Characteristics of the oil and natural gas industry

HRM STRATEGY

Table of Contents
Executive Summary 3
1.1 Strategic human resource management and its importance 3
1.2 Human resource planning 4
2.1General characteristics of the oil and natural gas industry 5
2.1.1Pestle analysis 6
3.1 Business model and SHRM strategy 8
3.2 Human resource supply and demand 9
4.1 Action, discussion, and reflection 10
Conclusion 10
References 12

Executive Summary
Canada’s oil and natural gas industry is lucrative and has significant economic impacts on the country. Canada is the fourth-largest producer of oil and the sixth-largest producer of natural gas globally. The success of the oil and natural gasses sector, and for companies such as Canadian Natural Resources Limited, comes from the strategic management of human resource capacities. Strategic human resource management enables companies to conduct and implement human resource planning, which is crucial to allowing companies to address human resource demands. Using the VRIO analysis, Canadian Natural Resources Limited possesses value in the Horizon Oil Sands as an asset to the company’s competitive advantage. The paper assesses the company’s human resource supply and demand, identifying supply and demand gaps and addressing the shortcomings to Canadian Natural Resources Limited’s advantage.
1.1 Strategic human resource management and its importance
Strategic human resource management is a crucial aspect in developing long-term business practices that guarantee growth, development, and achievement of long-term goals. Strategic human resource management references the development of consistent frameworks that highlight how employees are acquired, developed, and managed in a manner that suits an organization’s long-term objectives (Collins, 2021). Strategic human resource management is crucial to developing a high-performance and high productivity organizational culture that consistently meets the goals and objectives a company or organization sets out to achieve. Human resource strategies adopted by organizations thus have to specifically ascribe to the contexts of an organization and the targets an organization has for growth, development, and sustainability (Collins, 2021). Human resource planning is crucial to developing an organization’s sound strategic human resource management portfolio. Human resource planning allows organizations to align their skills and needs adequately with their business goals. This aspect of human resource planning is particularly important in the current landscape dominated by new and emerging trends such as technology. Thus organizations and businesses adopting sound human resource plans enable the maximization of opportunities made available by emerging new trends. In addition, human resource planning allows organizations to manage human resources shortages and assign the best skills to the best jobs (Collins, 2021).Businesses can be adept at attracting and maintaining top-tier talent who can optimize their knowledge and skill for the benefit of the business.
1.2 Human resource planning
The human resource planning process involves the following. First, organizations analyze the human resource supply currently at their disposal. The such analysis considers various aspects that inform the organization of the overall characteristics of the human resource supply. These characteristics include the skills and qualifications of the human resource, the positions the employees occupy, and the performance levels of the human resource supply, among other aspects. Organizations then analyze their labor demands (George, 2017). This analysis involves organizations considering the future of their workforce. Through analysis of labor demands, organizations can plan on issues such as the promotion of staff, transfers, demotions, and layoffs, depending on the organization’s labor demands (George, 2017). In addition, analysis of labor demands allows organizations to adapt to new technologies, hence determining whether an organization needs more or fewer employees when integrating new technology (George, 2017). Organizations then engage in a delicate balance of labor supply and demand. This balance involves the narrowing of labor supply while considering future labor demands. Organizations can achieve this balance by enabling employees to learn new skills and increasing management. The final step in human resource planning involves implementing and executing the human resource plan (George, 2017). The organization must have budgetary and collaborative capacities to ensure that the human resource plan is implemented to suit the organization’s needs.
2.1General characteristics of the oil and natural gas industry
Oil and gas production in Canada is a significant aspect of the country’s economy. Within Canada, there is active oil and gas exploration, with 12 provinces in Canada exhibiting oil and gas industry activities. Due to the extensive nature of the oil and gas industries in Canada, Canada is the fourth-largest producer in the world and the sixth-largest producer of natural gas. The industry is responsible for a significant portion of Canada’s GDP and has significant human resource requirements. Oil and gas industries are predominant in British Columbia, Alberta, Manitoba, and Saskatchewan, among other Canadian provinces (Mansoor& Tahir, 2021). Alberta holds the largest oil and natural gas deposits and is responsible for more than 80% of Canada’s total oil and gas production. In total, Canada processes nearly 8 million barrels of oil, while natural gas processing is nearly 120 trillion cubic feet. This production level translates to 132 billion dollars, which is 7% of the country’s annual GDP (Mansoor& Tahir, 2021). Many human resources services Canada’s significant level of oil and natural gas production. More than 500,000 workers service the Canadian oil and natural gas industry. This significant level of human resources requires strategic human resource management to maximize the potential of the vast human resources at the industry’s disposal.
Canadian Natural Resources Limited represents a significant player in Canada’s oil and natural gas business. The company has crafted its portfolio as one of Canada’s largest independent producers of natural gas. The company has a wide presence in various Canadian provinces, including Alberta, Saskatchewan, and Manitoba, and a considerable presence globally in Europe and Africa (Mansoor& Tahir, 2021).The company was formed in 1973 and has grown to become Canada’s ideal option in oil and natural gas solutions. The company processes close to 1.1 million barrels of oil daily, highlighting the significant nature of operations. Canadian Natural Resources Limited has an annual revenue of approximately 17 billion US dollars. This level of revenue is drawn from its widespread operations and a significant asset portfolio estimated to be close to 75 billion US dollars. The company also has a significant amount of human resources, as it seeks to develop people within a culture of integrity and value creation for its stakeholders. The company has 9700 employees working in different capacities (Mansoor& Tahir, 2021). The significant portfolio possessed by the company outright places it as the leading business in Canada’s oil and natural gas production industry. Due to the significant nature of the oil and natural gas industry and its crucial place in Canada’s economy, Canadian Natural Resources Limited (CNRL) faces significant competition. Some of the company’s main competitors include Tourmaline Oil (TOU), Pembina Pipeline, Peyto Exploration and Development (PEY), Ovintiv (OVI), and Seven Generations Energy (VII). Tourmaline Oil offers the stiffest competition of the companies mentioned above, with a significant market share capable of challenging Canadian Natural Resources Limited.
2.1.1Pestle analysis
Canadian Natural Resources Limited and the Canadian oil and natural gas industry are thriving enterprises. The political factors that enable the industry include the relative political stability that the country enjoys, which allows independent oil and gas sectors in the country to thrive. The country has favorable tax laws and regulations, in addition to labor laws, that ensure that the sector experiences a win-win situation in terms of keeping human resources, independent industry players, and the government happy (Zentner et al., 2020). Economic factors in the oil and natural gas industry include the strength of the Canadian dollar, which rates favorably against international currencies, enabling better returns in international markets. While the labor costs are relatively high, the significant skill and expertise displayed by Canadian human resources offsets additional labor costs the industry experiences. The free market policies of the Canadian government have further fostered a healthy business environment for the independent oil and natural gas sector (Zentner et al., 2020). The social factors in the oil and natural gas industry include the significant amount of immigrant populations in the human resource capacities. The oil and natural gas industry is often required to fulfill labor requirements by additional recruitment of immigrant populations. The technology landscape of the oil and natural gas industry includes the increased level of fuel variation. The emergence of green energy, solar energy, and electric energy, especially for automobiles and machines, poses an existential threat to the requirements of oil and natural gas and potentially diminishes the market value due to the presence of other advanced forms of safer energy (Zentner et al., 2020). In terms of the environment, the oil and natural gas industry and individual companies such as Canadian Natural Resources Limited have made significant commitments and strides to environmental conservation.
For instance, the oil and natural gas sector are responsible for more than 80% of investments in environmental conservation, translating to 1.65 billion USD. The sector has increasingly increased investment in making oil and natural gas cleaner to benefit the environment. The legal landscape of the sector in Canada entails the antitrust laws that apply to independent oil and natural gas industry players. The law aims to create fair competition among industry players in Canada (Zentner et al., 2020). Antitrust laws make it illegal for industry players to fix prices or enter into anti-competition agreements. These agreements would otherwise hurt consumers and ensure industry players are unregulated within the oil and natural gas sector. In addition to antitrust laws, the Canadian oil and natural gas industry possesses significant legal checks and balances for the sector, such as consumer protection, intellectual property, and data protection regulations.
3.1 Business model and SHRM strategy
Canadian Natural Resources Limited employs a business model based on the company’s goal to become an efficient oil and natural gas producer. Efficiency from the company’s viewpoint would enable it to continue being competitive in the independent market circuits in Canada. In addition, the company is focusing on sustainable development through technology applications to develop better product options (Ivanenko, 2012). For instance, Canadian Natural Resources Limited has been instrumental in forming Canada’s Oil Sands Innovation Alliance. This cooperation is an amalgamation of key oil and natural gas industry players. This alliance aims to develop research and technology capabilities to help in the exploration of green energy and reduce the carbon footprint from fossil fuels (Ivanenko, 2012). In addition, the company is aggressive in making strategic acquisitions, in line with its expansion mandate, enabling it to have a crucial presence in strategic locations such as Alberta, the country’s leading province in oil and natural gas exploration. Using the VRIO framework, the crucial acquisitions in Alberta represent the company’s investment in value (Song & Sung, 2015). As stated earlier, the province of Alberta is responsible for a significant portion of oil and natural gas exploration. Therefore, the company’s increased presence in Alberta represents value, as the company can be dominant in a crucial business environment. A significant presence in Alberta is a competitive advantage for Canadian Natural Resources Limited. The Horizon Oil Sands project in Alberta represents such an acquisition. This aggressive acquisition strategy has also influenced the company’s financial status. Through its asset portfolio, Canadian Natural Resources Limited stands to gain in terms of liquidity and is in a strong financial position to make and implement business solutions.
3.2 Human resource supply and demand
Canadian Natural Resources Limited currently has approximately 9700 employees across its vast investments in Canada and the globe, notably in the UK and Africa (Ivanenko, 2012). The company aims to increase value through practicing integrity, an aspect that translates to the human resource needs that the company has. The company’s human resource requirements mainly center around skilled labor required to man drilling rigs for oil exploration and extraction. Skilled labor requirements for the company are often fulfilled by a combination of local and immigrant labor. The demand for labor is in line with the increasing diversification of the nature of oil and natural gas products. The company has invested in green technology to help make oil and natural gas safer and more efficient. The company fulfills its human resource demand through the supply of skilled workers drawn from local and indigenous populations and skilled migrants from countries such as India, South Africa, and Kenya. This supply is useful in offsetting deficits that Canadian local labor. Assessing this particular demand and supply for human resources, the gap for Canadian Natural Resources Limited is identified in the human resources required to adequately operate the various aspects of the company’s commitment to a cleaner and safer options of oil and natural gas products. The technology is a departure from the traditional truck and shovel that dominated the industry, hence identifying human resource requirements to fulfill the commitment to clean energy. As such, the company can continue with its self-sufficient strategy of inclusive recruitment of local and immigrant labor that is skilled in oil and natural gas production. A significant investment would be required to provide additional skills to workers to integrate clean energy practices in the production of oil and natural gasses.
4.1 Action, discussion, and reflection
The plan for additional human resource requirements for Canadian Natural Resources Limited is viable because the company already has a competitive recruitment strategy. Therefore, the company plans to adjust its human resource needs to acquire adaptable individuals to form part of the workforce. The company’s skills and knowledge in oil and natural gas production are a bare minimum. Human resources acquired through the competitive process will then be adequately trained on the aspect of clean and safe energy, which is a commitment of the company that is economically viable due to the market preferring safer options. The plan will work due to the investment the company will make in terms of identifying areas in clean energy requiring research, the procurement of additional technology and experts to both implement clean energy systems in the company’s oil sands and also train the current crop of human resource on clean energy solutions and standards. In terms of strategic human resource management, the plan is adequate in meeting labor supply and demand requirements without necessarily making drastic adjustments that would result in additional costs for the company.
Potential setbacks that may derail the plan to meet its human resource supply and demand requirements include the challenge of consistently finding immigrant human resources to offset any labor deficits from the local reserves of human resources. Immigrant and foreign labor is costlier to procure and maintain, and the company has no guarantee that the aforementioned immigrant workforce is as skilled as the local human resources. In addition, the company is set to experience additional costs in acclimatizing to the new conditions within Canadian society, which could lead to downtime for the company and its operations. However, this plan gives Canadian Natural Resources Limited an edge over its competition. In implementing the human resource plan, the company will be ahead of its competition in terms of having better-skilled workers and considerable levels of research portfolio in the quest to fulfill clean energy commitments. The clean energy commitments, in particular, will allow the company to develop a sound strategy in the long term to counter the competitive nature of electric and solar energy. The company thus remains competitive, while additional training allows the human resource capabilities of the company remain productive and motivated to meet the company’s core goals and objectives.
Conclusion
In summary, Canada’s oil and natural gas industry is an economically viable industrial sector, owing to the economic benefits that Canada has accrued over the years. The successes of the oil and natural gas industry and, in particular, Canadian Natural Resources Limited is a result of the adequate strategies on human resource management and human resource planning that have been applied to improve human resource capacities in the company and the industry. As revealed by the pestle analysis, various factors are determinants of the industry’s relative success. Canada enjoys a relatively stable political environment, and the independent sector has access to various incentives that increase productivity in the sector. Socially, the sector has relied on immigrant labor to alleviate labor deficits. There is also the aspect of technology and clean and alternative energy sources. The emergence of solar and electric power for use, especially in the powering of machinery and automobiles, presents an opportunity and a threat to the oil and natural gas industry in terms of research and increased competition, respectively. Applying legal codes such as antitrust laws enables the maintenance of a competitive market environment. On the other hand, environmental conservation concerns for the sector have led to significant investment in environmental conservation in Canada.

References
Collins, C. J. (2021). Expanding the resource-based view model of strategic human resource management. The International Journal of Human Resource Management, 32(2), 331–358.
George, V. (2017). The role of human resource planning in the human resource network. International Journal of Creative Research Thoughts, 5(11), 1–10.
Ivanenko, V. (2012). Modularity analysis of the Canadian natural gas sector. Energy economics, 34(4), 1196–1207.
Mansoor, R., & Tahir, M. (2021). Recent developments in natural gas flaring reduction and reformation to energy-efficient fuels: a review. Energy & Fuels, 35(5), 3675–3714.
Song, J. J., & Sung, H. (2015). A study on the relation between strategic attributes of technological resources and competitive advantage: Empirical analysis of VRIO framework using technology evaluation results of technology-based SMEs. Journal of Korea technology innovation society, 18(3), 416-443.
Zentner, K., Fritze, A., Kloster, A., &Romaniuk, L. (2020). A Comparative PESTEL Analysis of Canada and China’s Management of Energy Markets. Journal of Applied Business & Economics, 22(12).