Attracting Oilfield Workers Faces New Challenges - David Yager - Canadian Energy News, Top Headlines, Commentaries, Features & Events

By David Yager

There has always been a stigma associated with working in the oilpatch.

Decades ago the drilling rigs were held is such low regard that a popular joke among rig hands went like this.

“I didn’t dare tell my mother that I was a roughneck. So I said I was a piano player in a brothel.”

Because working in the middle of night in the middle of winter in the middle of nowhere has never been for everyone. Many refuse to even consider it.

Weather extremes. Remote locations. Boredom when not working. Isolation from friends and family.

Historically, the drawbacks have been overcome by high wages and advancement opportunities not available in other industries.

For over a century of near-continuous growth in oil and gas production and demand, most of the time this industry has been a magnet for anyone interested in making above-average wages in a business with no barriers to career advancement.

But these attractions have disappeared because of terrible investment and commodity price cycles and the relentless message that fossil fuels have no future because of climate change.

The latest twist is modern society’s expectations of acceptable and rewarding employment.

Which is leaving the industry wondering if oilpatch work remains suitable for anyone.

As the economy recovers from the pandemic lockdown, all industries are having trouble attracting and retaining workers.

Even though the oil industry is doing much better after seven tough years, it is not surprising that many of the workers who have lost their jobs since 2015 don’t want to return.

But there’s a new twist among younger, educated workers that the resource sector has not encountered before. It is coined “The Social Purpose Gap,” the spread between what young workers want and what the industry is offering.

This is the thinking within “Generation Z,” those born in the late 1990s or the first decade of the 21^st century. Gen Z ranges in age from 15 to 25. Many are still in school or just entering the workforce.

A recent study by BDO Canada is titled “Turning Sceptics Into Changemakers: Attracting Gen Z to the Natural Resource Sector in Canada.” https://www.bdo.ca/en-ca/insights/industries/natural-resources/gen-z-natural-resource-sector/?utm_campaign=2022-nr-futureworkforce&utm_medium=news&utm_source=pressreleaseat

This was part of a global study done by BDO on behalf of its numerous international clients in mining and oil and gas. It involved 750 participants: companies in resource extraction and Gen Zs still in school and contemplating entering the workforce.

The executive summary reads, “BDO commissioned global research across five major markets for natural resources – Australia, Canada, Latin America, South Africa, and the United Kingdom – to understand why Generation Z is sceptical about a career in the industry, and what could be learned from the natural resources companies that have been most successful in navigating the challenging talent market.”

The study involved both oil and gas and mining. When it comes to climate change, the former has been vilified as the problem for decades. The latter, the companies extracting the myriad of minerals required to facilitate the energy transition from fossil fuels to electricity, are said to be solution.

What is illuminating is Gen Z dislikes them both. BDO wrote, “A large majority, 74%, say they are not at all interested in a career in mining, while 68% say the same for oil and gas.” Only 21% of the students surveyed “have considered a career in the natural resources or energy industry.”

By comparison, only 24% report negative views about technology or media, and only 27% aren’t interested in careers in health care or life sciences.

There is valuable information in the report including advice on how companies can learn how to persuade the youth of today to become the resource workers and managers of tomorrow.

BDO opens, “The continual rise of environmental, social and governance (ESG) practices, including decarbonization, is disrupting the natural resources sector…ln addition, the natural resources industry is facing recruitment and talent pipeline challenges.”

Lifestyle is a big factor, and aspirations include more flexibility and work-life balance.

Some of the paradigm shifts were impossible to foresee.

Except for income, fly in/fly out camp work in Fort McMurray will never compete with one of the new “work from home” jobs that emerged during the pandemic lockdown. With the job market tight, this is becoming a permanent fixture within some companies.

Work from home? Sure. Just don’t quit. High turnover rates have become a parallel challenge.

The Canadian portion of study calculated the Social Purpose Gap between employers and employees. BDO writes, “46% of the Canadian natural resources companies highlighted social purpose as important or essential to Gen Z when assessing their career options.”

But the “gap” is big because “…67% of Gen Z respondents in Canada identify social purposes as either important or essential.”

The great leveler used to be wages. Pay enough and somebody will take the job.

But the report classifies Gen Z as a “Values Driven Generation.” And climate change looms large. “Gen Z are highly motivated by purpose. As well as seeking secure, well-paying jobs they want to know that the work they do has a positive impact on society and the environment. When students in our survey were asked how important it is that their chosen career positively impacts climate change, 30% say it is highly important (a rating of 9 or 10 out of 10) and a further 29% believe it is an important consideration (a rating of 7 or 8 out of 10).”

“The net zero carbon goal is highly motivating for Gen Z,” BDO writes. “43% of the Gen Z representatives play a role in achieving net zero emissions targets by 2050 as a key motivation for considering opportunities in the renewables sector.” But on the employer side, “…only 18% of corporates in Canada recognized this as important to Gen Z.”

BDO calls a commercial response by industry to persuade the workers of tomorrow to head their way as a “The Purpose Dividend.” If you really want them, BDO explains how to get them.

“Our research results clearly show that focusing on their ESG credentials and a broader sense of social ‘purpose’ can boost the perceptions of an industry in the minds of Gen Z. The four industries that students believe have the most positive environmental impact – renewable energy, not-for-profit, life sciences, and technology and media – are also the same ones where students say they would be most interested to pursue their career.

Yet this ‘purpose dividend’ is only available to organisations that can demonstrate a genuine and credible impact on society, environment and under-represented communities. Gen Z is sceptical about greenwashing, the practice of organisations making false or misleading statements about their environmental credibility. For example, 58% of the students interviewed believe poor ESG credentials is one of the biggest drawbacks to pursuing a career in natural resources.

Addressing these perceptions head on through better media messaging and a stronger communications strategy needs to be a central part of any talent pipeline strategy for the industry.”

Other elements of ESG include diversity and inclusion – programs to attract a more diverse workforce. The survey showed Canada is behind. “Just 36% (of Canadian respondents) say they have these programs in place compared with 55% across our global research respondents.”

It is obvious that no matter which way the world goes on decarbonization, mining will be essential whether it is extracting bitumen, coal, lithium or cobalt.

BDO writes, “Choices made by students foreshadow a talent crunch for the natural resources industry as it braces for a wave of retirements from aging workers. Among the 13 industries rated by students in our survey, mining and oil and gas emerged in last place for overall attractiveness. Just 15% and 14% of students respectively said they would be ‘very interested’ in pursuing a career in these industries. Later this decade, fewer graduates will have the skills needed to build and run mines producing lithium, nickel, copper and other metals to feed ravenous makers of electric vehicles, solar panels and other renewable-energy technologies.”

Clearly, there is no need for the oilpatch to have a persecution complex when it faces the same workforce challenges as the electrification mineral extraction sector.

But how big a problem is this for oil and gas?

There is no question the entire oilfield supply chain is facing significant shortages from personnel to pipe to pumps.

Depending on which side of the workforce transaction you are on, the labor situation is either good or bad. In March, Canada’s total unemployment rate fell to an all-time record low of 5.3%. Alberta’s was above the national average at 6.5%, but it was still the lowest since September of 2015 (except for one month, November 2018).

Hiring is everybody’s problem in 2022.

Unfortunately, the playing field inside the oilpatch isn’t entirely level.

Producers, particularly the large publicly traded companies, have recognized the trends and responded with visible ESG commitments from emissions to employment.

The big oil sands producers are on the leading edge of decarbonization with their plans for large scale CCUS and new federal tax credits to help pay for it. Even if they don’t know how to do it, the Net Zero By 2050 mantra has been worked into the public communications of most of the larger producers.

However, the service sector is more challenged. Some larger providers have been able to respond with natural gas or electric powered frac spreads and even e-line units. More high-tech service jobs are emerging in emissions monitoring, controls, automation and AI. Lots of new ways to cut emissions and fuel consumption are emerging almost continuously.

But the nuts-and-bolts business of developing new oil and gas production and keeping existing production on stream is powered by fossil fuels and doesn’t occur in urban centres.

However, the same goes for mining and processing which remains very carbon intensive, even if the final product is intended to reduce emissions.

Commodity markets have provided the solution. Money. The price of all the resources that the Gen Z crowd prefers to avoid have spiked sharply. While resource producers are conditioned after years of tough times to keep costs down and are still grinding their vendors for the lowest possible prices, they do have cash should they decide to spend it.

More competitive, urban-based service industries ranging from retail to hospitality cannot, nor will ever, be able to pay whatever it takes to ensure their positions are filled.

Government support programs like CERB have not been helpful. Trends like a guaranteed minimum income always sound attractive, but they are no solution for what the economy needs today.

In the current job market, there’s a guaranteed minimum income for anybody with a pulse prepared to leave home and exchange labor and commitment for wages.

Because of the rising cost of everything and governments squeezed by massive public debt, the private sector should be able to react more quickly with higher compensation than government support programs.

One would hope. And pray.

Realistically, a lot of the expectations shared among today’s youth emerged in a different time. Even if it was only a year ago.

Low energy prices, low food prices, near-zero interest rates, and world peace are all gone.

Now the cost of living including the essentials of food and housing is rising fast. The fossil fuels that so many loved to hate are in short supply. The enemy is now Russia, not Alberta or big oil producers.

The BDO study is useful, but like everything it is a point-in-time snapshot. The world is changing fast, and the recovery in oil and gas appears to be more than a short-term flash in the pan.

The labor shortage will affect supply thus causing oil and gas prices to rise further. Which creates more cash to attract workers.

It will all work out. It always does. And for the worker shortage, this time the oilpatch is not alone.

David Yager is an oil service executive, oil and gas writer, energy policy analyst, and author of From Miracle to Menace – Alberta, A Carbon Story. Find the book to www.miracletomenace.ca.