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Suncor Energy facility is seen in Sherwood Park, Alta. on Aug. 21, 2019.Candace Elliott/Reuters

One of Canada’s biggest oil producers will cut up to 2,000 workers in the next year and a half – the largest announcement of job losses since the sector was rattled by collapsing prices and the COVID-19 pandemic.

Alberta Premier Jason Kenney said the news on Friday from Suncor Energy Inc. is yet another sign that his province faces an economic crisis that requires an immediate response from Ottawa. It also came the same day Moody’s Investors Service downgraded Alberta’s credit rating for the second time in a little more than a year.

Suncor said it expected to cut its work force by 10 per cent to 15 per cent over the next 18 months, with the first 5 per cent in the next six months. While it did not announce specific numbers, that would amount to as many as 2,000 layoffs over all and about 650 by March. The company currently has about 13,000 workers.

Mr. Kenney said layoffs of this scale were inevitable, six months after a price war between Russia and Saudi Arabia sent prices into the negative. At about the same time, global shutdowns related to COVID-19 caused demand to dry up. Even now, global oil output continues to ramp up while demand remains weak.

“It is hard to overstate the economic adversity that so many Albertans are going through, including now, up to 2,000 of the great women and men who work for one of Canada’s largest companies, one of our largest energy producers,” he said on Friday in Calgary.

“This announcement today by Suncor underscores that what’s happening in Alberta today is nothing less than an economic emergency.”

Mr. Kenney repeated his demands that the federal government repeal policies he views as hostile to the industry and give the province $6.5-billion from a fiscal stabilization fund to compensate for lost oil and gas revenues.

“Once again, we implore the federal government to work with us, to help get this industry back on its feet,” he said.

The province’s oil and gas sector was bleeding jobs even before the pandemic. Companies such as Husky Energy Inc. and Perpetual Energy Inc. announced job cuts last year.

More recently, TC Energy Corp. laid off an undisclosed number of workers earlier this week, and Royal Dutch Shell cut 9,000 of its global work force, although it’s not clear how many of the company’s 3,500 workers in Canada would be affected. Ovintiv Inc., formerly Encana Corp., laid off 640 staff across North America in June, including positions in Alberta, while the same week, Enbridge Inc. said 800 employees had accepted voluntary buyouts.

Suncor was already in the process of an overhaul that was going to result in job losses, spokesperson Sneh Seetal said. But she added that continuing market volatility accelerated those plans, which will also include voluntary retirements.

“We are looking across all of our locations, across all assets, across all areas,” Ms. Seetal said. “Numbers equal people, so these are never easy decisions.”

Fort McMurray and the surrounding area will be hit hard by the layoffs, said Don Scott, Mayor of the Regional Municipality of Wood Buffalo, the base for Suncor’s industrial operations. The company employs nearly 5,000 people in Wood Buffalo, as well as a host of contactors.

“It’s a tough day for the region and a tough day for Alberta,” Mr. Scott said.

Federal Natural Resources Minister Seamus O’Regan wasn’t available for an interview, but his press secretary, Ian Cameron, said in a statement that “our hearts go out to the workers at Suncor.” The statement noted previously announced support for the oil sector such as $1.7-billion to clean up inactive oil and gas wells in Alberta and other western provinces.

Richard Masson, chair of the World Petroleum Council-Canada, said such layoffs have been a long time coming and the impact will be felt far beyond the pandemic. He said companies were already looking for ways to be more efficient, and will emerge smaller even when prices and demand return.

“It’s just the right environment for management to finally say, ‘Okay, it’s time to rip off the bandage because we see a future with fewer people operating more efficiently,’” he said.

“It will mean leaner companies.”

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