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 More than a dozen LNG export terminals are being considered for the
Pacific coast province, and analysts expect three to five will go
ahead. They will also need hundreds of miles of pipeline and
thousands of wells, which use the same fracking technology that has
transformed the U.S. natural gas industry.
To meet industry needs, British Columbia has promised to build an
army of workers, but competition from rival projects, an aging
workforce, and tight timelines could mean conditions are ripe for
the same sharp cost overruns that cut short a similar energy boom in
Australia.
Provincial workforce projections reviewed by Reuters show that the
province could face a shortage of nearly 12,000 skilled workers to
staff the most in-demand trade jobs at peak LNG construction. The
province plans to address the gap by sharply boosting training, more
than quadrupling intakes for certain trades. But it likely will
still face a shortfall in some key roles.
Foreign workers could ease some of that strain, but Canada clamped
down on its controversial temporary foreign worker program after a
spate of recent abuses, raising the risks projects might not fill
jobs quickly and easily.
Royal Dutch Shell <RDSa.L>, Chevron Corp <CVX.N> and Malaysia's
Petronasare all contemplating projects in British Columbia, but none
have made final decisions on developments worth C$175 billion
($161.2 billion).
"I want to move a project forward as quickly as I reasonably can,"
Marvin Odum, President of Shell's U.S. subsidiary and a member of
the Anglo-Dutch company's executive committee, told reporters at a
Vancouver LNG conference last month.
"But until there's some clarity on workforce issues and labor
availability, you can't make that decision."
Companies also want clarity on taxes and need to secure sales
contracts before projects can move ahead.
TRAINING TIME
To help address labor concerns, British Columbia has pledged to
re-tool its education system, shifting funding away from arts
programs and into training for careers like engineering and the
construction trades.
Even the trainers say it may not be enough for peak demand.
"The priority is giving B.C. residents the opportunity to be first
in line," said Gary Herman, interim head of the Industry Training
Authority, the provincial agency that manages apprenticeships,
adding: "We're still going to have to bring folks in to help."
Canada's temporary foreign worker program has come under fire in
recent years over reports of Canadians being passed over for jobs.
That has prompted a broad program review and is fanning worries that
the government could cut off access.
In the resource sector, even union officials see a need for
temporary help, though only as a last resort. Many regularly tap
sister unions in the United States when short-term demand for
certain skills outpaces supply in Canada.
"Without temporary foreign workers going in there, jobs are going to
be delayed, jobs are going to be canceled and it will have an impact
not only on the Canadian economy, but also on the Canadian
workforce," said Joseph Maloney, Western Canadian VP for the
International Brotherhood of Boilermakers.
British Columbia projects its entire economy may need an extra half
million workers over the next decade, since a majority of the
workforce is close to retirement and there are not enough young
people to replace them.
To get a clearer snapshot of the LNG need, Reuters looked at the
province's expectations for the 10 most in-demand LNG jobs at peak
construction in 2018, which include seven trades, two unskilled
labor roles and one office job, and together represent about 80
percent of direct jobs at peak construction.
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For those 10 roles alone, British Columbia expects it will need just
over 26,000 new workers, including nearly 12,000 skilled trades
people, to meet demand from up to five projects, including export
terminals and related pipelines.
B.C. plans to train 24,000 to 27,000 workers for those LNG jobs,
including adding 11,000 to 12,000 new skilled workers.
But even with the ambitious training program, the province will
still be short hundreds of workers in each of four key trades,
according to the projections. That may seem insignificant, but if
just a few specialty workers are not available for a key task, it
can mean expensive delays.
"In the short run, we may not have enough workers to meet the needs
of industry," said Craig Alexander, chief economist at TD Bank
Group, Canada's second largest bank.
"But shortages would raise wages encouraging more workers into these
fields and the market to eventually adjust."
LEARNING FROM AUSTRALIA
Canada's tight labor supply has drawn comparison to Australia, where
LNG companies ended up battling with miners, and each other, for
staff and materials, leading to cost blowouts that dramatically
slowed a natural gas bonanza.
At Chevron's Gorgon project in Western Australia, project costs have
soared 46 percent to $54 billion, driven by pricey labor, high
turnover and low productivity, along with poor planning and
logistical delays for the island-based build.
"Finding the labor, particularly the right skills sets, to move
Canadian LNG projects forward is going to be a critical challenge
for industry to overcome," said Barry Munro, Canadian Oil & Gas
leader at global professional services firm EY.
Part of the issue in Australia, labor experts say, was that as the
number of workers on projects rose sharply, the skill level and
years of experience decreased, cutting productivity.
"In Australia, our onsite workforce went from 30,000 to nearly
90,000 from early 2010 to mid-2013," said Peter Dyball, founder of
Pit Crew, a management consultant. "Qualifications, skills and the
sector-specific experience were spread thin."
The lack of just a few skilled people at key times also proved to be
bottlenecks for massive projects, he said.
British Columbia Premier Christy Clark acknowledged the risk to
reporters at a recent industry event, and said her government had
learned from Australia's mistakes.
"If you look at what happened in Australia - it was a mess. People
walked away from billions of dollars in investment because they
couldn't afford to build the facilities. It got too expensive on the
labor side," she said. "We intend to avoid that."
(Editing by Jeffrey Hodgson and Peter Henderson)
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