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In a significant shift within the energy sector, Imperial Oil plans to reduce its workforce by 20 percent by the end of 2027. This decision will result in approximately 900 corporate positions being eliminated, primarily in Calgary. This move aligns with a broader industry trend of job reductions as companies seek to enhance efficiency amid fluctuating oil prices and emerging technologies.
This announcement follows similar actions by other major energy companies. For example, Cenovus Energy Inc. confirmed layoffs earlier this year, and Suncor Energy Inc. cut around 1,500 jobs in 2023. These trends indicate a concerted effort within the sector to adapt to the current economic climate.
The driving forces behind workforce reductions
According to Lance Mortlock, managing partner at EY Canada for industrials and energy, these job cuts reflect a broader movement among energy companies to seek operational efficiencies. He explains that challenges like low oil prices, the availability of advanced technologies, and complex regulatory environments compel companies to rethink their strategies.
“When faced with a policy environment that discourages investment in the oil and gas sector, the focus shifts from growing the asset to maximizing its existing capabilities,” he states.
Policy impacts on the energy landscape
Policies aimed at reducing greenhouse gas emissions in the oil and gas industry are significant drivers of these changes.
While these regulations are essential for addressing climate change, Mortlock advocates for a balanced approach that meets both environmental and economic needs. The challenge lies in finding a solution where sustainability efforts do not impede industry progress.
Technological advancements shaping employment
Efficiency has long been a hallmark of the oil and gas sector. However, the rise of automation and advanced technologies has made achieving these efficiencies more feasible than ever. For instance, the oilsands sector has begun using self-driving trucks in mining operations, and the growth of artificial intelligence is poised to transform numerous job functions, potentially leading to significant workforce reductions.
A report by EY from 2020 indicates that by 2040, employment for roles such as drilling and equipment operators could decline by over 60 percent due to automation. This trend suggests that positions characterized by routine tasks are particularly vulnerable. The report anticipates that many of these jobs will be phased out gradually through natural attrition rather than sudden layoffs.
Employment trends in the oil and gas sector
Employment in the oil and gas industry has been declining, especially in relation to production levels. A recent analysis by the Pembina Institute highlights that prior to the oil price collapse in 2014, there were approximately 38 direct jobs for every thousand barrels produced. By 2023, this figure had dropped by 43 percent, resulting in only 22 direct jobs for the same output.
Janetta McKenzie, director of oil and gas at Pembina, emphasizes that the focus on maximizing returns and the integration of automation and offshore engineering practices suggest limited potential for new job creation, even if production increases. “A decade of aggressive cost-cutting has led to a sustained decline in employment across the sector, despite rising production levels,” she noted.
The future of job creation in the energy sector
Despite these challenges, some optimistic forecasts suggest potential job growth within the industry. The Careers in Energy division of Energy Safety Canada projected that the energy sector could add between 41,600 and 46,500 direct jobs between 2022 and 2035. This growth is expected to include traditional oil and gas roles as well as positions in emerging fields focused on emissions reductions, such as carbon capture and storage.
Imperial Oil’s strategy to consolidate its corporate and technical functions into global business and technology centers, leveraging resources from its majority stakeholder, ExxonMobil Corp., demonstrates a deliberate effort to navigate this complex landscape. As the industry evolves, balancing job retention with the demands of technological advancement may significantly influence the future of work in the energy sector.
