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Tackling labor shortage a priority

Canadian Natural Resources offered a candid explanation for dramatically accelerating its oil sands program from C$10.8 billion to about C$35 billion.
President and Chief Operating Officer Steve Laut said there is a race to lock-up labor before the oil sands construction boom starts in earnest in 2007.

He said labor availability and inflationary pressures could create havoc for the timelines of some smaller projects.

“We know it’s going to be very tight in 2007,” Laut said.

Shell Canada understands the full scope of the headache.

To more than triple output from its 155,000 bpd Athabasca operation over the next decade it will need 10,000 welders, pipe fitters, electricians and skilled workers covering a broad spectrum of trades.

Request for national strategy

“Where is the next welder going to come from?” said Shell Canada oil sands Vice President Neil Carmata. “Where will the next plant operator come from?”
Even before the latest flurry of mega-project announcements, he estimated oil sands construction will require an extra 25,000-30,000 trades people, of which only 10,000 are in Alberta.

Importing temporary workers to close that gap can easily double the total labor costs for a skilled pipe fitter to C$80 an hour, Carmata warned.

A broad coalition of Canada’s leading energy producers — oil, gas, power, nuclear, wind and coal — along with pipeline companies and service providers have already made their case to the Canadian government for a national strategy to tackle issues such as labor shortages and regulatory delay.

The Energy Dialogue Group said a framework is urgently required to solve a vast array of challenges to help industry overcome a labor crunch in areas of high activity such as the oil sands.

Shortage of technical talent

Jiri Maly, a principal with consulting firm McKinsey & Co., said the shortage of technical talent in Canada has become a CEO-level concern and a national productivity issue. He said the competition for workers has spread far beyond Canada to a global stage, with countries such as Singapore or Dubai prepared to “do whatever it takes to get the best people.”
The scope of the problem is reflected in the Edmonton region, which is the manufacturing hub for many oil sands components and the transportation staging area.

Over the last 10 years, Edmonton, with a population of less than 900,000, has added 120,000 new jobs, the bulk of them tied to the energy industry.

In the process the available labor pool has been drained, forcing some oil sands companies to start recruiting drives outside Canada.

CNQ has gone one step further by building an airstrip capable of handling Boeing 737s near its Horizon site to speed the arrivals and departures of its workers.

On another front, the pipefitters and welders union for northern Alberta has appealed to U.S. members to sign up for work in their region.

More than 50% of employers report difficulties

But the scope of the problem is reflected in a survey conducted by the Canadian and Alberta governments.
It said the number of Alberta employers who reported difficulties finding workers rose to 56.3 percent in 2005 from 51.5 percent in 2003, despite an average 8.67 percent jump in wages to C$21.39 per hour.

The vacancy rates included 13.2 percent among structural metal and platework fabricators and fitters and 9.7 percent among oil and gas drilling, servicing and related laborers. The Conference Board of Canada said energy sector workers can expect the largest wage increases of all non-union employees in 2006 because their industry has been hardest hit by shortages.

The board predicted a 4.3 percent hike for oil and gas workers, compared with an average 3.6 percent for non-unionized workers.

“The intense competition for labor in Alberta’s energy sector is the sharpest example of growing pressure in the labor market,” said board Vice President Prem Benimadhu.

“After easing in recent years, recruitment and retention have re-emerged as priorities for organizations,” he said.

—Gary Park