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Vol. 10, No. 41 Week of October 09, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

That’s trillion, with a ‘T’

Oil sands spinoffs spread; study projects jobs, economic and tax impact

Gary Park

Petroleum News Canadian Contributing Writer

Forget all that talk about the Alberta oil sands being a billion-dollar bonanza. Try trillion.

If oil prices do no better than remain at US$40 a barrel, Canada’s Gross Domestic Product will derive C$1.4 trillion from the province’s bitumen deposit over the 2000-2020 period, according to the Canadian Energy Research Institute.

While conceding that its figure is a high-end estimate, the independent energy think-tank, financed by governments and the industry, said a base case pegged on oil at US$32 a barrel would deliver a cumulative impact of C$885 billion.

The study anticipates that C$100 billion will be invested in the oil sands, building production to 3.2 million barrels per day over the next 15 years from today’s 1 million bpd and output will reap C$571 billion.

Further, the institute projects that the oil sands will account for 3 percent of Canada’s total GDP and 20 percent of Alberta’s GDP by 2020.

Developing the resource is expected to generate 6.6 million person years worth of employment, including 780,000 in the oil sands region itself. Although 56 percent of that work will happen in Alberta, 16 percent is destined for Ontario, Canada’s most populous province, 9 percent in the rest of Canada and 17 percent outside Canada.

Full-time jobs, related to construction and downstream operations, are forecast to total 282,000 — 159,000 in Alberta, 46,000 in Ontario, 29,000 in the rest of Canada and 48,000 outside Canada, an institute spokesman told the Financial Post.

Oil sands benefits will be wide

At a time when the Alberta government is facing criticism as it prepares to distribute C$400 per head to its residents from surplus oil and gas royalties, the report is seen as establishing that the employment and tax benefits of the oil sands will be spread across the country.

Of the estimated C$123 billion in direct government revenue, the federal government is expected to collect C$51 billion or 41 percent, followed by Alberta at C$44 billion or 36 percent.

Canada’s other nine provinces and three territorial governments should collect C$12 billion or 9 percent.

Cities, the bulk of them in Alberta, stand to reap C$17 billion or 14 percent of the total from property taxes.

Alberta’s Intergovernmental Affairs Minister Ed Stelmach welcomed the findings as proof that the oil sands’ benefits “will be shared coast to coast,” with the capital investments playing a large role in Canada’s economic well-being.

Institute President Phil Prince said the calculations can be used to offset concerns raised in other parts of Canada about Alberta’s revenue windfall from oil and gas.

Roger Gibbins, president of the Canada West Foundation, said the report is clear proof that Alberta contributes more than its share to the national economy and underscores the importance of energy development.

Skilled labor remains a challenge

But hanging over this glowing outlook is the continuing challenge of finding skilled labor to turn the oil sands dream into reality. A new joint study by the Canadian and Alberta governments showed that 56.3 percent of Alberta employers report problems hiring workers, compared with 51.3 percent in 2003, despite an increase in average wages of 8.67 percent to C$21.39 an hour.

The study covered 6,700 employers and 480 occupations, representing 303,000 full-time and part-time workers.

In the last two years 28.2 percent of employers said at least one position in their companies went unfilled for more than four months, compared with 21 percent in 2003.

The highest vacancy rates were reported in jobs tied to the petroleum industry:

• Professional occupations had a 17.7 percent labor shortage in positions paying C$40.43 an hour.

• Structural metal and plate-work fabricators and fitters had a 13.2 percent vacancy rate for positions paying an average C$21.37 an hour.

• Oil and gas drilling, servicing and related laborers had a vacancy rate of 9.7 percent on average wages of C$16.63 an hour.

• The survey showed average hourly wages of C$34.62 for geologists, geophysicists and geochemists, C$37.68 for petroleum engineers, C$25.93 for geological and mineral technologists and C$19.29 for truck drivers.



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