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Oil sands take over center stage Conference Board of Canada bets on C$105B in upstream, upgrader spending over 10 years; by 2008 annual spending at C$15 billion; worker shortfall could hit 350,000 by 2025 Gary Park For Petroleum News
Chalk up another resounding vote of confidence in the Alberta oil sands.
The Conference Board of Canada has pinned a price tag of C$105 billion on new mining and upgrader projects over the next decade, up more than two-thirds from the past 10 years and greater than any other agency has forecast.
The board said it anticipates C$55 billion will be spent on mining projects, covering both announced and proposed operations, compared with C$17.6 billion in the 1995-2005 period, while upgrader investment will make a similarly staggering jump to C$50 billion from C$12.5 billion.
Pedro Antunes, director of national forecast with the board, said that by 2008 and 2009, annual spending will be about C$15 billion.
“You’re just looking at phenomenal investment spending,” he said.
And that doesn’t include the billions of dollars of planned oil sands pipelines within Alberta and from the province to the United States and British Columbia coast.
It coincides with a new target set by FirstEnergy Capital analyst Steve Paget, who believes oil sands production will almost triple to 2.9 million barrels per day over the next nine years.
Alberta work force questions But oil sands forecasts are invariably accompanied by questions about whether the Alberta work force can handle the growth.
Antunes said Alberta can no longer count on British Columbia, as it did in the 1998-2000 period, to fill the gaps because British Columbia is also on a roll.
He noted that the demand is not just limited to construction workers.
The red-hot energy sector is creating demand for head office employment in Calgary, which has climbed from 11,000 to 19,400 since the turn of the century, beating Canada’s three largest cities — Toronto, Montreal and Vancouver.
Conference board deputy chief economist Paul Darby said the job demand is “going to get worse before it gets better,” estimating that Alberta could have a shortfall of a staggering 350,000 workers by 2025.
The major squeeze is expected in 2008 and 2009 when the oil sands expansion will peak.
Calgary Economic Development Research Director Adam Legge said the labor supply is “our absolute No. 1 priority … and we don’t have any short-term solutions.”
Unemployment less than 3.5% Unemployment, now less than 3.5 percent, is liable to fall even more, he said, unless there are changes in Canada’s immigration policies involving professional and semi-professional accreditation rules and further cuts to personal and corporate income taxes.
Wages in Alberta are currently rising by 7 percent a year, but even that may not be enough to attract workers.
But initial moves to use foreign workers has aroused the ire of the Alberta Building Trades Council, which has accused Canadian Natural Resources of employing 50 temporary workers from China and planning to bring in 600 more for its Horizon project.
Although the company has not commented, building trades Executive Director Paul Walzack said it is well known on the site that foreign workers have “shown up.”
He wants the Canadian government to implement a memorandum with Alberta stipulating that foreign workers can supplement, but not replace Canadian workers.
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