CALGARY Ottawa has announced a new immigration program that it says will make it easier for Canadian business to hire the workers most urgently needed — skilled tradespeople.
The new stream for workers in fields such as construction and manufacturing should be set up later this year, Immigration Minister Jason Kenney said Tuesday in Calgary, the financial heart of Canada's oil and gas industry and a city all too familiar with skilled labour shortages.
"In Canada, we've been welcoming historic high numbers of immigrants, partly to help us fuel our prosperity in the future and fill growing labour shortages," Kenney said.
"But to be honest, our immigration programs haven't been effective in addressing a lot of those shortages. Our immigration programs have become rigid and slow and passive."
The labour market in Alberta is already tight, with a bevy of multibillion-dollar oilsands projects on the go. A recent report suggested it's only going to get tighter.
The Petroleum Human Resources Council of Canada has said the oilsands sector may need to double its workforce by 2021 to compensate for both the gap left by retiring baby boomers and fill the needs of new projects.
And that doesn't include the ripple effects of that growth on the wider economy — like the need for new homes and offices to be constructed, or demand for more service industry staffers.
There are some avenues for newcomers to become permanent residents, such as the Provincial Nominee Program and the Canadian Experience Class. Kenney said those have been helpful, but insufficient.
Skilled tradespeople make up a small percentage of immigrants coming to Canada under the current program, even though the resource and construction sectors are clamouring for welders, pipefitters, electricians and other workers.
Criteria required to enter Canada under the existing program put tradespeople at a disadvantage because the rules are geared toward professionals, said Kenney.
"Let's be honest — we don't need more people coming to Canada with advanced degrees that end up driving taxi cabs and end up working in convenience stores. That's a waste of human capital," he said.
Gil McGowan, president of the Alberta Federation of Labour, said the new program is an improvement from the tendency to use temporary foreign workers to backstop labour shortages.
But he said he remains "deeply troubled" that there are some 1.5 million unemployed workers within Canada that could fill the gap if they had the right training.
"There's a gap that needs to be bridged between the demand for workers in areas like the oilsands and the supply of workers in places like Ontario and Quebec," said McGowan.
The changes are part of a broader set of immigration reforms laid out in last month's federal budget.
Hamilton Spectator, Wed Apr 11 2012
Proposed reforms to make Canada's immigration system faster and more responsive are "bang on", says one national construction association.
In a recent speech to the National Metropolis Conference, Citizenship, Immigration and Multiculturalism Minister Jason Kenney highlighted recent changes to the Federal Skilled Worker Program and spoke of more flexibility within the current points system.
Though the minister did not go into policy details, Canadian Construction Association (CCA) president Michael Atkinson said these proposed reforms sound good on the surface.
"Both those statements he made sound encouraging because both those elements, the timeliness and the points system, were often identified by our members as deterrents or disincentives for using the Federal Skilled Worker program to try and get permanent workers in."
Current applicants to the Federal Skilled Worker Program must have experience in one of 29 occupations in demand, or have a job offer in Canada. Atkinson said part of the current problem is the huge backlog for the program.
"It can take years in order to get someone in under the permanent entry skilled worker program. Obviously that's not quick enough in a construction setting," he said, adding that's why so many construction firms use the Temporary Foreign Worker Program and provincial nominee programs.
Kenney recognized that the current points system used to assess federal skilled worker applicants needs to be more flexible and intelligent. It should place greater emphasis on the importance of language, he said, while recognizing that the language ability needed to successfully integrate in Canada is different for a doctor as opposed to a welder. It should also place greater emphasis on younger workers with high quality credentials that can be recognized quickly.
Kenney spoke of the growing success of the Canadian Experience Class, which allows certain foreign students and temporary foreign workers to translate their Canadian work and education experience into permanent residence.
"Immigration is playing an increasingly important role in our economy and we need a system that does a better job of attracting the people who have the skills that are in demand and getting them here quickly," he said.
The provincial and territorial nominee programs have played a role in spreading the benefits of immigration across the country and addressing long-term regional labour needs, said Kenney.
Ontario also recently announced that it is developing its first immigration strategy. A new expert roundtable, led by Julia Deans, past CEO of Greater Toronto CivicAction Alliance, will help develop the strategy and examine ways that immigration can best support Ontario's economic development.
Saskatchewan Premier Brad Wall was recently in Dublin on a labour recruitment mission to help fill the ranks of the province's skilled workforce.
Atkinson expects the CCA to be extensively consulted as the proposed changes and developments move forward as the construction industry employs more than 1.2 million Canadians.
"Given our needs in the future and given the fact that Canada's conomic growth is so dependent upon the kinds of infrastructure that we can provide to the resource based industries in Canada," he said, pointing to commodities like oil and gas, mining, metals and potash.
Projections currently indicate that the Canadian construction industry will experience a shortfall of 325,000 workers by 2019.
At the same time, demand for construction services in Canada is expected to continue increasing throughout the decade, elevating Canada's construction market to fifth-largest in the world.
While domestic efforts to increase skilled worker training in Canada is equally important, Canada's domestic population growth will not be able to singularly address industry needs, says the CCA.
Daily Commercial News and Construction Record, Wed Mar 14 2012
The Canadian Construction Association (CCA) and a group of Alberta business associations are pushing for immigration reform to deal with a shortage of skilled labour.
The initiatives are happening at the same time the federal government is proposing changes to the skilled worker program.
"Canada's current immigration system does not adequately address the needs of the Canadian construction industry or the projected growth of the Canadian economy," said Michael Atkinson, president of the CCA.
"On the surface, the reforms outlined sound like they would go a long way to addressing the challenges that employers currently face to bring in skilled workers, which would ultimately contribute to a more competitive Canadian economy."
Citizenship, Immigration and Multiculturalism Minister Jason Kenney outlined plans for immigration reform, during a keynote address to the National Metropolis Conference on March 1.
The minster highlighted changes to the Federal Skilled Worker Program (FSWP), which would require applicants to have a job offer in Canada or experience in one of 29 occupations in demand.
The Federal Skilled Worker Program is Canada's most important pathway for immigrants to obtain permanent residency.
For several years, the CCA has been advocating for reforms to the FSWP, which make the immigration system more user friendly to the construction industry.
While Kenney was talking about a vision for immigration reform, a group of 19 business organizations called the Alberta Coalition for Action on Labour Shortages (ACALS) is asking the federal government to take action to deal with labour shortages in western Canada.
"Overall, what the group is saying is that we need recognition that the pending labour shortage has got to move up on the public policy agenda, in order for the economy to move forward," said Bill Stewart, vice president of Merit Contractors Association in Alberta, which is a member of the ACALS.
"The federal government knows there are labour market needs that could be better met by looking at how points are allocated to specific sectors under the skilled worker program."
Both Stewart and Atkinson agree that the current immigration system puts too much emphasis on language proficiency and post secondary education.
A maximum of 16 points (out of a total of 100) is awarded for high proficiency in the first official language.
Education points are awarded based on the credential and the number of associated years of education.
Skilled tradespeople often have a credential in their trade, but not the required years of education, so they lose points.
The latest data released by Statistics Canada last week shows that 36,770 skilled workers obtained Canadian permanent residency in 2011.
Skilled tradespeople make up a very small share of the total number of these people, who are entering Canada under the FSWP.
Added to this problem, a large backlog has developed over the last several years, as applications have outstripped annual processing targets.
As a result, there are significant delays in processing applications, with some application not being looked at for more than four years.
As of June 30th, 313,825 applications remained in the backlog.
"Regardless of the backlog, the current system does not work very well for the trades or technical requirements," said Stewart. "Under the current system, only 3.0 per cent of the people have a trades background."
In response to this problem, Citizenship and Immigration Canada is proposing to increase the maximum points awarded for proficiency in the first official language from 16 to 20, while establishing minimum language requirements, depending on the immigrant's occupational skill level.
According to Kenney, the new points system will place greater emphasis on the importance of language and recognize that a doctor and a welder need a different language ability to successfully integrate in Canada.
The Construction Sector Council forecasts rising labour requirements for new construction in Alberta between 2011 and 2019 will increase the labour force by 30,000 workers.
At the same time, expected exits from the labour force due to retirements and mortality total 35,000 workers.
Half of the total requirements will be met with 26,000 new entrants, which means there is a shortage of 40,000 construction workers that will need to come from outside Alberta.
The ACALS argues that the reform of the Temporary Foreign Worker (TFW) program is an important part of an overall strategy to fill this labour shortage.
For example, the Alberta Federation of Labour argues that calls to expand the TFW are designed to drive down the wages in the province.
"Blowing the doors off the TFW program is not the solution that Alberta needs," said Gil McGowan, president of the Alberta Federation of Labour.
Instead, McGowan recommends that the government follow the advice of former Alberta premier Peter Lougheed and set a more reasonable pace of development in the oilsands.
He said that a more reasonable pace of development will allow labour needs to be met by the existing labour force in Canada.
Journal of Commerce, Wed Mar 7 2012
Byline: Richard Gilbert
EDMONTON - With an unemployment rate of 4.9 percent, Alberta currently fares better than any other Canadian province. But despite being fairly insulated from the economic turmoil plaguing the rest of the world, our oil-rich province's economy is not without problems.
Unlike south of the border, though, Alberta's biggest labour worry is that there are actually 114,000 more jobs than people to fill them.
So in an effort to help find solutions to that predicament, the Alberta Coalition for Action on Labour shortage, comprised of 19 groups and businesses, has been formed. Its key message is that it should be easier for people to come and work in our prairie province.
"If you look at the issue of labour shortages, the problem is getting worse, not better," said Tim Shipton of the Alberta Enterprise Group.
"Right now...the governments seem to be talking at each other and not engaging in a conversation about the issues and finding productive, positive ways forward," added Richard Truscott with the Canadian Federation of Independent Business.
To reverse that trend, the coalition believes the government should help by easing immigration restrictions.
On the provincial front, they say to write to the Minister of Human Services, Dave Hancock, who tells us he's already in agreement.
"While we need to make sure that every Albertan has an opportunity to get the skills they need to participate in the economy, even with that we're going to need others."
It's a realization that some local businesses can support.
At Edmonton's All-Weather Windows, Paul Taylor said they're really starting to notice the talent pool shrinking as the number of job applications aren't keeping pace with order forms.
"It's just harder to get the right people into the organization," he said.
And while they remember this pattern from the last boom, this time, experts say there's a big difference: this boom isn't expected to be about western Canada's oil industry, but rather, it is due largely to an aging population and too many retirees.
Not everyone agrees with the new coalition's views, though. The Alberta Federation of Labour believes the problem facing Alberta is what it considers to be the government's failure to set a reasonable pace to oilsands development.
"If these employers really want to be able to man these projects, then they should talk to the government about approving 5 or 10 projects at once instead of 65 multi-billion dollar projects going on all at the same time," said the AFL's Gil McGowan.
He considers the coalition's solution of loosening immigration restrictions to be a short-term solution which will have long-term consequences of lowered wages.
McGowan said a better alternative would be for projects to be stretched out over longer periods of time "so that our existing Canadian construction labour force can do the work and then we can have 23 to 30 years of good employment for our trades people as oppposed to 5 years of intense development by temporary foreign workers followed by a bust, because I believe that's where we're headed."
While the groups may disagree on how to achieve change, both agree on that finding political solutions is especially important now, before the problem becomes even more widespread.
Global TV Edmonton, Fri Mar 2 2012
Coalition calls for changes that would bring more workers into the province ahead of an anticipated shortage
EDMONTON - An alliance of 19 Alberta business organizations called on the federal and provincial governments to cut red tape around labour immigration on Thursday.
"The simple fact remains that we do not have enough people in Alberta to fill the jobs today and the thousands of jobs that are anticipated," said Tim Shipton, president of the Alberta Enterprise Group. "If there is going to be any limit to the growth in Alberta, it is the lack of people to fill jobs."
The AEG, along with other associations such as the Canadian Association of Petroleum Producers and the Alberta Federation of Independent Business, collectively call themselves the Alberta Coalition Against Labour Shortages. ACALS unveiled four technical requests for government aimed at bringing more workers into the province.
Government statistics project a shortage of 114,000 workers by 2021 in Alberta. Premier Alison Redford, speaking during a recent tour of Chicago, said American workers could fill some of those positions.
"We are probably looking to fill about 100,000 jobs," Redford said. "When we say that their eyes just pop out because in some places down here they're at 20-per-cent unemployment. They really want those people to be able to come up."
Ken Kobly, CEO of the Alberta Chambers of Commerce, another member of the coalition, identified changing demographics as a driving force behind the shortage.
"We're into the middle of a systemic shortage, not just in Alberta but across the country, because of folks like me who are going to be retiring in a little while," he said, pointing to shortages of skilled workers in Newfoundland.
"Certainly, it's aggravated by the peaks and valleys that we have in an economy, but it's a systemic requirement. Baby boomers are retiring."
Gil McGowan, president of the Alberta Federation of Labour, pinned the province's workforce problems to the pace of development in the Athabasca oilsands.
"The real problem is that our provincial government has simply approved too many projects at one time," McGowan said. "No one should be surprised that some employers are finding it hard to get the workers they need."
Industry will spend more than $20 billion on developing new oilsands projects in 2012.
McGowan called on the province to approve fewer projects and reform the temporary-foreign-workers program.
"I think most Albertans would prefer 25 or 30 years of steady employment in oilsands-related projects over six or seven years of frantic development, supplemented by thousands of temporary foreign workers and followed by a bust," he said. "We're afraid that these proposals would take thousands of those jobs away from Albertans and also have the effect of driving down wages.
"While this may be a great blueprint in the eyes of business groups, this, frankly, is the last thing that ordinary working people need."
ACALS members say they only look abroad for workers after exhausting the local market.
"If there are individuals that are willing and able to work, they should put up their hands, because there's certainly plenty of jobs in this province," said Richard Truscott, Alberta director of the Canadian Federation of Independent Business, an ACALS member.
"Nobody in their right mind would go through all the cost and hassle of something like the temporary-foreign-worker program if there were people here in Canada that were applying for these jobs. But they're not."
T.J. Keil of the Alberta branch of the Canadian Home Builders' Association said interprovincial migration won't meet Alberta's needs.
"If (Canadians) do want to make Alberta their home and work here, we want that to happen," he said. "But once that pool has dried up, you have to continue looking. It's a globally competitive market now."
In a news release, the provincial labour federation called the ACALS proposals "an attack on workers."
"It's bad news for temporary foreign workers under the existing program, and it's bad news for Canadian workers," said McGowan, who feels issues involving foreign workers in the province continue since the boom of the mid-2000s.
"We've seen this movie before."
Edmonton Journal, Thurs Mar 1 2012
Byline: Lewis Kelly
A reasonable pace of oil-sands development would mean more jobs for Albertans, says AFL
Calls to expand the Temporary Foreign Worker (TFW) program in Alberta are a move to unfairly drive down the wages earned by working Albertans, says the province's largest labour group.
"Blowing the doors off the TFW program is not the solution that Alberta needs," says Gil McGowan, president of the Alberta Federation of Labour, which represents 145,000 workers.
"Only six months ago, in a report titled Impact of the TFW Program on the Labour Market in Alberta, the Alberta government recognized that the TFW program was bad for our economy. We could soon have 100,000 TFWs in Alberta. How many more do we need?"
In September 2011, Conservative MLA Teresa Woo-Paw said in the report: "... I have concluded that we cannot continue to use the TFW Program to fulfil our province's long-term labour shortages. Doing so has significant, negative impacts for the long-term growth of our economy. Although temporary foreign workers (TFWs) have a place in our economy, the TFW program is not a long-term solution to Alberta's labour market needs."
The AFL president offered real solutions to the labour shortage, rather than the expansion of the TFW plan sought by a coalition of business groups including the Alberta Chamber of Commerce and the Alberta Enterprise Group.
"The government need only follow the advice of former Premier Peter Lougheed and set a more reasonable pace of development in the oil sands. Instead of approving dozens of oil-sands projects at once, a reasonable pace of development would create more value for Albertans, keep the cost of development down for oil-sands companies and mean that the labour needs could be met by the existing labour force in Canada," says McGowan.
"Not only would we have enough workers, we'd be creating good jobs and long-term jobs for Albertans for decades, instead of creating short-term jobs for TFWs," he says.
"However, these short-sighted groups prefer to focus on expanding the TFW program as a means to drive down labour costs. They want to pay workers less, even while the cost of living in Alberta is rising faster than other parts of Canada. Not happy with the massive profits they already make, they want to make even more by paying workers less," he says.
"It's not rocket science. The cure for an overheated market is not to throw more wood on the fire, it is to cool things down."
- Gil McGowan, AFL president, 780-218-9888. McGowan will be at PSAC rally at Canada Place, 9700 Jasper Avenue, Edmonton, at noon today.
Alberta's largest union is calling on the government to tighten transportation safety regulations lest migrant workers in that province suffer a similar fate to those killed in a recent crash in Ontario that claimed 11 lives.
"The lax laws governing how farm workers can be taken to and from work sites are a recipe for disaster," says Gil McGowan, president of the Alberta Federation of Labour (AFL), which represents 145,000 workers.
McGowan notes that in Alberta it is legal for farm workers to ride in the back of pickup trucks and larger trucks due to an exemption to the Alberta Traffic Safety Act/Rules of the Road Regulation.
"The government says it's wrong for all other Albertans to travel in this unsafe way, but says it's OK for farm workers. Why? Are their lives worth any less?"
On Feb. 7, 10 migrant workers from Peru were killed in a horrific collision in the hamlet of Hampstead, west of Waterloo, Ontario, when their 15-passenger van ran a stop sign and collided with a flatbed truck.
Eleven people were killed in the accident including the driver of the truck, making it Ontario's worst crash in at least a decade.
Fifteen-passenger vans such as the one involved in the Ontario crash have been dubbed "death traps on wheels" by some U.S. safety experts, and banned by the U.S. government for the transportation of children.
The vans have also been banned in Nova Scotia, and from transporting public school students in New Brunwick and Quebec, while some Alberta school boards will no longer insure them.
However, Alberta and most other provinces continue to allow farm workers to travel in the vans.
The lax laws governing how farm workers can be taken to and from work sites are a recipe for disaster.
The AFL is calling on the Alberta government to end the exemption for riding in the back of trucks, ban the use of 15-passenger vans, and outlaw vans that do not meet acceptable safety standards, among other improvements for migrant workers.
"During her campaign to become premier, Alison Redford promised tougher rules to protect farm workers," says McGowan. "Farm workers have the right to the same protections as all other Albertans. We expect the premier, as a human rights lawyer, to recognize this and fulfill her pledge now."
On Feb. 17, around 50 protesters gathered outside the Office of the Chief Coroner in Toronto, calling for an inquest into the deaths of the workers killed in the Feb. 7 collision as well as for laws to better protect all foreign workers in Ontario.
The protest was led by worker's rights group Justicia for Migrant Workers, which says that despite several tragedies involving migrant workers, there has never been a coroner's inquest conducted in Ontario to examine the death of a worker employed under the temporary foreign workers program.
"As we mourn this tragedy it is important that we take immediate steps to prevent such a tragedy from ever occurring again," says the group's organizer, Chris Ramsaroop.
In 2007, three female farm workers were killed in B.C. when a van carrying 16 workers overturned on an Abbottsford highway, about 70 km southeast of Vancouver. Only two of the passenger seats were equipped with seat belts.
Epoch Times, Wed Feb 22 2012
Alberta's Court of Appeal ruled Wednesday a Chinese company can be prosecuted for its role in the deaths of two temporary foreign workers in 2007.
Sinopec Shanghai Engineering Company Ltd. had claimed it shouldn't be involved in the trial also involving Canadian Natural Resources Ltd. and contractor SSEC Canada Ltd.
The companies face 53 charges in connection to the double fatality at CNRL's Horizon site, north of Fort McMurray on April 24, 2007. Hong Liang Liu, 33, an electrical engineer, and Genbao Ge, 27, a scaffolder, were killed when the roof of the oil tank they were working in collapsed.
Sinopec Shanghai had brought the workers into the country, but had argued it had no official presence here and that it was never properly served. However, several acts outlined in an earlier hearing helped link Sinopec Shanghai and SSEC.
"The next step is we go back to provincial court and we're going to be asking for Sinopec to be tried jointly with CNRL and SSEC Canada Ltd.," said Josh Stewart, Alberta Justice spokesman Thursday.
That court appearance will also seek approval to move ahead with the trial already scheduled for Oct. 1, 2012. It will be heard in a St. Albert courtroom.
"We can do it in absentia now," he added, if Sinopec fails to show up for court.
The companies were set to go to trial last month, but the court granted an adjournment requested by CNRL which had argued all three accused should stand trial together.
"The Crown objected and we asked that it go ahead on schedule as planned, but the judge ruled against the Crown and granted the adjournment," said David Dear of Alberta Justice at the time.
That appeal had been scheduled for Oct. 8.
Meanwhile, the Alberta Federation of Labour is applauding the court's ruling.
"(Wednesday's) ruling makes it clear that if international companies want to do business here, they have to not only respect our laws, but also be accountable when they violate them," said Gil McGowan, AFL president.
Though he applauded the decision, he admitted his organization is concerned the proceedings are taking so long. It's been over four years since the workers were killed.
"With one of the three court justices holding a dissenting position, there's a possibility that the company may seek to delay their day in court even longer," said McGowan. "It is incredibly frustrating and distressing that this company tried to dodge justice by dragging the process out as long as they have. We hope these workers' families will see justice as soon as possible."
Given the companies will be in court for trial more than five years after the accident, he said the delays make a mockery of the laws designed to protect workers.
Fort McMurray Today, Fri Nov 25 2011
Byline: Carol Christian
Chinese engineering, procurement, and construction management company Sinopec Shanghai Engineering Company (SSEC) could face charges in a Canadian court after a decision handed down yesterday by the Alberta Court of Appeal.
In a decision released yesterday, the court found that SSEC could be held accountable for the deaths in 2007 of two temporary foreign workers at the Horizon Oil Sands project in northern Alberta, operated by Canadian Natural Resources.
The Canadian company is due to face court over the matter in 2012, but SSEC had argued that it did not come under the jurisdiction of the Alberta court as it had no official presence in the nation or any Canadian employees.
The Appeal court's decision upheld a previous ruling finding that this was not the case.
Alberta Federation of Labour president Gil McGowan applauded the decision in a statement.
"Today's ruling makes it clear that if international companies want to do business here, they have to not only respect our laws, but also be accountable when they violate them," McGowan said.
"It is incredibly frustrating and distressing that this company tried to dodge justice by dragging the process out as long as they have. We hope these workers' families will see justice as soon as possible."
upstreamonline.ca, Thurs Nov 24 2011
Renewed calls to process more bitumen in Alberta are following a delay in a proposed export pipeline even though the economic upside for upgrading plants in recent years has shrunk.
The push to encourage more processing of production from the province's vast bitumen resource into higher value light oil resurfaced this week in a debate among elected leaders, after the U.S. federal regulator deciding on a permit for the 830,000 barrel per day Keystone XL pipeline from Alberta to the U.S. Gulf Coast indicated it won't budge on its additional year or more of study.
The heightened pressure on lawmakers to get more revenue for Alberta's bitumen follows recent calls to address a predicted decline in synthetic oil produced in the province, as a percentage of total bitumen output. The Energy Resources Conservation Board predicts 47 per cent of bitumen produced in the province in 2020 will be upgraded to light oil, down from 58 per cent in 2010. In 2008, the province had set a goal of 66 per cent. The regulator's summer forecast had some eyeing jobs and tax revenue attached to additional upgraders crying out for government action.
Energy Minister Ted Morton told an energy conference in Calgary this week there has been "heated" discussion on the issue in caucus since the Keystone XL delay and there are some "enthusiasts" in cabinet backing support for more upgrading, but that he isn't one of them.
Morton's view is that the economics for upgrading aren't certain and seem to change like the weather in Alberta, "every month or two," as he told an audience at the 2011 Calgary Energy Roundtable on Tuesday. Industry observers confirmed a confluence of factors make building a multibilliondollar upgrader riskier now than a few years ago.
Between 2004 and 2006, energy companies could earn 20 to 25 per cent more on each barrel of bitumen produced in Alberta by processing it into synthetic oil at an upgrader, said Kam Sandhar of investment bank Peters & Co. Today, a barrel of bitumen is only fetching 10 per cent less on markets than a barrel of synthetic crude.
A pair of new pipelines came online in 2010 to bring bitumen south to facilities that can handle the heavy oil, which lifted the price, Sandhar explained.
"What's changed between now and then is there's more take-away capacity to the Midwest, there's more coking capacity in the Midwest, which has essentially grown the market for heavy oil," Sandhar said.
While existing upgraders in Alberta are making money, Sandhar said, it's hard to justify new projects given that labour costs and supply chain costs have risen - including loftier steel prices. Expansion of oilsands mining and in situ bitumen production, expected to double from about 1.5 million barrels per day by 2020, means competition for workers in northern Alberta is fierce - which ratchets up wages, he said.
"Let's assume you heard somebody say tomorrow, 'There are two new upgraders being built,' " Sandhar said. "It's not doable."
The oilpatch is "clearly" supportive of doing upgrading in Alberta, said Greg Stringham, a vice-president of the Canadian Association of Petroleum Producers.
There are five upgraders operating in Alberta with capacity to process more than 1.2 million bpd, and a few more planned. North West Upgrading Inc. and Canadian Natural Resources Ltd. are pitching a three-phase project starting in 2014 to cost $15 billion and amount to 150,000 bpd, with a bitumen supply commitment from the government. The proposed Voyageur upgrader by Suncor Energy Inc. and Total S.A. is projected to add 200,000 barrels per day in 2016. CNRL has said it would add to its existing Horizon upgrader facility, as long as cost inflation isn't too high, and Nexen Inc. has publicly mused about an upgrader expansion at its Long Lake in situ oilsands project.
Stringham said U.S. Gulf Coast refiners that can take in Canadian heavy oil have existing contracts soon expiring with suppliers from Venezuela and Mexico and are willing to pay more.
"So that's what you're competing against," Stringham said. Assuming Keystone XL gets built to supply those refineries, he said, that demand will be satisfied.
The Alberta Federation of Labour has long bemoaned export pipelines for allowing value-added jobs to flow "down the pipeline," the group's president, Gil McGowan, said. Even worse, McGowan argued, is that pipelines leaving Alberta have contributed to the thinner profit margins upgrading projects could potentially earn by inflating heavy oil prices, leaving those profit spreads for refineries in Illinois to enjoy.
University of Alberta business professor Andrew Leach said the effect of pipelines on the economics of upgrading isn't so simple, since pipelines would also be needed to export new synthetic crude.
"Even if you are running 100 per cent synthetic in the province, you'd still want access to Gulf Coast or West Coast markets," Leach said.
Calgary Herald, Thurs Nov 24 2011
Byline: Rebecca Penty