CALGARY — The boom in U.S. shale oil and natural gas production threatens to cut off a key supply of skilled temporary foreign workers for Alberta companies, as more tradespeople opt to work on large infrastructure projects in the United States despite the lure of dramatically higher wages in Western Canada.
"There's going to be a battle between what goes up north versus what comes down south," said Mike Bergen, executive vice-president of Sugar Land, Tex.-based market research firm Industrial Info Resources.
Advances in drilling technology have unlocked new supplies of crude oil and natural gas from hard-to-reach reservoirs across much of the U.S. By 2025, shale gas alone could add more than one million workers to the U.S. manufacturing industry, according to a fall report published by PricewaterhouseCoopers, reducing costs for raw materials and energy by as much as US$11.6-billion annually.
"You get a big [liquefied natural gas] project that takes place and then you get several of these big refinery projects and then here comes a new ethylene plant," Mr. Bergen said. "That's going to draw a lot of labour."
Alberta's perennially tight labour market means average wages for electricians, boilermakers, plumbers and pipefitters, carpenters and structural steelworkers are anywhere from 70% to 136% higher than median U.S. wages, depending on the trade, according to a five-year outlook published Monday by Industrial Info.
The high wages contribute to an operating environment already seen as one of the most expensive regions in the world from which to extract oil, at a time Alberta's heavy blend of crude, Western Canada Select, is subject to steep price discounts in the U.S.
Larry Matychuk, business manager for the Edmonton-based Local 488 branch of the United Association of Plumbers and Pipefitters, said the base wage rate for members is $43.77 per hour plus benefits.
He said the union regularly turns to its U.S. affiliates for additional tradespeople during "shut down season," a four-month annual stretch when refineries and bitumen upgrading plants shut down for maintenance, exacerbating worker shortages.
"We've had 200 to 300 of them up here at a time," he said of the U.S. tradespeople. "We expect that that's going to increase. We offer jobs to Canadians first. However, there is work picking up across Canada now. There's work in Saskatchewan; there's work in Newfoundland. Work is starting to pick up in Ontario and B.C. We don't have access to as many of the Canadians as we used to have."
ExxonMobil Corp. said last week it was moving ahead with its US$14-billion Hebron development offshore Newfoundland and Labrador.
The project, designed to recover more than 700 million barrels of oil from the Jeanne d'Arc basin roughly 350 kilometres southeast of St. John's, will employ up to 3,500 people during construction, the Irving, Tex.-based energy giant said.
That could spell trouble for Alberta oil producers. The latest figures compiled by the Petroleum Human Resources Council of Canada suggest at least 9,500 jobs could go unfilled in the country's oil and gas industry by 2015.
Oil sands production is poised to increase 44% by then from today's levels, to 2.48 million barrels per day, according to the Canadian Association of Petroleum Producers.
An influx of U.S. tradespeople could help with facility expansions needed to boost production, Mr. Matychuk said, "if the Americans are available at the time when we need them."
Gil McGowan, president of the Alberta Federation of Labour, expressed concern about Americans filling Canadian jobs in the oil sands.
"We're not talking about sharing a cup of sugar with them," he said in an interview. "We're talking about jobs that pay in excess of $100,000 a year. We should not be allowing these jobs to go to people outside of Canada without first doing everything we can to provide opportunities to Canadians."
The point may be moot, as workers in the U.S. help rejig facilities to meet new sulphur specifications in gasoline plus accommodate soaring production of U.S. shale oil fields.
Refiners are "engaging in some pretty big projects" on the Texas Gulf Coast, Mr. Bergen at Industrial Info noted. "We're anticipating some pretty decent expansion work on distillate and crude conversions for taking the shale crude," he said.
Financial Post, Monday, Jan. 7, 2013
Byline: Jeff Lewis