Highlights on historical and future trends for labour productivity in Canada’s oil and gas industry based on a recently completed study. This webinar is targeted to oil and gas companies, associations, workforce and labour market analysts, training agencies, government and education. The webinar will review: • Historical and future trends for labour productivity in oil and gas • Current industry benchmarks for production per employee • Key factors impacting labour productivity in the oil and gas industry • Considerations for strategic planning • Recommendations for improving labour productivity

1. Labour Productivity in Canada’s Oil and Gas Industry
A discussion of historical and future trends
September/October 2017
V. 9.27.17

2. ACKNOWLEDGEMENTS AND DISCLAIMERS
The study and this webinar is funded in part by the Government of Canada’s Sectoral Initiatives Program.
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as follows: Source (or “adapted from”): The Petroleum Labour Market Information (PetroLMI) Division of Enform Canada, name or
product, catalogue, volume and issue numbers, reference period and page(s).
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2

3. Claudine Vidallo, BSBA, PMP
Team Lead
Claudine.Vidallo@enform.ca
3
PRESENTER
Gerry Beitel, B.SC, MBA
Project Consultant
Gerry Beitel@dynawise.com
AGENDA
• Overview of PetroLMI
• Oil and Gas Labour Productivity
• Historical Trends
• Future Impacts
• Recommendations
• Q&A
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5. Labour Productivity in Canada’s Oil and Gas Industry
A discussion of historical and future trends
5

6. Background
6
• The oil and gas industry is an important contributor to
Canada’s economy.
• In 2016, it made up close to 7% of the national
Gross Domestic Product (GDP)
• Employs approximately 175,000 direct workers and
many more indirect workers throughout Canada.
• Since 2014, the industry has undergone a significant
downward shift in oil prices
• Increased pressure on company’s to improve productivity,
including labour productivity
6X Higher
Oil and gas labour
productivity averaged 6X
higher annually than overall
Canadian labour
productivity since 2010
(Canadian business sector-
based on GDP per hours)
Source: CANSIM Table 383-0033. Oil and gas
industry for this report includes oil and gas
extraction, oil and gas services and pipeline
transportation industry subsectors.

7. Why is Labour Productivity Important?
7
Labour productivity is a key element in:
• Improving profitability and sustaining
industry activity levels.
• Forecasting labour demand for the industry
and organizations.
• Developing strategies and policies to meet
the industry’s workforce needs.
• Contributing to overall Canadian labour
productivity levels.

8. Our Goal for Today
8
• Our goal for today is help you understand:
• Historical labour productivity trends
• Current levels of labour productivity
• Future implications of labour productivity increases
• Provide recommendations to industry and policy makers on how labour
productivity may be improved
This report is limited to an examination of labour productivity of direct
industry employment

9. What is Labour Productivity?
9
• Labour productivity is defined as the
ratio of output per unit of labour input.
• Volume of output per unit of labour or more specifically, barrels of oil equivalent per
day (BOE/d) per direct employee is used in the report
Industry Subsector Labour Productivity Measure
Total industry Total BOE/d per employee
Exploration and production (E&P), excluding oil sands E&P BOE/d per employee
Oil sands Oil sands BOE/d per employee
Oil and gas services Total BOE/d per services employee
Pipeline transmission Total BOE/d per pipeline employee

10. What is Labour Productivity?
10
The two ways of increasing labour productivity are not mutually exclusive
Labour productivity improvements can be accomplished in two ways:
1. Requiring fewer people to accomplish the same amount of output.
2. Improving or increasing production output with the same amount of labour.

11. Oil and Gas Industry Labour Productivity
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• Three distinct time periods were examined:
‒ 2010-2014 a period of rapid growth and high prices
‒ 2015-2016 a period of contraction and significant price decline and
‒ 2017-2021 a forecasted period of moderate recovery.

12. Oil and Gas Industry Labour Productivity
12
Reference Point: Canadian Labour Productivity for all Business Sectors has
increased, on average, 1% per year between 2010-2016
Rapid growth and
high prices
Contraction and
significant price decline
Labour productivity
ratios (in BOE/d per
employee) and
percent change
between each period.
2015-2016
Note: 2016 was adjusted to excluded the impact of Fort McMurray Wild Fires

13. Oil and Gas Industry Labour Productivity: 2010-2014
13
+19% increase in production
+27% increase in direct employees
The number of direct
employees increased
at a faster rate than
production
Source: Production numbers sourced from CAPP with 2016 production adjusted for Fort McMurray wildfire impact. Employment
numbers from Statistic Canada (actuals) and PetroLMI (2015 Statistics Canada adjusted & 2016 estimated).
EmploymentProduction

14. Oil and Gas Industry Labour Productivity: 2015-2016
14
Production increased
slightly while the
number of direct
employees decreased
significantly
-23% decrease in direct employees
+1% increase in production
Source: Production numbers sourced from CAPP with 2016 production adjusted for Fort McMurray wildfire impact. Employment
numbers from Statistic Canada (actuals) and PetroLMI (2015 Statistics Canada adjusted & 2016 estimated).
Production Employment

15. Oil and Gas Industry Labour Benchmark
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• It took 20%, or 55 less workers to produce 10,000 BOE/D per day in 2016 compared to 2010.

16. Force Field Analysis: Capital Investment in 2010-2014
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• In 2010-2014, a rapid growth period, increased capital investment without immediate
increase to production was a key restraining force on labour productivity.
6,194
$6,085
7,391178,000
226,500
174,000
$8,254
$4,317
7,490
Source: Production numbers sourced from CAPP with 2016 production adjusted for Fort McMurray wildfire impact. Employment
numbers from Statistic Canada (actuals) and PetroLMI (2015 Statistics Canada adjusted & 2016 estimated).

17. Force Field Analysis: Other Key Factors in 2010-2014
17

18. 18
Production increase
from past Investment +
decreased capital and
related employment
Force Field Analysis: Capital Investment in 2015-2016
• In 2015-2016, reduced capital spending and related employment combined with increased
output from past investments served as driving forces to labour productivity.
Source: Capital spending from CAPP/Statistics Canada (actuals) and ARC Energy Research Institute (estimated). Production numbers sourced from
CAPP with 2016 production adjusted for Fort McMurray wildfire impact. . Employment numbers from Statistic Canada (actuals) and PetroLMI (2015
Statistics Canada adjusted & 2016 estimated).
6,194
$6,085
7,391178,000
226,500
174,000
$8,254
$4,317
7,490
Production increases from past
investments and reduced capital
spending and employment

19. 19
Force Field Analysis: Other Key Factors in 2015-2016

20. 2017 is a Pivotal Year for Canada’s Oil and Gas Industry
• Two Scenarios for Pricing, Production and Spending:
Sources: Pricing and expenditure forecasts supplied by ARC Energy Research Institute as of January 10, 2017 which incorporates the production outlook from the Canadian Association of
Petroleum Producers’ June 2016 Crude Oil Forecast, Markets and Transportation report. Oil price in US$ per barrel (/bbl), West Texas Intermediate (WTI); Natural gas price in C$ per
gigajoules (/GJ), AECO Hub Price Index.
20

21. Oil and Gas Industry Labour Productivity: 2017-2021
21
Modest Recovery:
12% increase in production and
10% increase in direct employment
Source: Production numbers sourced from CAPP with 2016 production adjusted for Fort McMurray wildfire impact. Employment numbers from Statistic Canada (actuals) and
PetroLMI (2015 Statistics Canada adjusted, 2016 estimated, 2017-2021 forecasted).
• For the 2017-2021, production is expected to increase at a
slightly faster rate than direct employment.
178,000
226,500
174,000
191,000
180,000
6,194
7,391 7,481
8,389
7,945

22. 22
Modest Recovery scenario
Force Field Analysis: Capital Investment in 2017-2021
• In the 2017-2021 period of forecasted moderate recovery, capital investment will serve as
both driving and restraining forces.
Source: Capital spending from CAPP/Statistics Canada (actuals) and ARC Energy Research Institute (estimated/forecasted). Production numbers sourced from CAPP with 2016 production
adjusted for Fort McMurray wildfire impact. Employment numbers from Statistic Canada (actuals) and PetroLMI (2015 Statistics Canada adjusted, 2016 estimated, 2017-2021 forecasted).
Production Employment

23. 23
Force Field Analysis: Other Key Factors in 2017-2021
Potential Game Changer:
In-situ solvent use
Potential Impact of marijuana
legalization is also of high
concern to the industry

24. Labour Productivity: Oil and Gas Subsectors
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• Labour productivity
varies according to
subsector
• All subsectors showed
similar historical trends
for labour productivity
• 2010 - 2014:
moderate
decrease
• 2015 - 2016:
significant
increase

25. E&P Labour Productivity
25
• E&P labour productivity is forecasted to decrease between 2017 and 2021 mainly due to
moderate recovery of capital investment (and employment) amid flat or declining production.
Modest Recovery scenario
Labour productivity
ratios (in BOE/d per
employee) and percent
change between each
period.

26. 26
• Labour productivity in the oil sands subsector is expected to further improve between 2017
and 2021 as production is forecasted to increase at faster rate than employment.
• Production will increase from prior investments while capital spending decreases/stays flat.
Oil Sands Labour Productivity
Labour productivity
ratios (in BOE/d per
employee) and percent
change between each
period.

27. Oil Sands Labour Productivity, by Operations Type
27
• Labour productivity for oil sands mining and upgrading are expected to increase during the
forecast period by 11% and 33% respectively while in situ is expected to remain flat.

28. Oil Sands Labour Benchmark, by Operations Type
28

29. Oil and Gas Services Labour Productivity
29
Service employees per $100M oil and gas expenditure
(in 2015$ CDN), Modest Recovery scenario
• Services labour productivity is expected to increase in 2017-2021 as total oil and gas
production increases at a greater rate than services employment. Improvements more
moderate than 2015-2016 trends although still greater than industry-wide trends.
Labour benchmark:
the number of service
workers required per
dollar of oil and gas
expenditure is a more
appropriate measure for
the subsector.
Labour productivity
ratios (in BOE/d per
employee) and percent
change between each
period.

30. Pipeline Labour Productivity
30
Pipeline throughput is a more
appropriate measure for the
subsector’s labour productivity.
However this metric was not
available at the time of research.
• Pipeline labour productivity show minimal changes during the forecast period.
‒ Restructuring in sector occurred. Addition of new staff more closely linked to project
approval (may change if mega projects are approved or proceed).
Modest Recovery scenario

31. Occupational Shifts
31
• General trend of moving from a growth
industry to one of optimization
• Highly technical staff required for
optimization and may be different skill
sets than E&P
• May be impacted by loss of knowledge
of downsizing/retirements
• Requirements of new technology
• Example: Solvents use in in-situ may affect requirements for steam engineers if
broadly adopted (e.g. fewer steam engineers per BOE/d may be required).
• New skills may be required, such as operators with skills to work with solvents (e.g.
an increased need for special skill operators per BOE/d).

32. Conclusions & Key Observations
32
• During periods of industry growth, with
significant capital investments in new
projects, labour productivity declines
are typical
Overall, during periods of growth or recovery, labour productivity declines
or slight increases may be acceptable and considered necessary for both
industry and individual company’s long-term health and viability

33. Conclusions & Key Observations
33
• Despite significant increase in technology and process improvements, labour productivity
decreased by 6% between 2010 and 2014 a period of rapid growth
• In line with expectations, significant labour productivity gains of 32% were made in 2015-
2016
• Based on forecasts, and a balance of factors, a moderate increase of approximately 2% in
labour productivity is expected over the next five years
• Without significant technology and process improvements it would be anticipated that
labour productivity would decrease between 2017 and 2021
The oil and gas industry is one of the most productive industries in Canada.
Its growth helps to improve overall labour productivity in Canada

34. 34
Industry players may want to consider some of the following:
• Continue/enhance information sharing to promote industry efficiency (e.g. COSIA);
• Continue investment and implementation of innovation;
• Undertake more rigorous measuring of labour productivity within companies and across
the industry;
• Set targets for improving labour productivity that consider a balance of factors;
• Engage in workforce planning and skill planning;
• Work with educational institutions and industry associations or governments
‒ Understand and support shifts in labour and training requirements.
Recommendations

35. Recommendations
35
Industry and government may want to consider some of the following:
• Encourage more investment through removing constraints on
transportation of oil and gas;
• Streamline regulatory processes;
• Support the development of value-added processing (e.g. partial
upgrading);
• Support the development and promotion of critical technical skills;
• Improve the provision of industry labour market data;
• Continue to seek win-win opportunities.
Labour productivity in any industry, and economy, is vital
for competition and for growth.
Carol Howes, Vice President, PetroLMI and Communications, Enform Canada

36. Check-in & Wrap
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• Our goals today were to help you understand:
• Historical labour productivity trends
• Current levels of labour productivity
• Future implications of labour productivity increases
• Provide recommendations to industry and policy
makers on how labour productivity may be improved.

37. QUESTIONS?

38. For more information
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Thank you for your time and we hope you found
this session valuable!