HR TRENDS AND INSIGHTS: FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING - EMPLOYMENT IMPACTS

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1 HR TRENDS AND INSIGHTS: FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING - EMPLOYMENT IMPACTS This project is funded by Government Canada s Sectoral Initiatives Program

2 FOREWORD Over Over last two last years, two years, Petroleum Human Human Resources Council Council has has undergone an an exciting period period transition. In In 2013, we we were were acquired acquired by Enform by Enform Canada, Canada, a move a move that that allowed allowed for for consolidation Enform s safety safety training services workforce workforce planning planning services services Council Council into into one one integrated national national entity entity serving serving Canada's upstream oil oil industry. With With release release this this report, report, I am I pleased am pleased to announce to announce that that we we are are furring our our integration by by launching a new a new name name visual visual identity identity for for former former Council Council Petroleum Petroleum Labour Labour Market Market Information (PetroLMI) Division Enform. PetroLMI PetroLMI has always has always served served a unique a unique role role in in oil oil industry. industry. As As part part Enform Enform family, family, we we provide provide labour labour market market data, data, knowledge knowledge expertise expertise to furr to furr align align Enform s Enform s training training safety safety services services with with industry industry needs. needs. Moving Moving forward, forward, we we believe believe new new PetroLMI PetroLMI name name logo logo will will better better reflect reflect our our Division s Division s mate. mate. Employment Employment impacts impacts due due to decreased to decreased industry industry spending spending The oil The oil industry industry has has already already experienced experienced significant significant impacts impacts to its to labour its labour force force since since price price oil oil started started its its decline decline last November. last November. If oil If prices oil prices continue continue to remain to remain low, low, we we anticipate anticipate additional additional reductions reductions to spending to spending jobs jobs before before things things start start to turn to turn around. around. This This report report examines examines potential potential impacts impacts reduced reduced industry industry spending spending 2015 in 2015 on on direct direct indirect indirect jobs jobs related related to to oil oil industry industry across across Canada. Canada. History History has shown, has shown, however, however, just just how how resilient resilient this this industry, industry, its people, its people, can can be. be. Despite Despite challenges challenges it has it has faced faced over over last several decades, Canadian oil industry people who drive it to succeed have still managed to increase last several decades, Canadian oil industry people who drive it to succeed have still managed to increase output, boost pritability process efficiency, deliver products out to new international markets year over year. output, boost pritability process efficiency, deliver products out to new international markets year over year. Looking ahead for PetroLMI Looking ahead for PetroLMI In 2015, PetroLMI will furr develop its labour market information provide analysis insight into new trends, changes In 2015, PetroLMI will furr develop its labour market information provide analysis insight into new trends, changes challenges within industry. As well, we are building some unique tools to support workforce career planning. One challenges within industry. As well, we are building some unique tools to support workforce career planning. One our upcoming LMI products is a new HR Trends Insights report on rotational workers in Canada's petroleum industry. In our upcoming LMI products is a new HR Trends Insights report on rotational workers in Canada's petroleum industry. In addition, PetroLMI is in process updating developing priles current new occupations that are evolving or addition, PetroLMI is in process updating developing priles current new occupations that are evolving or emerging due to changes within industry as well as a result technological advancements. emerging due to changes within industry as well as a result technological advancements. Our mate going forward remains same: to collaborate with industry, government, educators training agencies to Our mate going forward remains same: to collaborate with industry, government, educators training agencies to support help advance development a sustainable, skilled productive workforce in Canadian petroleum support help advance development a sustainable, skilled productive workforce in Canadian petroleum industry. industry. Carol Howes Carol Director, Howes PetroLMI Director, PetroLMI MAY 2015 PG. 2 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 2

3 TABLE TABLE OF CONTENTS OF Foreword Foreword Executive Executive Summary Summary Introduction Methodology Limitations Limitations Approach Approach Previous Previous PetroLMI PetroLMI Employment Impact Impact Assessments Oil Oil Gas Gas Industry Industry Capital Capital Operational Operational Expenditures Outlook Outlook Capital Capital Expenditures Expenditures Operational Operational Expenditures Expenditures Employment Employment Impacts Impacts capital capital operational operational Expenditures Expenditures Employment Employment Impacts Impacts Related Related to Operational to Operational Expenditures Expenditures Conclusion Conclusion Appendix Appendix A... A Appendix Appendix B... B Appendix Appendix C... C Acknowledgements Acknowledgements MAY 2015 PG. 3 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 3

4 EXECUTIVE SUMMARY In 2014, EXECUTIVE Canadian SUMMARY oil industry spent almost $125 billion on exploration, development production activities, In 2014, which Canadian supported oil more than industry 720,000 spent direct almost indirect $125 billion jobs across on exploration, Canada. development In 2015, an anticipated production $31 billion activities, reduction which in operational supported more capital than 720,000 expenditures direct is expected indirect jobs to have across a significant Canada. In impact 2015, an on anticipated oil $31 industry billion reduction its associated in operational labour force. capital Based expenditures on similar industry is expected spending to have patterns a significant in recent impact years, on oil assuming industry those spending its associated patterns labour do force. not change, Based on as many similar as industry 185,000 spending direct patterns indirect in jobs recent related years, to oil assuming industry could those potentially spending patterns be lost, a do decline not change, 25% as from many as 185,000 direct indirect jobs related to oil Oil industry engineering could potentially construction be firms, lost, which a decline perform 25% majority from work related to development projects, would expect to absorb Oil largest engineering share construction he employment firms, impacts, which perform accounting majority for 75,000 work jobs, related or almost to development 40% total projects, jobs lost. would The expect support to absorb services sector, largest which share is involved he employment heavily impacts, in exploration accounting development for 75,000 jobs, drilling, or almost would 40% account total for jobs next lost. largest The share support with an services estimated sector, decline which is 26,000 involved jobs. heavily in exploration development drilling, would account for next largest share with an estimated decline 26,000 jobs. Many losses would take place in Alberta would impact those employed in oil extraction related construction Many (58,000), losses followed would take by oil place in Alberta support services would impact (21,000). those However, employed in impact oil decreased extraction spending related will permeate construction many industries (58,000), followed impact by oil or regions support in Canada. services About (21,000). one-third, However, or 60,000, impact jobs, could decreased be lost spending outside will Alberta, permeate including many an industries estimated 20,000 impact jobs or in British regions Columbia in Canada. About 14,000 one-third, jobs in Ontario. or 60,000, jobs, could be lost outside Alberta, including an estimated 20,000 jobs in British Columbia 14,000 jobs in Ontario. The estimates potential job losses presented in this report are comparable with industry declines during global economic The estimates crisis in , potential job when losses employment presented losses in this were report similar are comparable in scale. However, with industry current declines industry during downturn global poses different economic challenges, crisis in , effects when employment sharp decline losses in were price similar oil in this scale. time However, around will unfold current in industry very different downturn ways poses across different various challenges, oil industry effects sectors sharp across decline provinces. price The outlook oil this for time 2016 around remains will unclear, unfold in very it different is unlikely ways industry across will various recover oil as quickly industry 2016 sectors as it did following across provinces. global recession The outlook in for 2016 remains unclear, it is unlikely industry will recover as quickly in 2016 as it did following global recession in The employment impact assessment presented in this report is based on assumptions Canada s upstream oil industry s planned The capital employment operational impact assessment expenditures presented for 2015 in this report was derived is based from on assumptions an economic impact Canada s analysis upstream using oil Statistics industry s Canada s planned interprovincial capital operational input-output expenditures model. Industry for 2015 expenditure was estimates derived from were an provided economic by impact ARC Financial, analysis using with input Statistics from Canadian Canada s Association interprovincial Petroleum input-output Producers model. (CAPP). Industry Estimates expenditure estimates direct jobs were refer provided to employment by ARC in Financial, companies with in input oil from extraction. Canadian Indirect Association employment Petroleum includes Producers supply (CAPP). chain companies Estimates that direct supply jobs goods refer to employment services to in companies oil in industry. oil extraction. Indirect employment includes supply chain companies that supply goods services to oil industry. Oil Gas Industry Spending Resulting Employment Impacts Oil Gas Industry Spending Resulting Employment Impacts $125 $94 BILLION TOTAL SPENDING IN ,000 DIRECT & INDIRECT WORKERS $31 BILLION 185K WORKERS IN 2015 &BEYOND BILLION TOTAL SPENDING IN ,000 DIRECT & INDIRECT WORKERS FALLING FALLING OIL PRICES OIL PRICES AND AND DECREASED DECREASED INDUSTRY INDUSTRY SPENDING SPENDING WORKFORCE WORKFORCE EMPLOYMENT IMPACTS IMPACTS MAY MAY PG. PG. 4 4

5 INTRODUCTION The The oil oil industry industry is an is important driver driver economic growth employment in in Canada, once again industry industry faces faces falling falling commodity prices. prices. While While sharp sharp decline decline oil in oil prices prices is is already having a significant a impact on Canada s on Canada s economy, economy, magnitude impact impact continues to unfold to unfold not not just just in in Alberta, but but also also in in or provinces, provinces, such such as British as British Columbia Columbia Ontario. Ontario. Some Some more more immediate immediate impacts impacts declining declining oil prices, oil prices, including including a slowdown a in industry industry expansion activity hiring hiring contract contract full-time full-time positions, positions, directly directly indirectly indirectly related related to to oil oil industry, industry, were were felt felt early early in in Although long-term long-term impacts impacts remain remain unclear, unclear, aim aim this this report report is to is provide to provide a more a more detailed detailed picture picture near-term implications on on employment employment across across oil oil industry industry as well as well as across as across Canada. Canada. This This report report provides provides estimates estimates employment employment generated generated by by capital capital operational operational expenditures in in oil oil industry industry extraction extraction its associated its associated supply supply chain chain (those (those industries industries that that support support supply supply oil oil industry). industry). The The potential potential industry industry employment employment impacts impacts related related to to expected expected spending spending reductions reductions in 2015 in 2015 a decline a decline in price price oil oil are are also also examined. examined. The The scope scope this this study study is limited is limited to to exploration, exploration, development development production production activities activities upstream upstream oil oil industry industry excludes excludes impacts impacts related related to transportation, to transportation, refining refining distribution. distribution. This This report report is organized is organized into into following following sections: sections: The first section provides an overview methodology used to estimate employment impacts. The first section provides an overview methodology used to estimate employment impacts. The second section describes 2015 outlook for anticipated oil industry operational capital The second section describes 2015 outlook for anticipated oil industry operational capital expenditures. expenditures. The third section provides employment estimates an assessment employment impacts associated The third section provides employment estimates an assessment employment impacts associated with a decrease in oil industry expenditures. with a decrease in oil industry expenditures. MAY 2015 PG. 5 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 5

6 METHODOLOGY A number A number data data sources sources are are available available for for current current historical historical employment in in oil oil industry, including Labour Labour Force Force Survey Survey (LFS), (LFS), Survey Survey Employment, Payrolls Payrolls Hours Hours (SEPH), (SEPH), National Household Survey Survey (NHS), (NHS), as well as well as detailed as detailed industry industry workforce workforce projections projections produced produced by by Petroleum Labour Labour Market Market Information Information Division Division Enform Enform (PetroLMI). (PetroLMI). Each Each se se sources sources is limited is limited by by a point a point in time, time, sample sample size size or or scope. scope. Estimates Estimates full full employment employment impact impact generated generated by by oil oil industry industry activity, activity, particularly particularly as as it relates it relates to to broader broader Canadian Canadian economy economy are are not not as readily as readily available. available. Economic Economic impact impact analysis analysis is, is, refore, refore, an an effective effective tool tool to to provide provide such such estimates. estimates. This This type type analysis analysis uses uses interprovincial, interprovincial, inter-industry inter-industry input-output input-output tables tables economy economy published published by Statistics by Statistics Canada Canada to estimate to estimate economic economic impacts impacts (including (including employment employment impacts) impacts) specific specific industry industry expenditures expenditures on or on or industries industries across across provinces. provinces. The The analysis analysis assumes assumes a fixed a fixed relationship relationship between between industry industry expenditure expenditure employment. employment. A stickiness A stickiness factor factor is ten is ten associated associated with with sudden sudden changes changes in expenditures. in expenditures. The The number number actual actual job job losses losses that that occur occur as as a result a result anticipated anticipated decreases decreases in in expenditure expenditure will will depend on a multitude variables not considered in I/O approach. depend on a multitude variables not considered in I/O approach. This report has two objectives: This report has two objectives: To provide estimates for employment generated by capital operational expenditures in oil To provide estimates for employment generated by capital operational expenditures in oil industry its supply chain industries. industry its supply chain industries. To measure potential impacts on direct indirect jobs from anticipated reductions in industry To measure potential impacts on direct indirect jobs from anticipated reductions in industry spending in spending in The employment estimates for 2014 potential impacts for 2015 are based on industry expenditure estimates The employment estimates for 2014 potential impacts for 2015 are based on industry expenditure estimates provided by ARC Financial, with input from Canadian Association Petroleum Producers (CAPP).The employment provided by ARC Financial, with input from Canadian Association Petroleum Producers (CAPP).The employment impacts presented in this report are estimated using 2010 Statistics Canada interprovincial input-output (I/O) model are impacts presented in this report are estimated using 2010 Statistics Canada interprovincial input-output (I/O) model are based on pattern industry expenditures in 2011 (i.e. most recent data available). Employment impacts related to based on pattern industry expenditures in 2011 (i.e. most recent data available). Employment impacts related to industry s capital operational expenditures were measured, are reported, separately. Separate model runs industry s I/O model capital were conducted operational for operational expenditures capital were measured, expenditures in are 2014 reported, separately. Separate model runs I/O model were conducted for operational capital expenditures in EMPLOYMENT IMPACTS ARE DEFINED AS THE FOLLOWING: EMPLOYMENT IMPACTS ARE DEFINED AS THE FOLLOWING: Direct impacts measure employment directly related to wages salaries paid by oil Direct companies. impacts Direct measure employment employment related directly to operational related to expenditures wages is salaries entirely in paid by oil oil companies. industry. Direct employment related from capital to operational expenditures expenditures by oil is entirely industry oil is concentrated in industry. construction Direct employment industry, but from include capital a number expenditures industries by (i.e. oil oil industry construction, is concentrated engineering construction or oil industry, industry but include direct a number contractors). industries (i.e. oil construction, engineering or oil industry direct contractors). Indirect impacts (also referred to as supply chain) are additional employment that is generated Indirect by impacts operational (also referred capital to expenditures as supply chain) industries are additional selling to employment oil that industry is generated its by direct operational contractors at capital earlier expenditures stages in in supply industries chain. (For selling example, to support oil services industry for oil its direct (drilling contractors contractors), at earlier manufacturing stages supply financial chain. services). (For example, support services for oil (drilling contractors), manufacturing financial services). Employment estimates in this report are presented as total number jobs. Direct indirect jobs are ten combined for Employment reporting estimates purposes to in show this report total employment are presented impacts as total for number individual jobs. industries. Direct A significant indirect number jobs are ten jobs combined are associated for reporting with or purposes support to show activities total such employment as transportation, impacts for refining individual distribution, industries. A but significant se are number outside jobs scope are associated this analysis, with which or focuses support activities on only exploration, such as transportation, development refining production distribution, activities but se upstream are outside oil scope industry. this analysis, which focuses on only exploration, development production activities upstream oil industry. Limitations Approach Limitations The employment Approach impacts in this report are estimated using 2010 Statistics Canada interprovincial input-output model based The on employment pattern impacts industry this expenditures report are in estimated The using input-output 2010 model Statistics analysis Canada assumes interprovincial re are input-output no changes model in structure based on pattern economy industry that expenditures technological in coefficients The input-output are fixed. The model analysis analysis does assumes not take re into account are no changes economies in scale, structure economy that technological coefficients are fixed. The analysis does not take into account economies scale, MAY 2015 PG. 6 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 6

7 constraint capacities, technological change, changes in productivity, externalities or price changes. 1 In or words, it assumes no resource constraint or capacities, supply-side technological constraints. change, This is especially changes in important productivity, to keep externalities in mind when or price interpreting changes. 1 In or employment words, it impacts. assumes no resource or supply-side constraints. This is especially important to keep in mind when interpreting employment impacts. The estimates provided in this analysis also make no assumptions about changes in behavior companies or individuals. For example, The estimates companies provided may in this fset analysis declines also in make dem no assumptions from oil about changes industry in by behavior shifting markets companies or products or individuals. services For example, to meet dems companies in may or fset markets. declines Any in changes dem in from average oil compensation industry or hours by shifting worked markets would or also products have considerable services to impacts meet dems on employment. in or markets. Any changes in average compensation or hours worked would also have considerable impacts on employment. Previous PetroLMI Employment Impact Assessments Previous PetroLMI Employment Impact Assessments The previous employment impact assessment conducted in 2013, produced different employment impacts than those presented The previous in this report. employment This analysis impact assessment is based on conducted most current in 2013, 2010 produced version different Statistics employment Canadaʼs impacts Input-Output than those model that presented has a much in greater this report. industry This analysis commodity is based disaggregation most current than 2010 previous version assessment, Statistics Canadaʼs which was Input-Output based on model 2008 that version. has a much greater industry commodity disaggregation than previous assessment, which was based on 2008 version. As mentioned, fluctuations in average compensation for each industry also have a significant impact on employment estimated As mentioned, by I/O fluctuations model approach. in average Wage compensation inflation, fluctuations for each industry overtime also hours have a significant pay, impact total hours on worked employment can all affect estimated employment by estimates I/O model across approach. industries. Wage inflation, fluctuations in overtime hours pay, total hours worked can all affect employment estimates across industries. Additionally, last assessment reported average annual employment estimates based on expenditures over a period many Additionally, years, while this last analysis assessment focuses reported specifically average on annual impacts employment in 2014 estimates based In on 2013 expenditures assessment, over for a period example, assumed many years, average while annual this analysis combined focuses operational specifically on capital impacts expenditures in 2014 was $ billion, In 2013 compared assessment, to $111.5 for billion example, in 2015 assumed assessment. average Using annual same combined 2008 operational jobs multiplier estimated capital expenditures in 2013 was study $96.6 billion, applying compared it to 2014 to $111.5 expenditures billion in assumptions, 2015 assessment. annual estimated Using direct same 2008 indirect jobs multiplier employment estimated would in be 657, study The remaining applying 10% it to difference 2014 expenditures between assumptions, 2013 current annual estimates estimated are direct as a result indirect employment factors discussed would be above 657,280. as well The as remaining minor adjustments 10% difference to I/O between 2013 current estimates are as a result factors discussed above as well as minor adjustments to I/O methodology to better align differences between industry definitions CAPEX OPEX with Statistics Canada System methodology to better align differences between industry definitions CAPEX OPEX with Statistics Canada System National Accounts. National Accounts. Comparison Employment Impact Estimates in Comparison Employment Impact Estimates in Year Year Scenario Scenario based 2015 to based 2015 to 2013 on 2008 Difference on 2008 Difference multiplier multiplier I/O Model I/O Model Operations $39,792 $46,096 $6,304 $46,096 Expenditures Operations $39,792 $46,096 $6,304 $46,096 Expenditures ($millions ($millions Capital Capital $56,820 $56,820 $65,416 $65,416 $8,596 $8,596 $65,416 average $65,416 average annual) annual) Total Total $96,611 $96,611 $ 111,512 $ 111,512 $14,901 $14,901 $ 111,512 $ 111,512 Direct Direct 247, , , ,023 37,478 37,478 Average Average annual annual Indirect Indirect employment employment 321, , , , , ,866 Direct/Indirect Direct/Indirect 569, , , , , , , ,282 Jobs Jobs per per million million Direct/Indirect Direct/Indirect Table Table 1 Source: 1 Source: Prism Prism Economics Economics Analysis, Analysis, Statistics Statistics Canada Canada I/O model I/O model NOTE: NOTE: Expenditures Expenditures are deflated are deflated accordingly. accordingly. 1 Statistics 1 Statistics Canada Canada Input-Output Input-Output model model hbook hbook FALLING FALLING OIL PRICES OIL PRICES AND AND DECREASED INDUSTRY SPENDING WORKFORCE EMPLOYMENT IMPACTS IMPACTS MAY MAY PG. PG. 7 7

8 OIL AND GAS INDUSTRY CAPITAL AND OPERATIONAL EXPENDITURES OUTLOOK OIL AND GAS INDUSTRY CAPITAL AND OPERATIONAL EXPENDITURES OUTLOOK In 2014, expenditures by Canada s oil industry reached nearly $125 billion (ARC Financial), following a period unprecedented In 2014, expenditures growth. In by 2015, Canada s spending oil on capital industry operational reached nearly investment $125 billion is projected (ARC Financial), to fall by just following over $31 a period billion, a decline unprecedented about 25% growth. from 2014 In 2015, levels. spending on capital operational investment is projected to fall by just over $31 billion, a decline about 25% from 2014 levels. In some respects, anticipated reduction in spending related activities mirrors dramatic declines experienced in In some global respects, economic anticipated recession. reduction The most in spending significant declines related in activities 2015 are mirrors expected in dramatic capital declines expenditures experienced on in exploration global development, economic which recession. are anticipated The most to significant decline by declines 37%, similar in 2015 to are expected percentage in capital decline expenditures in In addition, however, exploration expenditures development, related to production which are anticipated are also projected to decline to by decline 37%, in similar to In real percentage dollars (adjusted decline for in inflation), 2 In addition, decline however, in capital expenditures operational related expenditures to production is are almost also projected $10 billion to (or decline 34%) in more, than In real in dollars If (adjusted anticipated for inflation), reduction in expenditures decline in is capital realized, operational implications expenditures for employment is almost could $10 be billion significant. (or 34%) more, than in If anticipated reduction in expenditures is realized, implications for employment could be significant. The underlying reasons for fall in oil prices in 2015 differ markedly from At that time, global financial crisis drove The down underlying global dem reasons for commodities fall in oil prices energy in 2015 prices differ fell markedly accordingly. from The sudden At downturn that time, in 2009 global was financial significant, crisis but short drove lived, down global dem recovery for that commodities followed was equally energy dramatic. prices fell Spending accordingly. rebounded The sudden sharply downturn in 2010 in 2009 by was 2011, significant, previous but short peak lived, in 2008 had been recovery surpassed. that followed From was 2009, equally industry dramatic. production Spending expenditure rebounded sharply accelerated, in 2010 increasing by 2011, 80% to previous In 2015, peak in fall 2008 in oil had prices been is surpassed. driven by a From complex 2009, set industry factors production that include global expenditure supply accelerated, outstripping increasing dem, 80% to geopolitics In 2015, protection fall in oil prices market is driven share. by This a complex difference set is expected factors that to have include considerable global supply impact outstripping on recovery dem, path for industry geopolitics going forward. protection market share. This difference is expected to have considerable impact on recovery path for industry going forward. Oil Gas Operational Capital Expenditures 2004 to 2015 Oil Gas Operational Capital Expenditures 2004 to 2015 $140 BILLIONS CAPITAL EXPENDITURES $0 OPERATIONAL EXPENDITURES e 2015f Figure Figure 1 Source: 1 Source: actuals, actuals, CAPP. CAPP estimate estimate forecast, forecast, ARC ARC Financial. Financial. e=estimate, f=forecast NOTE: NOTE: Adjusted Adjusted to $2014 to $ Oil Oil capital capital expenditures declined declined 38% 38% in 2009 in 2009 compared compared to to FALLING FALLING OIL PRICES OIL PRICES AND AND DECREASED INDUSTRY INDUSTRY SPENDING WORKFORCE EMPLOYMENT IMPACTS MAY MAY PG. PG. 8 8

9 Capital Expenditures Capital Capital expenditures Expenditures on exploration development activities, including l acquisition, geophysical, drilling completions, facility Capital pipeline expenditures costs, on determine exploration industry s development capacity activities, to sustain including exp l acquisition, future oil geophysical, production. drilling completions, facility pipeline costs, determine industry s capacity to sustain exp future oil production. In 2014, capital expenditures totalled $75 billion. The sharp fall in price oil triggered a dramatic reduction in planned capital In 2014, expenditures capital expenditures for As totalled January, $75 ARC billion. Financial The sharp projected fall in capital price expenditures oil triggered would a dramatic decline reduction by almost in planned $28 billion, down capital 37% from expenditures for As January, ARC Financial projected capital expenditures would decline by almost $28 billion, down 37% from Major development projects currently underway are expected to proceed as scheduled, but since January, many proposed new projects Major have development been postponed projects or currently deferred underway indefinitely. are As expected January, to proceed CAPP as estimated scheduled, exploratory but since drilling January, activity many for proposed new oil new reserves projects to slow have down been by postponed 30% in 2015, or deferred resulting indefinitely. 3,150 fewer As January, wells drilled CAPP compared estimated to 2014 exploratory. drilling activity for new oil reserves to slow down by 30% in 2015, resulting in 3,150 fewer wells drilled compared to The impact on capital expenditures is concentrated in conventional oil (normal pumping techniques) sector. Capital spending The impact in this on sector capital is expected expenditures to decline is concentrated by just over in $20 conventional billion, down oil 45% (normal from pumping Oil techniques) ss capital is expected sector. to Capital decrease spending by $7.4 in this billion, sector an is anticipated expected to decline by 25% just from over 2014 $20 billion, levels. down The oil 45% ss from also account Oil ss for about capital one-quarter is expected to total decrease projected by capital $7.4 expenditures billion, an anticipated declines. decline 25% from 2014 levels. The oil ss also account for about one-quarter total projected capital expenditures declines. Regionally, largest impacts are concentrated in Alberta but ripple effects are expected across or provinces. Figure 2 provides Regionally, a breakdown largest impacts expected are capital concentrated spending Alberta reductions but ripple by region effects for are conventional expected across non-conventional or provinces. (includes Figure 2 oil ss). provides a breakdown expected capital spending reductions by region for conventional non-conventional (includes oil ss). Oil Gas Industry Capital Expenditures in , by Region Oil Gas Industry Capital Expenditures in , by Region CONVENTIONAL $40 48% 25% BILLIONS 48% 47% 25% $0 AB BC SK ROC OIL SANDS (Rest Canada) Figure 2 Source: ARC Financial estimates with input from CAPP Figure 2 Source: ARC Financial estimates with input from CAPP NOTE: The percentages in this figure represent decrease in spending from 2014 to 2015 NOTE: The percentages in this figure represent decrease in spending from 2014 to 2015 FALLING FALLING OIL PRICES OIL PRICES AND AND DECREASED DECREASED INDUSTRY INDUSTRY SPENDING SPENDING WORKFORCE EMPLOYMENT WORKFORCE IMPACTS IMPACTS MAY MAY PG. PG. 9 9

10 Operational Expenditures Operational expenditures are are costs costs incurred incurred in production oil oil.. These These costs costs include wages salaries, materials materials or or inputs inputs related related to oil to oil production. In 2014, In 2014, operational expenditures totalled nearly $50 $50 billion, with with oil ss oil ss accounting for for largest largest share share (56%), (56%), or $28 or $28 billion. billion. Though production is expected is to to grow grow modestly in in 2015, ARC ARC projects projects expenditures to decline to decline by $3.3 by $3.3 billion, billion, down down 6.7% 6.7% from from Figure Figure 3 below 3 below provides provides a breakdown a expected operational spending reductions by by region for for conventional nonconventional (includes (includes oil ss). oil ss). non- Oil Oil Gas Gas Industry Industry Operational Expenditures in 2014 in , 2015, by by Region Region $40 CONVENTIONAL 5.6% BILLIONS 8.7% 8.4% 5.6% 9.2% $0 ROC AB BC SK OIL SANDS (Rest Canada) 2014e 2015f Figure 3 Source: ARC Financial estimates with input from CAPP Figure 3 Source: ARC Financial estimates with input from CAPP NOTE: The percentages in this figure represent decrease in spending from 2014 to 2015 NOTE: The percentages in this figure represent decrease in spending from 2014 to 2015 MAY 2015 PG. 10 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 10

11 EMPLOYMENT IMPACTS OF CAPITAL AND OPERATIONAL EXPENDITURES EMPLOYMENT IMPACTS OF CAPITAL AND OPERATIONAL EXPENDITURES The nearly $125 billion spent in 2014 by oil industry on exploration, development production supported more The than nearly 720,000 $125 direct billion spent indirect 2014 jobs by across oil Canada, industry including on an exploration, estimated 71,000 development direct jobs production in oil supported extraction, more than 192, ,000 direct direct jobs in engineering indirect jobs construction across Canada, including 437,000 indirect an estimated jobs across 71,000 direct several jobs industries. oil The majority extraction, se 192,000 jobs are direct in Alberta, jobs in engineering with about one-third, construction or 236, ,000 jobs, indirect distributed jobs across or several provinces. industries. The majority se jobs are in Alberta, with about one-third, or 236,000 jobs, distributed across or provinces. In 2015, an anticipated $31 billion reduction in capital operational expenditures is expected to have a significant impact on oil In 2015, industry an anticipated its associated $31 billion reduction labour force. in capital Based on operational similar industry expenditures spending is patterns expected in to recent have years, a significant assuming impact on those oil spending industry patterns do not its associated change, as labour many force. as 185,000 Based direct on similar indirect industry jobs spending related patterns to oil in recent years, industry could assuming potentially those spending be lost, a patterns decline do 25% not change, from as many as 185,000 direct indirect jobs related to oil industry could potentially be lost, a decline 25% from Oil engineering construction firms, which perform majority work related to development projects, would expect to absorb Oil largest engineering share construction employment firms, impacts, which accounting perform for majority 75,000 jobs, work or related almost to 40% development total jobs projects, lost. The would support expect to services absorb sector, largest which is share involved heavily employment in exploration impacts, accounting development for 75,000 drilling, jobs, would or almost account 40% for total next jobs largest lost. The share support with an estimated services decline sector, which 26,000 is jobs. involved heavily in exploration development drilling, would account for next largest share with an estimated decline 26,000 jobs. Many losses would take place in Alberta would impact those employed in oil extraction related construction Many losses would take place in Alberta would impact those employed in oil extraction related construction (58,000), followed by oil support services (21,000). However, impact decreased spending will permeate many (58,000), followed by oil support services (21,000). However, impact decreased spending will permeate many industries impact or regions in Canada. About one-third, or 60,000, jobs, could be lost outside Alberta, including an industries impact or regions in Canada. About one-third, or 60,000, jobs, could be lost outside Alberta, including an estimated 20,000 jobs in British Columbia 14,000 jobs in Ontario (see Appendix C for detailed provincial employment impacts). estimated 20,000 jobs in British Columbia 14,000 jobs in Ontario (see Appendix C for detailed provincial employment impacts). The estimated employment impacts are larger in magnitude but comparable to scale industry declines reported in The estimated employment impacts are larger in magnitude but comparable to scale industry declines reported in Then, employment in oil extraction; support services for oil extraction; oil engineering construction Then, employment in oil extraction; support services for oil extraction; oil engineering construction ( jobs tied most directly to oil industry sector, 3 ) declined by about 58,000 or about 20%. The potential jobs losses ( jobs tied most directly to oil industry sector, 3 ) declined by about 58,000 or about 20%. The potential jobs losses estimated in se same three industries as a result expected spending reductions in 2015 are estimated to be just over estimated in se same three industries as a result expected spending reductions in 2015 are estimated to be just over 100,000, a decline about 30% from The increase in number potential jobs impacted compared to 2009 is due to 100,000, a decline about 30% from The increase in number potential jobs impacted compared to 2009 is due to industry growth since 2009 includes higher construction dems. industry growth since 2009 includes higher construction dems. Figure Figure 4 illustrates 4 illustrates potential potential change change in employment in employment related related to decreased to decreased oil oil expenditures expenditures for for industries industries most most impacted. impacted. Figures Figures provide 6 provide detailed detailed estimates estimates impacts impacts for for individual individual provinces provinces industries. industries. Change Change in Direct in Direct Indirect Indirect Employment Employment Impacts Impacts between between , 2015, by by Major Major Industry Industry 700, ,811 Oil extraction Support activities for oil extraction EMPLOYMENT 74,595-8,760 89,963-25, ,869-74, chg, 2015 Oil engineering construction Total -300, ,019 Figure Figure 4 Source: 4 Source: Prism Prism Economics Economics Analysis, Analysis, Statistics Statistics Canada Canada 3 3 The oil The oil extraction; extraction; support support services services for oil for oil extraction; extraction; oil oil engineering engineering construction construction industries industries employ employ about about half half (49%) (49%) total total direct direct indirect indirect jobs supported jobs supported by oil by oil sector sector expenditures expenditures in Canada. in Canada. FALLING FALLING OIL PRICES OIL PRICES AND AND DECREASED DECREASED INDUSTRY INDUSTRY SPENDING SPENDING WORKFORCE EMPLOYMENT WORKFORCE IMPACTS IMPACTS MAY MAY PG. PG

12 Employment Impacts Reduced Industry Expenditures between , by Province Industry Employment Impacts Reduced Industry Expenditures between , by Province Industry EMPLOYMENT IMPACTS BY PROVINCE EMPLOYMENT IMPACTS BY INDUSTRY 8% 2% 1% 6% 22% 4% 3% 40% 11% 4% 5% 68% 5% 7% 14% Alberta British Columbia Ontario Manitoba Oil engineering construction Oil extraction Atlantic Canada Saskatchewan Support activities for oil Administrative support services Quebec Architectural, engineering or pressional services Finance insurance real estate services Figures 5 6 Source: Prism Economics Analysis, Statistics Canada Wholesale trade (M&E building supplies) Or Figures 5 6 Source: Prism Economics Analysis, Statistics Canada MAY 2015 PG. 12

13 Summary Summary Employment Impacts Impacts Industry Industry Expenditures to 2015, to 2015, by by Industry 39% 200,000 29% 12% 25% 25% 19% 14% 18% 27% 23% 21% 24% 20% Oil engineering construction 8 Computer systems design or pressional, scientific technical services 2 Support activities for oil extraction 9 Fabricated metal product manufacturing 3 Oil extraction 10 Truck transportation 4 5 Architectural, engineering or pressional services Wholesale trade (M&E Building supplies) Motor vehicle parts, building supplies or retail trade Machinery manufacturing 6 Administrative support services 13 All or 7 Finance, insurance real estate services Figure 7 Source: Prism Economics Analysis, Statistics Canada I/O model Figure 7 Source: Prism Economics Analysis, Statistics Canada I/O model NOTE: The percentages in this figure represent decrease in spending from 2014 to 2015 NOTE: The percentages in this figure represent decrease in spending from 2014 to 2015 MAY 2015 PG. 13 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 13

14 Employment Impacts Related to to Capital Expenditures The The $75 $75 billion billion in capital in capital expenditures by by oil oil industry in 2014 in 2014 supported close close to to 217,000 direct jobs, primarily in in oil oil engineering construction industry. An An additional 203,000 indirect jobs jobs were were sustained in industries that that provide provide goods goods services services required required by capital by capital projects. The The projected projected $28 $28 billion billion (37%) (37%) decline decline capital in capital spending spending 2015 in 2015 will will have have significant employment impact across all all sectors tied tied to capital to capital projects projects an estimated an estimated 161, ,000 jobs jobs would would be be lost lost across across Canada. Canada. Employment Employment Impacts Impacts Reduced Reduced Industry Industry Capital Capital Expenditures between between , 2015, by by Region Region 450,000 38% 300,000 38% 46% 46% 34% 0 AB BC SK ROC TOTAL (Rest Canada) Figure 8 Source: Prism Economics Analysis, Statistics Canada I/O model Figure 8 Source: Prism Economics Analysis, Statistics Canada I/O model NOTE: The percentages in this figure represent decrease in spending from 2014 to NOTE: The percentages in this figure represent decrease in spending from 2014 to MAY 2015 PG. 14 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 14

15 Employment Impacts Impacts Related Related to Operational to Expenditures Operational expenditures by by oil oil industry industry totalled totalled nearly nearly $50 $50 billion billion in 2014, in 2014, supporting almost 70,000 jobs jobs across Canada. Canada. Industry Industry spending spending on on goods goods services services supporting production operations sustained an an additional 234,000 jobs jobs in supply in supply chain chain industries. industries. A projected A projected $3.3 $3.3 billion billion (6.7 (6.7 percent) percent) spending spending reduction reduction in 2015 in 2015 could could potentially translate into into an an estimated 6,750 6,750 decline in in direct direct oil oil industry industry jobs jobs 15,800 15,800 additional additional jobs jobs lost lost in supply in supply chain chain industries. In total, In total, an an estimated 22,500 jobs jobs would would be lost be across lost across all sectors all sectors in Canada in Canada due due to to expected expected decline decline operational in expenditures. Employment Employment Impacts Impacts Reduced Reduced Industry Industry Operational Operational Expenditures between between , 2015, by by Region Region 350, % 200, % 8.4% 7.0% 7.8% 0 AB BC SK ROC TOTAL (Rest Canada) Figure 9 Source: Prism Economics Analysis, Statistics Canada I/O model Figure 9 Source: Prism Economics Analysis, Statistics Canada I/O model NOTE: The percentages in this figure represent decrease in spending from 2014 to 2015 NOTE: The percentages in this figure represent decrease in spending from 2014 to 2015 MAY 2015 PG. 15 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 15

16 CONCLUSION The The oil oil industry industry continues to be to an be important driver driver economic growth employment in in Canada. Projected job job losses losses stemming stemming from from decline decline in price price oil oil estimated industry expenditures are are larger in in magnitude but but comparable in scale in scale to to declines declines experienced in in That That said, said, current current downturn poses poses different challenges than than global global financial financial crisis crisis impacts impacts steep steep decline decline in price price oil oil in 2015 in 2015 will will likely likely unfold unfold in in very very different ways ways across across industries industries provinces. provinces. The The outlook outlook for 2016 for 2016 beyond beyond is still is still uncertain, uncertain, re re are are no no indications that that industry industry will will recover recover as as quickly quickly in in as it as did it in did in The The employment employment implications implications this this downturn downturn will will depend depend greatly greatly on on what what happens happens to to commodity prices prices over over next next few few months, months, but but also also on on behaviour behaviour oil oil companies companies those those that that support support supply supply industry. industry. The The whipsaw whipsaw effects effects caused caused by by quick quick recovery recovery following following global global economic economic crisis crisis caused caused significant significant labour labour challenges challenges oil oil companies companies those those that that support support supply supply m m need need to to find find ways ways managing managing labour labour costs costs in in response response to declining to declining revenues revenues against against maintaining maintaining capacity capacity growth growth potential potential for for long long term. term. Creative Creative recruitment recruitment practices, practices, such such as up-skilling as up-skilling current current workforce workforce effective effective management management retention retention skilled skilled experienced experienced workers workers will will become become more more critical critical in in months months ahead. ahead. MAY 2015 PG. 16 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 16

17 APPENDIX A A This This section section provides provides detailed detailed definitions explanations for for terms terms in this in this report. report. Industry Industry classification The The input-output accounts accounts are are based based on on North North American Industrial Classification System (NAICS). NAICS classifies establishments into into industries industries on on basis basis similarity ir ir production processes. Industries are are organized according to three to three broad broad sectors sectors economy: economy: business, government non-prit institutions serving households (NPISH) sectors. sectors. The The following following table table provides provides detailed detailed Statistics Statistics Canada Canada descriptions for for key key NAICS NAICS industries related to to oil oil sector sector referenced referenced in this in this report. report. Description Description Selected Selected North North American American Industry Industry Classification System System (NAICS) (NAICS) Industries Oil - Oil extraction extraction This This industry industry group group comprises comprises establishments establishments primarily primarily engaged engaged in operating operating oil oil field field properties. properties. Such Such activities activities may may include: include: exploration exploration for crude for crude petroleum petroleum natural natural ; ; drilling, drilling, completing completing equipping equipping wells; wells; operating operating separators, separators, emulsion emulsion breakers, breakers, desilting desilting equipment equipment field field garing garing lines lines for for crude crude petroleum; petroleum; all all or or activities activities in in preparation preparation oil oil up to up to point point shipment shipment from from producing producing property. property Conventional - Conventional oil oil extraction extraction This Canadian industry comprises establishments primarily engaged in exploration for, /or production, This Canadian industry comprises establishments primarily engaged in exploration for, /or production, petroleum or natural from wells in which hydrocarbons will initially flow or can be produced using normal pumping petroleum or natural from wells in which hydrocarbons will initially flow or can be produced using normal pumping techniques. Examples include: crude oil, conventional extraction; fractionating; natural liquids; liquefied petroleum techniques. Examples include: crude oil, conventional extraction; fractionating; natural liquids; liquefied petroleum es (LPG) from natural, production, mining; natural butane, ethane, isobutane propane production; natural es (LPG) from natural, production, mining; natural butane, ethane, isobutane propane production; natural cleaning preparation plants; natural liquids recovering mining; oil exploration. cleaning preparation plants; natural liquids recovering mining; oil exploration Non-conventional oil extraction Non-conventional oil extraction This Canadian industry comprises establishments primarily engaged in producing crude oil from surface shales or tar This Canadian industry comprises establishments primarily engaged in producing crude oil from surface shales or tar ss or from reservoirs in which hydrocarbons are semisolids conventional production methods are not ss or from reservoirs in which hydrocarbons are semisolids conventional production methods are not possible. Examples include: bitumen production, extraction by mining; heavy oil in place, solution drive recovering; possible. Examples include: bitumen production, extraction by mining; heavy oil in place, solution drive recovering; petroleum, from shale or s, production; shale oil mining; tar s mining for oil extraction. petroleum, from shale or s, production; shale oil mining; tar s mining for oil extraction Support activities for mining, oil extraction Support activities for mining, oil extraction This industry comprises establishments primarily engaged in providing support services, on a contract or fee basis, for This mining industry comprises quarrying establishments minerals primarily for extraction engaged in oil providing. support Establishments services, on engaged a contract in or exploration fee basis, for for mining minerals, quarrying or than minerals oil or, are for included. extraction Exploration oil includes. traditional Establishments prospecting engaged methods, in such exploration as taking for ore minerals, samples or than making oil or geological, are included. observations Exploration prospective includes sites. traditional Specific prospecting industries include methods, oil such taking contract ore drilling samples services to making oil geological extraction. observations at prospective sites. Specific industries include oil contract drilling services to oil extraction Heavy civil engineering construction Heavy civil engineering construction Oil pipeline related structures construction Oil pipeline related structures construction This Canadian industry is a subsector heavy civil engineering construction. Oil engineering construction This comprises Canadian establishments industry a subsector primarily engaged heavy in civil construction engineering construction. oil lines, Oil mains, refineries, engineering construction storage tanks. comprises The work establishments performed may primarily include engaged new work, in reconstruction, rehabilitation oil lines, repairs. mains, Specialized refineries, trade activities storage tanks. related The to work oil performed pipeline may include related new structures work, reconstruction, rehabilitation are included. The repairs. construction Specialized structures trade activities (including related to oil buildings) pipeline that are integral related parts structures oil construction networks are (e.g., included. storage The tanks, construction pumping stations, structures refineries) (including is included buildings) in this that industry. are integral parts oil networks (e.g., storage tanks, pumping stations, refineries) is included in this industry. MAY 2015 PG. 17 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 17

18 Glossary Glossary Commodity classification A commodity Commodity is defined classification a good or service normally intended for sale on market at a price designed to cover cost production. A commodity The classification is defined as a goods or in service Input-Output normally intended accounts for is sale based on on market Stard at a price Classification designed to cover Goods. Given cost absence production. a The stard classification classification goods in services, Input-Output Input-Output accounts accounts is based utilize on a Stard service classification Classification based Goods. on Given characteristic absence products a stard industries. classification services, Input-Output accounts utilize a service classification based on characteristic products industries. Full-time equivalence (FTE) number jobs The Full-time estimate equivalence total number (FTE) jobs number covers two jobs main categories: employee jobs self-employed jobs (including persons The estimate working in a family total business number without jobs covers pay). The two main total number categories: jobs employee includes jobs full-time, self-employed part-time, jobs temporary (including jobs. It does persons not take working into account in a family business number without hours pay). worked The per total employee. number FTE jobs jobs includes include full-time, both part-time, employee temporary selfemployed It does jobs not take but into FTE account transformation number only hours applies worked to employee per employee. jobs. The FTE transformation jobs include both is based employee on overall self- average jobs. full-time employed hours jobs worked but in FTE business transformation government only applies sectors. employee jobs. The transformation is based on overall average full-time hours worked in business government sectors. Direct impacts measure employment directly related to wages salaries paid by oil companies. Direct employment Direct impacts related measure to operational employment expenditures directly is related entirely to in wages oil salaries industry. paid Direct by oil employment companies. from capital Direct expenditures employment by related oil to operational industry expenditures is concentrated is entirely in in construction oil industry, industry. but Direct include employment a number from industries capital (i.e. oil expenditures construction, by oil engineering industry or is concentrated oil industry construction direct contractors). industry, but include a number industries (i.e. oil construction, engineering or oil industry direct contractors). Indirect impacts (also referred to as supply chain) are additional employment that is generated by operational capital Indirect expenditures impacts in (also industries referred to selling as supply to chain) oil are industry additional employment its direct contractors that is generated earlier by stages operational in supply capital chain. expenditures (For example, in support industries services selling for to oil oil (drilling industry contractors), its direct manufacturing contractors at earlier financial stages services). in supply chain. (For example, support services for oil (drilling contractors), manufacturing financial services). Capital (gross fixed capital formation) Capital Capital investment, (gross fixed or gross capital fixed formation) capital formation, is value a producer s acquisitions, less disposals, fixed assets during Capital accounting investment, period or gross plus fixed certain capital additions formation, to is value value non-produced a producer s assets acquisitions, (such as less subsoil disposals, assets or fixed major assets during accounting period plus certain additions to value non-produced assets (such as subsoil assets or major improvements in quantity, quality or productivity l) realized by productive activity institutional units. improvements in quantity, quality or productivity l) realized by productive activity institutional units. Inputs Inputs Economic resources used in a companyʼs production process. A distinction is usually drawn between primary inputs (labour Economic resources used in a companyʼs production process. A distinction is usually drawn between primary inputs (labour capital) intermediate inputs (energy raw materials). capital) intermediate inputs (energy raw materials). Intermediate inputs Intermediate inputs Intermediate inputs consists goods services used by industries in a process production, excluding fixed assets Intermediate inputs consists goods services used by industries in a process production, excluding fixed assets whose consumption is recorded as consumption fixed capital; goods or services may be eir transformed or used up whose consumption is recorded as consumption fixed capital; goods or services may be eir transformed or used up by production process. by production process. Supplementary labour income Supplementary labour income Supplementary labour income are expenditures by employers on ir labour account, which are regarded as compensation Supplementary labour income are expenditures by employers on ir labour account, which are regarded as compensation employees. employees. They They include include contributions contributions to employment to employment insurance, insurance, private private public public pension pension plan plan contributions, contributions, (beginning (beginning in 1990) in 1990) retirement retirement allowances. allowances. Wages Wages salaries salaries Wages Wages salaries salaries consist consist monetary monetary compensation compensation payments-in-kind payments-in-kind (e.g., (e.g., board board lodging) lodging) to to wage wage earners earners salaried salaried persons persons employed employed in private, in private, public public non-prit non-prit institutions institutions Canada, in Canada, including including domestic domestic servants servants babysitterssitters. Or Or forms forms compensation compensation included included here here are are commissions, commissions, bonuses, bonuses, tips, tips, directorsʼ directorsʼ fees, fees, taxable taxable allowances allowances baby- values values stock stock options options corporations. corporations. Bonuses, Bonuses, commissions commissions retroactive retroactive wages wages are are recorded recorded in in period period paid paid rar rar than than earned. earned. Wages Wages salaries salaries are are recorded recorded on on a gross a gross basis, basis, before before deductions deductions for for taxes, taxes, employeesʼ contributions contributions to employment to employment insurance, insurance, private private public public pension pension plans. plans. A complete A complete glossary glossary is available is available on on national national economic economic accounts accounts module module on on Statistics Canada Canada website website at at following address: address: FALLING FALLING OIL PRICES OIL PRICES AND AND DECREASED INDUSTRY INDUSTRY SPENDING EMPLOYMENT WORKFORCE IMPACTS MAY MAY PG. PG

19 APPENDIX B B The The following following section section provides provides detailed detailed figures figures for for capital capital operating expenditures. Summary Summary Capital Capital Spending Spending Assumptions Capital Capital Spending Spending ($millions) ($millions) Sector Sector difference difference to to (%) (%) Change Change Conventional Conventional $45,000 $45,000 $24,619 $24,619 $20,381 $20, % -45.3% Non-conventional Non-conventional (includes (includes oil oil $29,979 $29,979 $22,500 $22,500 $7,479 $7, % -24.9% ss) ss) Total $74,979 $47,119 $27,859-37% Total $74,979 $47,119 $27,859-37% Source: ARC Financial estimates with input from CAPP Source: ARC Financial estimates with input from CAPP Summary Operations Spending Assumptions Summary Operations Spending Assumptions Operations Spending ($millions) Operations Spending ($millions) Sector Sector difference difference 2014 to 2015 (%) 2014 to 2015 (%) Change Change Conventional Conventional $21,727 $21,727 $19,930 $19,930 $1,796 $1, % -8.3% Non-conventional Non-conventional (includes oil $27,913 $26,361 $1, % (includes ss) oil $27,913 $26,361 $1, % ss) Total $49,639 $46,292 $3, % Total $49,639 $46,292 $3, % Source: ARC Financial estimates with input from CAPP Source: ARC Financial estimates with input from CAPP MAY 2015 PG. 19 FALLING OIL PRICES AND DECREASED INDUSTRY SPENDING WORKFORCE IMPACTS MAY 2015 PG. 19

20 APPENDIX C The APPENDIX following section C provides detailed tables for employment impacts as a result reduced spending. The following section provides detailed tables for employment impacts as a result reduced spending. Summary Employment Impacts Industry Expenditures 2014 to 2015, by Industry Summary Employment Impacts Industry Expenditures 2014 to 2015, by Industry 2014 Employment 2015 Employment 2014 Employment 2015 Employment Change in % Industry Direct Indirect Total Direct Indirect Total Change number in change % Industry Direct Indirect Total Direct Indirect Total number jobs change jobs Total 285, , , , , , ,019 25% Total 285, , , , , , ,019 25% Oil engineering 191, , , ,359 74,510 39% construction Oil engineering 191, , , ,359 74,510 39% construction Support activities for oil 3,816 86,147 89,963 2,112 61,917 64,029 25,934 29% Support extraction activities for oil 3,816 86,147 89,963 2,112 61,917 64,029 25,934 29% extraction Oil extraction 71,391 3,204 74,595 63,242 2,593 65,835 8,760 12% Oil extraction 71,391 3,204 74,595 63,242 2,593 65,835 8,760 12% Architectural, engineering Architectural, or pressional engineering services or pressional services Wholesale trade (M&E Wholesale building supplies) trade (M&E building supplies) Administrative support Administrative services support services Finance, insurance real Finance, estate services insurance real estate services Computer systems design Computer or systems pressional, design scientific or pressional, technical services scientific technical services Fabricated metal product Fabricated manufacturing metal product manufacturing 0 54,920 50, ,922 40,922 13,998 25% 0 54,920 50, ,922 40,922 13,998 25% 8,525 41,679 50,204 6,062 33,769 39,831 10,373 21% 8,525 41,679 50,204 6,062 33,769 39,831 10,373 21% 0 37,617 37, ,474 30,474 7,143 19% 0 37,617 37, ,474 30,474 7,143 19% 90 38,362 38, ,824 32,914 5,538 14% 90 38,362 38, ,824 32,914 5,538 14% 0 27,218 27, ,346 22,346 4,872 18% 0 27,218 27, ,346 22,346 4,872 18% ,733 12, ,548 9,011 3,357 27% ,733 12, ,548 9,011 3,357 27% Truck transportation ,589 11, ,164 8,545 2,573 23% Truck transportation ,589 11, ,164 8,545 2,573 23% Retail trade (Motor Retail trade (Motor vehicle parts, vehicle parts, building building supplies supplies or or retail retail trade) trade) Machinery Machinery manufacturing manufacturing 1,595 1,595 13,114 13,114 14,709 14, ,605 10,605 11,602 11,602 3,107 3,107 21% 21% 4,812 4,812 6,099 6,099 10,911 10,911 3,467 3,467 4,806 4,806 8,273 8,273 2,638 2,638 24% 24% All or All or 1,759 1, , , , ,867 1,267 1,267 85,384 85,384 86,651 86,651 21,216 21,216 20% 20% Source: Source: Prism Prism Economics Economics Analysis, Analysis, Statistics Statistics Canada Canada I/O model I/O model FALLING FALLING OIL PRICES OIL PRICES AND AND DECREASED DECREASED INDUSTRY INDUSTRY SPENDING SPENDING WORKFORCE EMPLOYMENT WORKFORCE IMPACTS IMPACTS MAY MAY PG. PG

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