Nfld. & Labrador·Changing Course

Here's why Alberta's economic angst could have a deep, echoing impact in N.L.

Thousands of Newfoundlanders and Labradorians have made the trek out west to work. But with the pandemic and oil crash sapping the economic lifeblood of Alberta, the ripple effects are being felt at home.

Thousands of workers travel west and bring paycheques back east

Estimates from IHS Markit say Canada's energy sector has slashed spending plans across the industry by more than $8 billion. That’s bad news for Alberta’s economy, and could have a ripple effect for fly-in, fly-out workers from Newfoundland and Labrador. (Kyle Bakx/CBC)

Andrew Ivany says the relationship between the province he calls home and the province he's travelled to for work remains strong.

"Like they say, Fort Mac is the second biggest city in Newfoundland," he said, referring to Fort McMurray. 

"Alberta and Newfoundland go hand in hand."

Ivany recently drove thousands of kilometres back home. The trip was bookended by quarantines at his job site in Sylvan Lake, near Red Deer, before he left, and at a relative's cabin on the Avalon Peninsula when he arrived in Newfoundland.

"Alberta has provided a lot of opportunity for Newfoundlanders," Ivany told CBC News.

"I mean, it's a place for guys [who] don't grow up with much, and we go out and we work hard. Alberta is just like a second home. That's how I consider it, anyways."

Ripple effects felt across the country

Ivany is one of thousands of Newfoundlanders and Labradorians who've made the trek out west to seek out that opportunity.

And with the pandemic and oil crash sapping the economic lifeblood of Alberta, the ripple effects are being felt at home, too.

The problems come on top of already severe problems in Newfoundland and Labrador's own oil industry. Drilling has been halted at the Hibernia platform, the Terra Nova field has already been dormant for months, and an ambitious deepsea project has been put on the back burner. 

With COVID-19 growing and airports busy, Andrew Ivany left his work site in Alberta and drove home to Newfoundland, with quarantine on both ends. (Submitted by Andrew Ivany)

A recent report predicted that Alberta's economy would shrink by an unprecedented 5.8 per cent in 2020, and unemployment could average more than 11 per cent.

All that bad news out west could have a big impact in the east.

While some people pull up stakes and move, many don't. For them, it's a commuter existence — fly-in, fly-out — earning Alberta dollars that help some Newfoundland outports stay afloat. 

"It's very clear that COVID-19 is posing major problems for these workers and their families, in the sense that it's very difficult now to be mobile, to live in this province and work in other provinces," said Barbara Neis, a distinguished research professor of sociology at Memorial University.

Significant effect on N.L. economy

Neis runs a project called On the Move, a national partnership that studies the mobile labour force. 

That labour force has had a big impact on the economy in Newfoundland and Labrador.

"It's like an iceberg. We've had this — particularly in some regions — this large population, we're talking about thousands of workers, who have relied on being mobile in and out of the province and helped to sustain rural communities," Neis said.

Like an iceberg, much of the current data that would reveal the scope of the issue remains below the surface. 

Barbara Neis, director of the On the Move Project, says the effects of the pandemic are particularly pronounced for mobile workers, including Newfoundlanders who work in Alberta. (Sherry Vivian/CBC)

There is a years-long lag in Statistics Canada figures on how much workers who live in one province make elsewhere. 

But historic numbers show the contribution is significant.

In 2014, workers living in Newfoundland and Labrador made nearly $1.1 billion in earnings in other provinces. More than $700 million of that total was earned in Alberta.

Resident employees — people who lived and worked in Newfoundland and Labrador — made just over $11 billion.

So for every $10 made inside the province that year, about $1 was earned outside the province — the vast majority of it in Alberta.

That year, more than 19,000 people living in Newfoundland and Labrador earned income outside the province. More than half of them — almost 11,000 — did so in Alberta.

The number dropped in subsequent years, amid an economic downturn.

In 2016 — the most recent year for which statistics are available — the number of workers travelling from the province to the rest of Canada dropped to just over 14,000. They pulled in less than $700 million — roughly half of that in Alberta.

At peak, in the economic boom time of 2008, 14,000 people living in Newfoundland and Labrador commuted to work in Alberta alone. 

'Unprecedented time' for industry

The oilsands have been a key destination for that mobile labour force.

In the boom times around 2008, the majority of rotational workers in the oilsands were from Atlantic Canada.

Fast-forward a decade, to late 2017, and one in nine of those travelling workers called Newfoundland and Labrador home, according to an industry survey.

Shafak Sajid, a policy analyst with the Oil Sands Community Alliance, says many companies have postponed maintenance to minimize on-site activity during the pandemic. (Submitted by Shafak Sajid)

Today, the Alberta oilpatch is facing a double-edged sword — dealing with the fallout of cratering crude prices on one side, and addressing health concerns caused by COVID-19 on the other.

"It has been, I'd say, a pretty unprecedented time," said Shafak Sajid, a policy analyst with the Oil Sands Community Alliance, an umbrella group representing the major industry players.

On the economic side, there have been billions slashed from planned capital investments, big voluntary production cuts, and project slowdowns.

"A number of companies have postponed scheduled turnaround or maintenance, just to reduce and minimize the activity on site while the pandemic guidance is in place," Sajid said. 

On the health side, concerns have been expressed about the use of fly-in workers, and the possibility they could unwittingly spread the coronavirus.

An outbreak at the Kearl site near Fort McMurray has been linked to more than 100 COVID-19 infections across five provinces — including one in Newfoundland and Labrador.

The pandemic has exacerbated what was already an oil downturn, and we're now in crisis mode in the oil economy - Sara Dorow

Sajid said companies have been working to adjust their operations to conform with public-health guidance — everything from altering shift rotations and work schedules, to changing how workers are fed (pre-packaged meals instead of buffets), to enhanced screening and physical distancing measures. 

"I would say that camps continue to be a vital component of sustaining the oilsands operation. I don't see those going anywhere," Sajid said.

"And as far as fly-in, fly-out workers are concerned, that is a strategy that we need to effectively staff our operations. I don't see that shifting in a major way."

Health and oil crisis 'double whammy'

University of Alberta professor Sara Dorow said the western province is currently facing the "double whammy" of a health crisis and an oil crisis.

She said they are both separate and related issues, and have both separate and compounding effects on mobile workers.

Sara Dorow, chair of sociology at the University of Alberta, says the future is uncertain for fly-in, fly-out workers. (Submitted by Sara Dorow)

"The pandemic has exacerbated what was already an oil downturn, and we're now in crisis mode in the oil economy — which has been sort of happening over years, but has really come to a head with the decreased demand for oil," Dorow told CBC News in an interview.

Dorow is chair of sociology at the University of Alberta and has been researching the political economy of the oilsands for over a decade.

She said the workforce has been reduced at some sites by up to 60 per cent, and there are questions about what happens next.

"We don't know if industry will return to the usual shutdown approach, where thousands of workers fly in for these two-month periods," Dorow said. 

"So that means a lot of people who are relying on that are [on] pins and needles about future prospects for work." 

Trainees practise laying down drill pipe on a rig floor near Nisku, Alta., in this file photo. The pandemic and oil price crash have sent the Alberta oilsands industry into crisis mode. (Jason Franson/The Canadian Press)

Dorow said the current added stress and difficulty for fly-in, fly-out workers has been compounded by the financial and economic uncertainty they are facing.

"I think that we're in a very important turning point — what I hope is a turning point — which is that the confluence of the pandemic and the oil crisis should be a wakeup call," she said. 

"That relying on one economy that is a fickle boom-and-bust economy is a real problem, and that we need to diversify. Not just here, but in the places from which [fly-in, fly-out] workers come."

This coverage is part of Changing Course, a series of stories from CBC Newfoundland and Labrador that's taking a closer look at how the COVID-19 pandemic is affecting local industries and businesses, and how they're adapting during these uncertain times to stay afloat.

Read more from CBC Newfoundland and Labrador

With files from Anthony Germain

Add some “good” to your morning and evening.

A variety of newsletters you'll love, delivered straight to you.

Sign up now

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

now