CALGARY — Before oil prices fell from more than US$100 per barrel three years ago, jobs driving heavy-haul mining trucks in the oilsands were sought after for their six-figure salaries.
But ever since crude’s collapse sent oilsands producers on years-long cost-cutting drives, the long-term prospects for heavy-haul operators have deteriorated. For instance, Suncor Energy Inc. is hiring such drivers for its new Fort Hills oilsands mine, but the job postings show the positions are just 12-month contracts.
One possible reason for the position’s now transitory nature is that Suncor has been piloting the use of driverless trucks in the oilsands on a fleet of six heavy haulers for two years and will decide whether to implement the autonomous system company-wide at the end of this year.
Suncor’s driverless trucks are just one way Canada’s energy industry is turning to automation and robotics to further reduce costs as West Texas Intermediate oil prices stubbornly hover around US$50 per barrel.
University of Waterloo mechatronics engineering professor William Melek said automation “is increasing, but increasing very slowly” in the energy sector. But, just as the push to lower costs through robotic and automated processes is changing Ontario’s manufacturing industry, it’s spreading to other sectors of the economy such as energy and mining.
CIBC World Markets analyst Arthur Grayfer in a recent research note said Suncor could expand the program to 150 trucks, which are already equipped with self-driving software, and the switch is “implementable immediately.”
Suncor spokesperson Sneh Seetal said the company has yet to make a final decision on expanding the program, but confirmed the company last September hired a director of autonomous haul systems as well as a supporting team of engineers.
Peter Tertzakian, ARC Energy Research Institute’s executive director, said the price point for adopting new automated systems is falling and oil and gas companies, usually late adopters of new technology, are now moving more quickly.
“The realization is setting in that an oil price recovery may not be forthcoming,” he said.
Drillers, refiners and pipeline companies are all adopting automation and robotics to survive lower commodity prices and labour market forecasters believe the change will affect employment levels, though it’s not yet clear how many positions could be reduced.
At Cenovus Energy Inc.’s annual meeting in April, chief executive Brian Ferguson said the oilsands is at the beginning of a “technological renaissance,” adding, “We’ve only just started to scratch the surface in terms of big data, digitization and automation.”
Similarly, Precision Drilling Corp. chief executive Kevin Neveu said one of his company’s stated objectives for 2017 is to commercialize new automated and robotics systems, many of which are in beta testing in the field today.
The company is working with Pason Systems Corp., Schlumberger Ltd., National Oilwell Varco and software firm SAP AG to develop its technology, and Neveu said collaboration will be necessary for some companies to develop automated systems.
“This is not an automobile, where we have 200,000 of the same thing,” he said, noting that Precision’s rig fleet numbers in the hundreds, not thousands. “The fleet to spread that cost over is much smaller.”
In the middle of May, Precision held an investor day to show off its automated systems, guidance systems and data gathering systems, and explain how new technology could make drilling more efficient.
The company’s rigs already use hydraulic legs to walk from well to well and other parts of the system are automated or have robotic elements as well. Neveu said further automation and better data collection would help lower drilling costs between eight and 12 per cent and reduce human error.
Still, Neveu doesn’t expect the transition will eliminate jobs at Precision.
“We don’t need fewer people, we need higher-skilled people,” he said, adding that in the near future, field staff will have to understand software programs that automate the company’s rigs.
Though jobs may not be lost at Precision, the widespread adoption of automation and robotics will likely affect employment across the industry.
In March, the Petroleum Labour Market Institute forecast that if oil prices stabilized or rose over the next five years, companies would only re-hire a third of the 52,500 jobs lost during the recent recession.
Carol Howes, the institute’s vice-president of communications, said the study didn’t directly focus on automation, but the research done in preparing it suggests “some of the people who are retiring may not be replaced with new workers, but may be replaced by automation.”
Similarly, Suncor’s Seetal said that if her company transitions its heavy haul fleet to a driverless system, the switch would be phased in over three to five years and she expects any job reductions would be managed through attrition.
CIBC’s Grayfer said Suncor’s estimates show it could shave 10 per cent off its operating costs with driverless trucks, but mining giant Rio Tinto PLC’s experience with the trucks shows Suncor could push those savings to 13 per cent.
In other industries, automation and robotics have led to reductions of between 20 and 40 per cent in the workforce for manual labour, said Lance Mortlock, Ernst and Young’s Canadian strategy services leader.
Mortlock said it’s not clear what the effect will be in oil and gas, but it is clear that a combination of field and office jobs could be automated. In the past, he said, automation put blue-collar field workers out of work and now automated software processes, or bots, have begun to do the same thing to white-collar office positions.
He said bots that “emulate human behaviour of repetitive processes” can operate for a third of the cost of offshore workers and have the potential to replace workers doing tasks such as accounts payable, collecting and formatting tax documents, uploading job descriptions and other HR paperwork.
“We’re seeing a lot of activity in this space in other industries and we expect oil and gas to follow suit,” Mortlock said.
Tertzakian said he expects “the composition of the labour force will change. Employment trends may shift from one kind of engineering to more software engineering.”
At this point, Tertzakian said he thinks only a small number of companies in the Canadian energy sector are making the shift, but those early adopters are gaining an edge.
He points out the growing number of tech startups in Calgary have the potential to both speed up the adoption of new technologies and change the way energy companies operate.
For example, Calgary-based Osprey Informatics has built an automated system for monitoring remote sites such as oil wells, eliminating the need for field workers to spend all day driving around for routine inspections at a cost of $75 per hour.
Osprey chief executive Robert Logan said the company can do the same thing for 15 cents per hour and has signed up 35 oil and gas companies as clients.
“Now we’re at a point, in a $40-to-$60 WTI window, where creating structural cost savings are critical,” he said.
Osprey is based out of a General Electric “innovation centre” and tech accelerator in the middle of downtown Calgary, where “automation is across everything that we do here,” said GE Canada chief innovation officer Gandeephan Ganeshalingam.
The accelerator is also home to companies such as Steam IQ, which has developed algorithms and automated systems to optimize the amount of steam and pressure that oilsands companies such as Cenovus could use in their deeper-lying bitumen properties.
The centre has also developed automated systems, including one by Hifi Engineering Inc., for immediately identifying pinhole pipeline leaks or even strains using fibre optic cables.
University of Waterloo’s Melek said many of his engineering graduates, specialized in automation and robotics, are still going to work in the manufacturing industry, but some are making their way to energy and mining.
“Repetitive, tedious tasks can be given to robots,” he said, “but skilled labour will still be needed.”