|
Canada’s upstream wants U.S. workers Drilling costs driven up by labor shortage; Alberta expected to need 40,000 additional skilled workers over next five years By Gary Park Petroleum News Canadian Contributing Writer
Manpower shortages are cutting a swath through the Canadian oil patch, sending drilling costs higher by 10 to 25 percent a year and prompting an appeal for U.S. trade union locals to send 3,000 workers to the oil sands region of northern Alberta.
Things are so grim that Paul Ziff, chief executive officer of consulting firm Ziff Energy Group, raised an alert about the economic viability of the Western Canada Sedimentary basin as drilling and completion costs skyrocket.
With the oil sands sector poised to explode out of the gates, it is expected that Alberta will need 40,000 skilled trades people over the next five years in addition to the 160,000 now available.
In fact, contractors no longer believe that they can count on the domestic, or even the North American work force to meet the needs of a multi-billion dollar construction program.
Word has leaked out that the United Association of Plumbers and Pipefitters is trying to organize a pool of up to 3,000 U.S. union members who can be shipped to Canada at short notice.
The Christian Labor Association of Canada estimates it could find work for 3,000 to 4,000 workers.
And Ledcor Industries has government permission to import foreign laborers, despite a brewing controversy over whether those workers will be hired at reduced wages and conditions, driving unions off the job sites.
However, a spokesman for the plumbers and pipefitters union said Eastern Canadians are turning down the chance to work in northern Alberta, forcing employers to consider paying transportation costs. Canadian Natural will recruit overseas Canadian Natural Resources has permission to recruit from overseas for its C$10.8 billion Horizon project and has built an airstrip at the site capable of handling Boeing 737s to reduce the travel time.
The consequences have been building for years, with Ziff Energy Group estimating that the cost of drilling and well completion has climbed to C$3.80 per thousand cubic feet equivalent from C$1.90 in 1995; gas drilling accounts for about 80 percent of Western Canada’s upstream activity.
Ziff’s report, based on data from six E&P companies, said drilling and completion costs now claim 68 percent of overall finding and development costs.
The firm, in conjunction with Schlumberger, plans to release a more detailed drilling costs and performance study in November.
The Petroleum Services Association of Canada is predicting a record 23,825 well completions this year, up 5 percent from 2004, a five- to six-fold increase from the early 1990s.
| 