While Canada’s oil and natural gas resources are primarily located in the western provinces and East Coast offshore, the industry has a nation-wide reach. From manufactured goods to technical expertise, the industry’s supply chain extends to all parts of the country — including Sault Ste. Marie, Ontario, home to Tenaris, which makes steel pipe and tubing needed for drilling natural gas and oil wells.
“At Tenaris we’re dealing with the same economic challenges as Canada’s oil and natural gas companies,” comments David McHattie, vice-president, Institutional Relations. “Drilling is down by 85 per cent, which has impacted our business and employees. But our customers are supporting us by continuing to choose Canadian-made products, and as they emerge from pandemic restrictions they are looking to the future. So are we.”
Prior to the present economic downturn caused by COVID-19 and extreme low commodity prices, Tenaris employed up to 1,000 people in Canada and had annual revenue in the $1 billion range. The company manufactures seamless and welded casing and tubing, the only seamless pipe manufacturer in Canada. But with drilling down, operations at the company’s Ontario plant have slowed — clearly affecting employees, but also presenting an opportunity.
Resilience and resourcefulness
In response to the question, ‘How can we evolve yet continue to produce high-quality, cost-effective products at home in Canada?’ Tenaris is taking advantage of the industry slowdown to make changes in its main plant in Sault Ste. Marie, with anticipated support from the federal Strategic Innovation Fund and other government initiatives.
“We made investment decisions in 2019 that are coming to fruition. We are re-organizing production to align with customers’ operating levels and drilling forecasts. Installation of new manufacturing tools and equipment over the summer of 2020 will mean construction jobs, and that investment is a clear commitment to Canada’s energy industry.” And in Alberta, Tenaris is working with customers to manufacture pipe and tubing and build inventory that will be needed as drilling ramps up again.
McHattie believes natural gas and oil is a sustainable long-term industry. “Canada can rebuild from strengths including energy, agriculture, manufacturing and much more, but no sector is more important to Canada’s overall recovery than energy. Tenaris is an essential supplier to an essential industry.”
And although he knows recovery won’t happen overnight, he says with confidence, “Canada is still the fourth-largest market worldwide for our products. At Tenaris we’ve had an opportunity to adapt to challenges, investing in our plants and our future. We’re all struggling together, but in the long run we’ll win together.”
The ripple effect: Supply chain in action
The economic impact of Canada’s energy industry is huge, with suppliers across the country. In Ontario alone, Alberta’s oil sands industry purchased more than $1.89 billion in goods and services from 1,162 suppliers in 2016-17. This short, informative video highlights the many faces of the intricate and innovative supply chain that’s essential to Canada’s natural gas and oil development.