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Labour Shortages Threaten Canada’s $50 Billion LNG Investment Plans

By James Burgess | Mon, 09 December 2013 23:27 | 0

Demand for natural gas in Asia, in the form of liquefied natural gas, has boomed in the last couple of years and Canada is positioned as the perfect place to take advantage and supply this increased demand. In order to develop the LNG infrastructure and export terminals along Canada’s west coast, energy companies intend to raise an estimated $50 billion, but these projects, that could bring in a lot of revenue, are under threat due to the lack of skilled workers in Canada’s labour market.

In order to attract tradesmen to the remote, snow-covered West Coast, energy companies are offering huge housing complexes, with indoor driving ranges, gymnasiums, and private movie theatres. Treveor Haynes, the Chief Executive Officer of Black Diamond Group, explained that over 70,000 people live in work camps in Alberta, and that in order to attract labour, the camps had become more a-kin to hotels than the basic dorms that are normally offered.

Related article: China’s Sinopec Eyes Stake in Canadian LNG Project

Around the country wages for oil and gas workers have risen by as much as 60% compared to the same jobs in the US. Nabor Industries Ltd., stated that a drill operator in Canada could earn $42 an hour, compared to $29.50 for the same job in Texas.

Geoff Hill, a partner at Deloitte Canada, said that “the lack of skilled workers is a major component for the reason why you’re often behind schedule and over budget.”

Chevron, Royal Dutch Shell, and Petroliam Nasional, are just some of the larger oil companies looking to develop the nine proposed LNG export terminals in order to supply rising demand in Asia.

Related article: China Increases Purchases of LNG on Spot Market

Chevron has estimated that in order to build its pipeline and export plant on the Pacific Coast they will need 5,500 workers, a number that just cannot be supplied by the current labour market in Canada.

Chevron is looking to secure financial partners and long-term LNG supply contracts with Asian customers, before they make any final investment decisions.

If just five of the proposed nine projects are built by 2021, then it is estimated that they will need a total of 21,600 workers during peak construction.

By. James Burgess of Oilprice.com

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