Posted on 02/17/2014 4:52:45 AM PST by thackney
Companies developing multibillion-dollar Gulf Coast plants to export cheap domestic natural gas or make things with it are encountering a harsh reality: There aren’t enough skilled hands to do all that building.
“It causes a big concern about what’s going to actually happen when it comes to fulfilling these jobs,” says Michael Bergen, executive vice president of Industrial Info Resources, a Sugar Land-based market research firm. It projects that companies ?will invest more than $64 billion to build at least seven liquefied natural gas facilities along the Gulf Coast in the coming years.
And if demand for labor drives up wages and related labor costs, Bergen said, some pro-jects might be canceled or delayed.
Announced projects include liquefied natural gas export terminals under development by Sempra Energy, Cheniere Energy and Freeport LNG. Such facilities chill natural gas into a liquid so it can be transported by tanker to foreign markets where it commands higher prices than in the United States.
A surge in U.S. natural gas production, spurred by advances in drilling and well completion, also is driving construction of petrochemical plants, which use gas as fuel and raw material.
Chevron Phillips Chemical Co. soon will start work on $5 billion in upgrades at its Cedar Bayou plant in Baytown, including an ethane cracker to produce a plastics building block derived from natural gas.
Exxon Mobil Corp. is expanding its Baytown complex, too — and last year announced a half-million-dollar commitment to coordinate training programs at nine area community colleges and other institutions.
Dow Chemical Co. plans a $4 billion upgrade of its plant in Freeport.
Industrial Info Resources forecasts that the number of skilled construction workers in the Gulf Coast region will grow from around 62,000 today to more than 103,000 by 2016, driven by the surge in those industrial projects. That figure only includes workers in 13 specific crafts — in particular, pipe fitters, welders, electricians and instrument technicians. It doesn’t include apprentices and general laborers; with them, the numbers are even higher.
Energy companies are rushing to build LNG export facilities in part because they see a competing push in Canada. But the push also has caused the American facilities to compete for local labor.
“It’s a very real problem when you look at the numbers that could be required if everyone builds at the same time,” said Ron Corn, senior vice president for specialties, aromatics and styrenics at Chevron Phillips Chemical.
Bergen said construction contractors are recruiting workers from other parts of the country and probably will have to raise wages to retain employees once work on those projects begins. And that, he said, could worry the companies behind those projects.
“If labor (cost) rises 30 percent, some of these projects will not move forward,” he said.
As energy companies and their construction contractors focus on finding the workforce they need, labor interests are developing training programs to help fill the jobs.
The apprenticeship program offered by the Iron Workers Local 84 union, for example, has doubled its enrollment to about 220 over the last year, said Terry Sieck, a former president of the local, who leads the program.
“I’m currently working as hard and as fast as I can to get as many people trained as possible,” Sieck said. “It’s exciting and exhausting.”
The union, which represents welders, crane operators, riggers and others involved in commercial and industrial construction, views the plant building boom as a recruiting opportunity.
Sieck said interest in construction trades is rising, with laborers enticed by the prospect of higher wages and steady work.
Construction firms contracted to build the LNG and petrochemical facilities say they too are investing heavily in training.
But those types of programs should have ramped up years ago and likely won’t be enough to satisfy the demand for labor, said Paul Schuster, managing director of Trimountaine Group, a Massachusetts-based risk management firm.
He speculates that some of the multibillion-dollars projects that have been announced with much fanfare over the last few years will be mothballed quietly.
“The labor market will flex only so much before projects need to be canceled,” Schuster said.
He said the companies behind the projects face a budgetary dilemma since it’s difficult to project how much wages will rise as the building boom fuels demand for skilled trades.
“You’re either overpaying because you assume it’s going to be really bad, or you’re stuck with having these huge overruns,” Schuster said. “Neither situation is going to be great.”
The big winners in the labor crunch are the skilled construction workers themselves.
Besides higher wages, the boom could mean more bonuses — at hiring and project completion — as well as higher per diems to cover expenses like meals, which aren’t subject to the same tax treatment as wages.
“It’s pretty exciting times on the Gulf Coast — especially if you’re a construction worker,” said Dan Spinks, vice president and general manager of Houston operations for Irving-based Fluor Corp., which is working on the Dow facility in Freeport and the Chevron Phillips project in Baytown.
Spinks said that the relative proximity of the projects along the Texas and Louisiana coasts makes it easier for workers to switch jobs. That means companies have to pay particular attention to factors besides wages to keep construction workers happy and on the job. He said Fluor is emphasizing job security by giving workers the chance to move among its various projects in the region.
Chevron Phillips’ Corn said that company will try to provide workers with intangibles like easier access to job sites and more attractive areas for lunch breaks.
“Those little things tend to be quite important,” he said.
In addition to attracting good workers, companies face a challenge of avoiding bad ones in their push to fill rosters and meet schedules.
“I don’t think anyone in the Gulf Coast wants this to become their Sochi moment, where all of a sudden you have these huge overruns and declining quality and contractors cutting corners,” Schuster said, referring to problems at the Winter Olympics in Russia.
Fluor, for example, hopes to bring workers from refineries it helped build near Detroit and Chicago to help with its projects here.
It also is investing in fabrication yards in Mexico, the Philippines and other countries, where workers can build modules for assembly at the U.S. construction sites.
“If you’re a construction worker,” Spinks said, “there’s going to be a tremendous amount of opportunity.”
Interesting points about labor costs. My answer is supply and demand! You want and need people to do the work, you just don’t want to pay them to much to do so.
Their answer is ‘open the borders so we can get cheap labor legally’.
Skilled hands, not just hands.
And many of the jobs require getting a background check to obtain a TWIC card.
http://www.tsa.gov/stakeholders/transportation-worker-identification-credential-twic%C2%AE
Despite the exciting contributions to energy production that the application of horizontal hydraulic fracturing (fracking) has provided, the market for petroleum engineers and technicians is still very tight. Rykert attributed this to the oil and gas “bust” in the 1980s, during which there was a decline in the number of students entering petroleum engineering degree programs.
“There was a ‘skipped generation’ as college students avoided the field due to the perception of lack of opportunity. Petroleum engineering university programs are now growing as the industry has significantly rebounded, but there is a gap in experience levels in the 10- to 20-year range,” Rykert said. “The industry is also facing the loss of the ‘baby boom’ generation as these individuals are nearing retirement age.”
The growing number of employment opportunities across the state due to the Eagle Ford Shale, in conjunction with a sluggish supply of new talent, means industry employers are eager to search for and hire qualified engineers.
“We seek experienced engineers and geoscientists in the exploration and production industry with petroleum engineering, geoscience or related degrees. We maintain an internship program as a method to establish a pipeline to future engineering talent and introduce students to opportunities...,” Rykert said.
In addition to a strong engineering team, shale industry employers are seeking qualified skilled laborers to join the shale production workforce, including lease operators, production and construction foremen and completion supervisors.
excerpted:
Shale activity rock-solid in thriving energy market
http://www.chron.com/jobs/article/Shale-activity-rock-solid-in-thriving-energy-5235729.php
Many of the jobs require a “union card”. I think that’s the point.
Pay the baby boomers more. They will return part time. That is what the accounting profession is doing.
Where are the SKILLED workers today and where have they been. They are in COLLEGE, persuing degrees in Art History, French Literature, and varied “studies” that lead to a lifetime of under or non-employment.
This country has yet to learn that it is the skilled worker with callused hands who keeps the world we live in continuing to live and prosper.
The real reason that “workers” are imported from afar is the locals are busy learning nothing and learning to do nothing.
A very simple example: A greasy handed ELEVATOR REPAIRMAN is an example. Without him there is not a building in the USA over 3 stories. Same with plumbers, electricians, HVAC repair techs and so on forever.
100% Agree.
ping
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