Small Business

A leaner oilpatch emerges from the downturn as technology advances replace jobs

Written by Ian Bickis, The Canadian Press

Tens of thousands of oil and gas workers laid off during the downturn have been waiting for the patch to get back on its feet, but many of the jobs could be gone for good. A rapid change in technology is playing out across the industry, after plummeting crude prices that began in 2015 forced companies to cut jobs and other costs wherever they could over the past two years.

Now, with oil holding steady above US$50 a barrel since December after having bottomed out to about $26 in early 2016, energy analysts say the growth of automation and other labour-saving efficiencies could hold back many jobs from returning with the economic recovery.

Take shale drilling, where just a few years ago you could find 30 rig hands operating diesel pumps, using headsets to synchronize the throttle and pressure needed to break apart the rock formations and free the trapped crude.

Today, that job can be done by two people sitting inside a control van, monitoring the automated, electrified systems, said Mark Salkeld, head of the Petroleum Services Association of Canada.

“Now on a drill rig you’ve got a driller sitting in a cyber chair, with dual joysticks, touch screens, everything instrumented. He can control the whole rig, he can see it all.”
Companies are relying more on machine learning to crunch the bewildering array of data from the field, looking for ways to improve production and lower costs, said Warren Gieck, a production optimization leader at General Electric’s innovation centre in Calgary.

“As the market is settling out and people are looking at expanding, they’re looking at expanding their projects, but not the number of people that are running them,” he said.

“They’re trying to do a lot more with a lot less,” he noted. “The personnel that are left are just overloaded and need additional tools.”

Gieck said that downturn has also accelerated the hunt for optimization because companies can’t afford to just drill extra wells like they could in the past.

The streamlined operations can be seen at Cenovus Energy (TSX:CVE), where the downturn spurred a major restructuring, says Drew Zieglgansberger, executive vice-president of oilsands manufacturing. “We have been extremely focused over the last two years on efficiency and reducing our cost structures,” he said by email.

The efforts have resulted in faster drilling, fewer well pads and other improvements that have cut non-fuel operating costs by 30%. Those efforts have also meant that despite cutting about a third of its head count in the downturn, Zieglgansberger says they won’t need to rehire anyone to go ahead with two expansion projects a year.

Companies like Cenovus and Suncor are moving increasingly to replicated plans, rather than starting from scratch, meaning design time for projects have plummeted. Suncor says it has slashed the engineering time for a new steam-based oilsands well pad to 800 hours for its new design, compared with about 9,100 hours between 2010 and 2015.

And companies are looking to push advancements on the more mature mining method as well, with Suncor already operating a driverless truck pilot project at its oilsands mine. Shell and Imperial (TSX:IMO) have also said they’re looking into the potential of autonomous trucks.

Salkeld said smaller companies, like those on the service side, haven’t been able to invest as much in technology because of the downturn—but with the industry picking up, so too is the push for automation.

Precision Drilling (TSX:PD) boasted in its latest quarterly results that it will be working to further the automation on its Super Triple rigs, with mechanized pipe feeding and the ability to walk itself to the next pad, while also pushing for further “de-manned” directional drilling services.

Big rigs still require a lot of workers, noted Salkeld, with some of the largest creating an estimated 300 direct and indirect jobs, but those rigs are doing the work of what some five did before.

Looking ahead, Salkeld said he sees a continued push towards robotics with a crew of two or less, both for costs and increased safety. He said that future is already arriving, having recently seen a new type of automated rig online.

“It was a video of this massive, automotive assembly-line type, Star Wars-type robot, that was picking up the pipe, drilling it, and there wasn’t a person in sight.”

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