workforce primarily composed of men (77%). 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. Between 2003 and 2008, crude oil prices increased markedly 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 in 2017-2018. Despite the low price environment, output continued to grow, largely driven by increased production capacity in the oil sands resulting from many years of massive investments. The resulting pace of growth in real GDP averaged 3.6% annually over the period 2009-2018. However, growth in employment was much more modest, averaging 0.6% annually. This reflects significant job losses associated with lower investment and drilling activity following the oil price shock of 2014-2015. Productivity also increased markedly in the past decade, reflecting 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. According to Suncor[1], the company’s operating costs per barrel of oil declined from $30 in 2012 to 24$ in 2018, a decrease of 20%.

Real GDP growth in the oil and gas industry is projected to average 2.0% annually over the period 2019-2028, a significant slowdown relative to the previous ten years. While prices have recovered to a more stable level in recent years, they remain largely below their level of 2014. The slowdown anticipated in global economic growth, soaring U.S. shale production and the lack of adequate pipeline capacity will continue to weigh on prices, investment and output in the industry. The fact that production cuts in Alberta have been extended until December 2020, in order to stabilize prices and reduce the differential between U.S. and Canadian oil prices, is another factor expected to discourage energy-related investment in Canada in the short-term. Due to the low-price environment and the weak outlook for drilling, prospects for Canada’s gas industry is also expected to remain modest.

The good news is that three large oil sand projects should be completed in Alberta by 2023: Imperial Oil’s Aspen project; expansion of Syncrude’s Mildred Lake operations; and Suncor’s Meadow Creek project. Those three projects alone should add close to 300,000 barrels per day to production. Meanwhile, conventional production will benefit from the construction of steam-assisted gravity drainage projects in Saskatchewan and at the Bay du Nord oil and gas project in Newfoundland and Labrador. In addition, the completion of LNG Canada and other liquefied natural gas (LNG) projects, such as Goldboro in Nova Scotia and the smaller Woodfibre project in British Columbia, are expected to lift export demand and boost prices for natural gas, allowing the gas industry to return to profitability over the longer term. As a result, most of the output growth in oil and gas extraction is expected to come from the oil sands and the production of liquefied natural gas for shipments overseas, starting in the second half of the projection period. The outlook for job creation remains modest, with employment growth projected to average 0.5% annually over the period 2019-2028. Oil producers are expected to keep cutting costs and trying to find ways to operate more efficiently, while gas producers are expected to reduce their workforce in order to return to profitability. Thereby, productivity growth is expected to keep accounting for most of output growth in the industry.

Real GDP and Employment Growth Rates in Oil and Gas Extraction

Figure showing the annual average growth rates of real GDP and employment over the periods 2009-2018 and 2019-2028 for the industry of oil and gas extraction. The data is shown on the table following this figure

Sources: Statistics Canada (historical) and ESDC 2019 COPS industrial projections.

Text Version of Figure Real GDP and Employment Growth Rates in Oil and Gas Extraction (%, annual average)
  Real GDP Employment
2009-2018 3.6 0.6
2019-2028 2.0 0.5

Sources: Statistics Canada (historical) and ESDC 2019 COPS industrial projections.

[1]Suncor, Report to Shareholders for the Fourth Quarter of 2018. Back to text.

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