Halliburton oilfield layoffs expected to affect hundreds in Alberta

Hundreds of Alberta oilfield workers are expected to be caught in a new round of up to 6,200 job cuts confirmed Tuesday by giant Houston-based Halliburton Co. in reaction to plunging levels of drilling activity in Canada and the U.S. driven by falling oil and gas prices.

Also Tuesday, Calgary-based private oilfield services company Sanjel Corp. said it has been laying off staff over the past several weeks from its workforce of between 4,000 and 4,100 and has imposed an across-the-board salary cut of between five and 10 per cent.

The confirmed layoffs could be the tip of the iceberg — in January, the Canadian Association of Oilwell Drilling Contractors predicted an average of 167 fewer drilling rigs will be active this year in Canada, resulting in 23,000 fewer direct and indirect jobs than in 2014. Statistics Canada said Friday 13,000 jobs have been lost in the natural resources sector in Alberta since September.

Other international oilfield services companies operating in Canada who have recently announced layoffs include Baker Hughes Inc., with 7,000 layoffs worldwide; Schlumberger Ltd. with 9,000; and Weatherford International PLC with 8,000.

Sanjel announced last August it would add 120,000 horsepower of hydraulic fracturing capacity to take its North American operations to 650,000 HP by the end of May — it called a halt to the program when oil prices continued dropping in the fall and is now at about 550,000 HP, with no expansion capital in the budget for 2015.

Chief operating officer Warren Zemlak wouldn’t give any exact layoff numbers in an interview Tuesday but said the company has been letting people go from non-operational areas such as manufacturing, human resources and marketing. Crews in the field will have jobs as long as they and their equipment have contracts to fill, he said.

“The view we’re taking is this is going to be extended,” he said. “We do have to get our structured costs aligned to what we see as an 18- to 24-month cycle, plan for the worst, hope for the best.”

Zemlak said activity in Canada is still relatively strong because companies do most of their drilling in the winter but it’s expected to fall quickly when spring breakup begins. He said the slowdown will also likely prompt increased pressure from customers for lower pricing.

Halliburton spokesman Chevalier Mayes said in an e-mail to the Herald on Tuesday that it expects to lay off 6.5 to eight per cent of its global workforce of about 80,000 people. The numbers include 1,000 layoffs in the eastern hemisphere that Halliburton announced in December.

“We value every employee we have, but unfortunately we are faced with the difficult reality that reductions are necessary to work through this challenging market environment,” said Mayes, who declined to say what the Canadian numbers will be.

“The impact will be across all areas of Halliburton’s operations. We do not have additional information on specific regions.”

Local financial analysts who asked not to be identified because they don’t cover Halliburton estimated that Canada accounts for three to five per cent of the company’s operations, mainly in Alberta, so between 200 and 300 people will likely be laid off.

Previously, they estimated the Baker Hughes cuts could result in 300 to 500 Canadian layoffs and Schlumberger’s 450 to 650.

Last Tuesday, Calgary-based oilfield environmental services firm Newalta Corp. laid off about 180 workers, about 15 per cent of its workforce, in part due to expectations of lower activity. A third of the layoffs were expected in Calgary and the company said it is implementing a hiring freeze and deferring salary increases among its remaining 900 staff.

The oilfield services industry, which helps explorers find and produce oil and natural gas, has been deeply affected as oil companies slash spending. Crude prices have plunged more than 50 per cent since last June as U.S. production surged and the Organization of Petroleum Exporting Countries resisted output cuts.

Halliburton announced in November it would acquire Baker Hughes for $34.6 billion US. Mayes said Tuesday’s cuts had nothing to do with that acquisition.

dhealing@calgaryherald.com

Twitter.com/HealingSlowly

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