Drilling companies scramble for workers

The Globe and Mail

As sustained crude prices ease the pain of the oil patch downturn, Canada's drilling companies now find themselves in a worker crunch so severe that some have begun calling for a dramatic boost to labour costs.

There are so few workers available that some companies have been forced to turn away jobs at a time when many are scrambling to make up for the dramatic fall in revenue in the past couple of years.

"This is about as tight as I've seen it," said Joe Bruce, chief executive officer of Nabors Canada, one of the largest drilling companies in the country. "We could probably work somewhere in the region of 63 or 64 of our drilling rigs this winter. We don't believe we can crew any more than maybe 55 or 56."

Drilling is part of the broader field of oilfield services, which employs one out of two oil patch workers. They are what some call the "horsepower" of the industry, and their work is growing in importance as new oil sands projects use wells over mines. As a result, problems with drillers can have far-reaching consequences for an industry that relies heavily on what they do.

Convincing people to work outside in cold, remote locations has never been easy for drilling companies. But they say this year has been especially difficult, since drill workers who went without work in the past couple of years have now abandoned the industry - in part for construction jobs and in part to stay away from companies that now admit their salaries haven't kept up.



The hourly rates for drill workers range from $24 an hour for a lease hand to $40.20 for a driller. But rig work typically lasts only for a few months at a time, and even the weekly two-on, one-off shifts are often interrupted by changes in plan that come from, for example, companies cancelling wells. And the pay is less than it once was.

In 2009, for the first time in at least decades, the Canadian Association of Oilwell Drilling Contractors rolled back pay for rig workers, who took an average 12 per cent cut. The association sets suggested rates that are mirrored by most companies. This year, it increased wages by 3 per cent, but industry has resisted further increases, arguing that that would hurt the competitiveness of the Canadian industry compared to that of the U.S.

Bruce Jones, chief executive officer of Stoneham Drilling Trust and a former chairman of the CAODC, argues that more is needed. Drilling companies normally use "unskilled labour" since they don't typically require ticketed trades. But they draw from a demographic that is also favoured by industries like construction, where pay is now comparable.

"The rest of the world's compensation kind of caught up with oil and gas," Mr. Jones said. "We need to offer a more competitive wage so we attract more people, and so there's an incentive to come to this sector."

After all, industry has a lot of people to hire. In the last two years, the services sector cut more than 15,000 jobs from a work force that numbered about 93,000 in 2007. Next year, the Petroleum Human Resources Council expects the need to surge again, to about 87,000 workers. The council forecasts a steady rise to 109,000 by 2020.

Hiring difficulties could make that tough, however. Companies have sought to make themselves more attractive. Nabors, for example, has doubled an orientation program to two days to emphasize safety, which is a growing worry amid the increasing use of inexperienced personnel.

Though drillers still rely heavily on rural newspaper and radio advertising, Nabors has also begun using the Internet for its hiring. The entire industry is also using more "level-loading," which spreads the work out over the year, rather than concentrating it in the winter drilling season. And companies have begun to reach out to so-called "under-represented workers" who are first nation, women or immigrants.

But industry says there are limits to how fast it can grow.

"We're doing everything we can to attract people," said Mr. Bruce. "But at the same time we're not about to put people at risk by putting a whole bunch of green hands on a rig that don't know what they're doing."