Work dries up as Alberta’s oil boom fades

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At the Barge Landing Lodge, an hour north of Fort McMurray, there are few signs of an oil slump, for now.

Long lines of men with backpacks and luggage wait to check in at the front desk. Dozens of muddy boots are left in a side room to keep the dining hall floor tidy. During shift changes, buses line up to take hundreds of tradespeople from the work camp on Fort McKay First Nation lands to Fort Hills, along with other oil sands sites. But occupancy rates at such work camps have been falling steadily over the past year or two and entire camps in the Athabasca oil sands region have been mothballed.

As construction work wraps up on projects such as Suncor Energy Inc.'s Fort Hills site, and Canadian Natural Resources Ltd.'s expansion at its Horizon site, the days of easily finding business opportunities in Alberta's oil sands regions are over. Oil sands mining and upgrader construction work peaked last year, and a downward slide has now begun.

"The weaker price of oil continues on prompting a second round of job losses in 2018 as current projects wind down and no new major projects are scheduled to start," says a report from BuildForce Canada, a construction-industry group. The current investment cycle "bottoms in 2019 and employment touches its low point in 2020," it forecasts.

Richard Burton, a carpenter and scaffolder who moved to Alberta from Southern Ontario in the early 1990s, has had almost non-stop work and high wages travelling to oil sands construction sites from his Hilda, Alta., farm for the better part of two decades.

The 65-year-old has worked long hours, has spent long days commuting and endured painful frostbite on his face after working in minus-50 C temperatures. But he says he has no intention of giving up work unless his health forces him to. His dream was to work on at least one major project with his teenage grandson – who he trained in carpentry – before retiring.

He is currently working at Fort Hills. However, given the long lead times and huge capital costs involved in such oil sands projects, Mr. Burton isn't confident he will get another contract. "If they announce one project tomorrow, it's going to be five years before I've got a job."

Companies that provide equipment or services to the oil sands from industrial centres such as Nisku, Acheson and Red Deer will also feel the pinch.

Paul Verhesen, president and chief executive of Edmonton-based Clark Builders, said his company is winding up construction on accommodation structures, truck shops, administration buildings and the fire hall at Fort Hills. But Clark Builders has also done smaller construction projects for dozens of smaller firms that act as suppliers to oil sands megaprojects. "We became used to megaprojects, and the side effects of megaprojects," Mr. Verhesen said of the oil sands boom years of the past decade. "Every megaproject has countless other projects associated with it."

Ian Johnston, chief operating officer of PCL Constructors Inc.'s heavy-industrial division – which works construction on oil sands sites including Fort Hills – said fly in/fly out workers who have their travel expenses paid for them are becoming a thing of the past as oil companies look to cut costs. The numbers of interprovincial workers have dropped sharply, he said. "We're moving back to the days of you've got to make your own way here."

PCL is looking to do more work through its U.S. entities, and is looking for an uptick in petrochemical, in-situ oil sands or pipeline projects within Alberta. But Mr. Johnston said there's no question that his company will have to lay off workers once both Fort Hills and the North West Upgrading Inc. facility – another mega-project near Edmonton – are completed at the end of this year.

"There's not as many jobs starting as finishing. So keeping the same levels of employment in '18 and '19 is going to be a big challenge."