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While there’s plenty of talk about the energy transition now underway, 2020 will go down as a year of rapid economic transformation for Calgary — with more oilpatch consolidation and continued expansion in the technology sector.
The past few days have highlighted these changes, from the blockbuster union of Cenovus Energy and Husky Energy that was approved by shareholders Tuesday, to the growth of LodgeLink Inc.
The Calgary-based technology company, a subsidiary of workforce lodging provider Black Diamond Group, said Wednesday it expects to hire up to 600 workers in the coming five years, spurred in part by
a grant from the city’s economic development fund
.
The jobs are a sorely needed shot in the arm for Calgarians and provide additional momentum for the city’s burgeoning tech industry.
“Some people in our community are scared of the word transition. I am not scared of it,” Mayor Naheed Nenshi said as the Opportunity Calgary Investment Fund announced it will provide up to $3 million to LodgeLink.
“The new economy is something that will either happen to us, or something that we can lead.”
In the case of LodgeLink, it has ambitious plans to lead.
It aims to create 300 technology jobs in Calgary, such as data analysts and software developers, as well as hire another 300 non-tech positions. The company provides workforce crew travel services to more than 500 companies in North America.
Its online platform links accommodations and transportation, can track work crews and provide other services. Just three people were working on its operation two years ago, but it has 60 employees today.
Trevor Haynes, CEO of LodgeLink and of its parent company, said the tech outfit has seen business double in the past year. He expects about $18 million in gross booking revenues in 2020, even with COVID-19 limiting global travel.
Haynes, past-chair of the Petroleum Services Association of Canada, said the genesis for LodgeLink came after Black Diamond’s labour camp business serving the oilpatch began slowing down several years ago and companies searched for ways to lower costs and become more efficient.
It faced a similar challenge to one that’s confronting the city today: How do you transform in the face of a rapidly shifting economy?
“Our core market, and we were very successful at what we were doing, reduced by 90 per cent in a matter of two years. So we had to put in place strategies to use our skill sets and service other markets and go farther afield,” he said in an interview.
“There is a parallel here of the city of Calgary — looking at what else could we do with what we have to work with.”
There’s no denying a period of profound change has been sweeping through the economy, driven in part by the pandemic.
A wave of consolidation has hit the energy sector since the plunge in oil prices earlier this year. A number of deals have taken place, such as Whitecap Resources’ $900-million takeover of TORC Oil & Gas last week.
Shareholders of Husky Energy — an integrated petroleum producer with an eight-decade history — overwhelmingly approved the company’s $3.8-billion takeover by Cenovus earlier this week.
The transaction will lead to a larger, stronger player in the Canadian oilpatch. But as Cenovus looks for $1.2 billion in annual cost-savings with the combined company, it’s expected to lead to the loss of up to 2,150 jobs.
Energy companies are busy adapting to a low-carbon future. There are daily signs of the energy transition ahead, such as Ottawa on Wednesday
rolling out a new hydrogen strategy
, an area where Alberta-based energy players should be poised to lead the way.
A flurry of stories have also come out recently about the expansion within the local technology sector. Calgary-based Benevity Inc. landed a US$1.1-billion deal with international investors earlier this month,
earning the rare “unicorn” valuation status
.
A handful of local firms have successfully attracted capital, including
fintech company Neo Financial announcing this week it’s raised $50 million
.
“It’s remarkable here what has happened in the past 24 months,” said Calgary Economic Development CEO Mary Moran. “People are starting to pay attention.”
The pandemic and recession have acted as a “shock to the system” and accelerated change across the economy. These factors are likely spurring growth in the city’s digital economy, said Conference Board of Canada chief economist Pedro Antunes.
However, he cautioned against overlooking the enormous effect that the oil and gas industry has on the broader economy, driving capital investment, jobs and income levels.
“It is terrific to see the rise of tech and rise of the knowledge economy and hopefully more diversification,” Antunes said.
“But it’s hard to displace what are the negative impacts essentially on energy producers. We are seeing consolidation in the industry and seeing further job cuts in that sector. I would say the city and the province are early on in their transition.”
For Nenshi, the energy sector remains the economic engine of Calgary.
But he sees signs the city’s economy is also evolving, as this year’s tech takeoff shows.
“The world is changing and I think many of us in the city were a little guilty for a long time of trying to hold back the tides,” Nenshi said in an interview.
“But like King Canute, you can’t hold back the water.”
Chris Varcoe is a Calgary Herald columnist.
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