Petroleum industry braces for more job cuts

FORT ST. JOHN, B.C. — A new Bloomberg Business news report says Canada’s 27 largest oil and gas producers are set to spend an average of 32 per cent less this year.

Despite almost two years of sinking oil prices and at least 40,000 job cuts, it suggests the next round has already begun with Cenovus Energy and Murphy Oil announcing work force reductions last week.

This adds to ongoing cuts by Suncor, Encana and others, which will likely result in thousands of additional lost jobs by the end of the year.

Industry estimates show the country’s petroleum industry likely employs about 200,000 people, and that crude was Canada’s most valuable export until 2014.

However, in Alberta, where oil and natural gas account for more than a quarter of the economy, the February unemployment rate was 7.9 per cent and higher than the national average for the first time since 1988.

The downturn impact was even more dramatic in Northeast BC where the jobless rate in February skyrocketed to a previously unthinkable 9.2 per cent.

Quoting Jackie Forrest of ARC Financial Corporation, Canada’s largest energy-focused private equity manager, the story says collapsing cash flow is the best barometer of the challenges production companies face.

This year, it is likely to fall to about $17.5 billion or roughly half of last year’s level.

It means it would be less than a quarter of the $72-billion generated in 2014, the year the price of crude oil started to collapse after averaging about $90/barrel U.S. over the previous five years.

This week it continues to trade at less than $40/barrel, and Bank of Canada deputy governor Lynn Patterso, suggests it will take another two years for the country to adjust to the shock.