(Repeats Insight with no change to headline or text)
By Julie Gordon
VANCOUVER, June 12 The Canadian province of
British Columbia is on the brink of a liquefied natural gas
boom, but a shortfall of thousands of workers is imperiling
billions in investment dollars.
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
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
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, Chevron Corp and
Malaysia's Petronas are 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.
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
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.
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
(Editing by Jeffrey Hodgson and Peter Henderson)