Energy plans stoke labour crisis; Mega-projects need 40,000 workers

The announcement of $40 billion worth of new energy industry projects in the past two weeks, including Shell Canada's plans to spend $27 billion to construct a massive oilsands processing unit at its Scotford upgrader near Edmonton, has refocused attention on the province's ongoing labour crunch.

All told, oilsands projects worth more than $130 billion are planned for the next 20 years -- and billions more will be spent on energy-related projects across the province over the same time period. That has Albertans asking: where will the workers come from?

Last month, the Alberta government warned the province is facing a shortfall of 100,000 workers by 2015, with at least 40,000 of those positions in the oil and gas sector. Energy contributes about a third, more than $59 billion annually, to Alberta's gross domestic product.

"Our top three priorities are people, people and more people," said Shell Canada spokeswoman Janet Annesley, acknowledging the dilemma. "Ensuring we have access to skilled people is our top concern."

Shell's new upgrader is the cornerstone of a made-in-Canada strategy that will see it process virtually all of its oilsands in Alberta -- about 10 per cent of the country's projected output -- from the mine to the gas tank. The facility is to be built in four stages over the next 15 to 20 years, with each phase requiring 5,000 construction workers over and above the 1,200 personnel needed to run the plant.

Likewise, Petro-Canada is refitting its Edmonton refinery to take a steady diet from the Fort Hills mine, which is currently under construction near booming Fort McMurray. Costs to complete the project have risen steadily.

"The impact of labour shortages is very real. To keep up with the pace of economic growth and capitalize on key projects in the oilsands, industry needs to take the lead and tackle this issue," Andrew Stephens, a Petro-Canada vice-president, said in response to the unveiling of a new government program to recruit and train new workers.

According to a report by Deloitte and Touche, the oil industry is partly a victim of its own success, pulling talent and manpower from other sectors of the economy that support it.

"It's not just in the oilsands areas," said Dick Cooper, Deloitte's energy and resources practice leader, who is based in Calgary.

"It's in the whole economy . . . whether it's the Tim Hortons or new restaurant that can't find people to serve coffee and food because there's not enough people to keep the restaurants or coffee shops open."

In a report on future labour requirements, Cooper sees emerging demographic and educational trends contributing to the problem.

In addition to recruiting a younger generation of skilled workers, a greying bubble of baby boomers will retire, further straining a limited and shrinking talent pool.

"It's really causing a crunch in terms of getting these projects done."

But oil companies remain cautiously optimistic they can find and train new staff.

Recently, Total SA, Europe's third-largest oil producer, said it expects logistic bottlenecks and hiring difficulties as it develops oilsands projects in Alberta.

Like Shell and Petro-Canada, Total is also seeking a homegrown solution to handle the processing of its growing production, including an oilsands upgrading plant to take up bitumen from Joslyn and Surmont.

In its second-quarter report earlier this week, Total said it plans to spend between $10 billion and $15 billion to expand in Canada.

"We will have logistic pressure," Robert Castaigne, the company's chief financial officer told analysts last week. "There will be more costs. I don't think it's anything we won't be able to solve."

But Shell's Annesley said her company has a leg up because of direct recruiting programs in Alberta's colleges and trade schools -- even Internet sites like Facebook -- that lure young people into the fold.

The problem is finding the right skills for the job, another major challenge in an education system also under stress.

A $7.5-million donation to the Northern Alberta Institute of Technology (NAIT) in Edmonton is being used to develop a program tailored exclusively for Shell and its operating processes. In addition, the company wants to raise the number of apprentices on job sites to increase training.

"That alone gives an indication of the importance we place on educating the workforce of the future," Annesley said. "In the oilsands, education is the key to having opportunity."

But Alberta's labour movement is deeply suspicious of any incursion into their traditional turf, saying it compromises worker safety and benefits.

In July, five separate construction unions voted to strike, the first such ballot in three decades. The results showed a rising discontent with the breakneck pace of oilsands development among the people charged with building it.

Although the unions haven't yet served strike notices, the threat of a walkout could arise Aug. 8 when the contractors are expected to come back with a counter-offer.

A union proposal put forth in July calls for 14.5 per cent wage increases over two years, barely above Alberta's nation-leading inflation rate of 6.5 per cent.

Another issue for unions are temporary foreign workers.

The skilled labour shortage is a global phenomenon, prompting companies to look overseas for employees.

Alberta Building Trades Council president Ron Harry likens it to a "runaway train." But others just call it union busting.

Gil McGowan, the president of the Alberta Federation of Labour (AFL), fired off a letter to provincial authorities after the collapse of a pair of holding tanks at Canadian Natural Resources Ltd.'s Horizon mine site this spring, killing two Chinese workers and injuring four.

It was the second accident in a span of three weeks his organization blamed on inadequate safety standards and the use of unqualified staff.

"From our perspective, these events raise serious questions about construction practices and safety on the site," he said.

"If these temporary workers were on a track to becoming full citizens, it would be less of a concern. But they're not. The vast majority will be treated like Post-it notes -- to be used, discarded and sent back to the countries of origin."

The AFL also questions whether there is actually a labour crisis and what needs to be done to address it.

By the Alberta government's own definition, problems don't start developing in the labour market until the unemployment rate drops below 3.5 per cent.

According to Statistics Canada, Alberta currently has a 6.1 per cent unemployment rate in the construction trades.

McGowan said there are plenty of potential workers to be found in the Aboriginal communities as well as in Saskatchewan and Manitoba.

Rather than marginalize unions, the government needs to start looking at labour organizations as a potential source of training and for creating new opportunities, he said.

"Organized labour has to be part of the solution."

Calgary Herald, Page A1, Mon Aug 13 2007
Byline: Shaun Polczer

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