CALGARY – North America’s largest pipeline company, Enbridge Inc., is cutting non-union salaries and offering employees early retirement and severance packages in an effort to cut costs.
Enbridge said in an email Wednesday that roughly 800 employees – or about seven per cent of the company’s workforce — have accepted voluntary early retirement packages, severance, educational or personal leaves of absence or part-time work. At the end of last year, the company employed 11,300 people, including 7,800 in Canada and 3,500 in the U.S.
Enbridge spokesperson Jesse Semko said the company would not “need to pursue company-wide layoffs at this time” as a result of the cost-cutting measures.
The company is reducing chief executive officer Al Monaco’s salary by 15 per cent, directors’ pay by 15 per cent and executive vice-presidents’ salaries by 10 per cent. Company disclosures show Monaco’s compensation in 2019 totalled $14.7 million including the value of equity compensation.
The company is also reducing base pay across its non-union workforce. Disclosures from Enbridge show that at the end of 2019, 1,700 Enbridge employees, or 15 per cent of its staff, were under collective bargaining agreements but they were set to expire at the end of 2020.
“Enbridge is a resilient company, but we are not immune to the unprecedented nature of the current crisis,” Semko said in an email. “The dual challenge of COVID-19 and the global oil price shock is impacting our company, particularly with decreased volumes in our liquids business.”
Enbridge operates the largest oil pipeline network exporting Canadian crude to the U.S. Midwest and to Central Canada. In recent years, as Canadian oil production has surged beyond the capacity of the existing oil export pipelines in Canada, the Enbridge Mainline system has had to ration space, forcing producers without access to pipelines to move their oil on train cars.
The International Energy Agency said in a report this week that Canadian oil production fell by 530,000 barrels of oil per day to reach 5.1 million bpd in April as companies shut in uneconomic production to survive the dramatic collapse in crude markets.
As a result, Enbridge’s Mainline pipeline network is no longer in apportionment — meaning there is enough space on the system to move the oil being produced in Canada.
The dual challenge of COVID-19 and the global oil price shock is impacting our companyEnbridge Inc.
Across the border, American oil and gas companies are also looking to cut their head counts amid a severe price decline.
Ovintiv Inc., the oil and gas producer that moved its headquarters out of Calgary earlier this year, is laying off staff across North America as it reduces drilling activity.
The layoffs are coming roughly equally from the company’s offices in Calgary, Denver and Texas, as well as from field staff, said Cindy Hassler, a spokeswoman for Ovintiv. Hassler declined to immediately provide a number of how many jobs were cut.
Ovintiv cut its capital spending by US$300 million in the second quarter and reduced the number of rigs it has in the field from 23 to seven.
“It is deeply unfortunate, but we had to right-size the organization to align with expected future activity levels,” Hassler said in an interview.
Ovintiv earlier this year changed its name from Encana and moved its headquarters to Denver from Calgary, dealing a morale blow to the Canadian energy industry. Chief executive officer Doug Suttles said the move was meant to allow the company to access a broader pool of investors in U.S. markets.
Oil prices settled lower on Wednesday on fuel demand worries due to an uptick in coronavirus cases, with emerging hotspots in China and the United States, and as U.S. crude stocks grew again, taking commercial inventories to another all-time high.
Brent crude settled down 25 cents, or 0.6 per cent, at US$40.71 a barrel. U.S. West Texas Intermediate fell 42 cents, or 1.1 per cent, to US$37.96 a barrel.
With files from Bloomberg