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05 Dec 2011

Oil and gas industry facing massive labour shortages in Canada

Source : Journal of Commerce

Canada's oil and gas industry, which includes the Athabasca oilsands in northeastern Alberta, will struggle to find workers over the next few years, according to the Calgary-based Petroleum Human Resources Council of Canada (PHRCC).

In fact, labour shortages are projected to be more severe than in 2007, the height of the last boom, when the industry had trouble attracting and retaining enough workers.

Some of the shortages will be due to the introduction of new technologies in the oilsands. Until recently, conventional open-pit mining, using huge shovels and trucks, was how most bitumen was extracted.

But, only about 20 per cent of the resource can be mined.

The remaining 80 per cent is too deep – more than 70 metres in depth – and needs to be pumped out of the ground like conventional crude oil.

The transformation to newer in-situ extraction technologies is in full swing.

“Already more than one-half of oilsands extraction is in-situ,” said Travis Davies, manager-media and issues with the PHRCC.

“We expect that by 2015, it will take the lion’s share.

” Davies said the most widely-used in-situ technology is steam-assisted gravity drainage.

SAGD (pronounced “SAG-DEE”) is an advanced form of steam stimulation, in which a pair of horizontal wells are drilled into the oil reservoir, one a few metres above the other.

Low pressure steam is continuously injected into the upper well bore to heat the oil and reduce its viscosity, causing the heated oil to drain into the lower well bore, where it is pumped out.

Because in-situ requires a lot of piping, there is a greater demand for labour from the metal trades, such as boiler makers, pipe-fitters and welders, as well as technicians from the electrical and controller industries.

Cheryl Knight, executive director and CEO of the Petroleum HR Council, said the move to in-situ and the increased use of fracking technology (hydraulic fracturing to release petroleum from layers of rock), is also leading to increased demand for, and shortages of, software developers and technologists, fracking operators, and water and environmental management technicians.

Knight said many of the shortages are occurring in the services sector, which is the operating part of the oil and gas industry and its single largest component.

Exploration and production are other sectors.

Both in-situ and fracking rely heavily on the services sector for their operations.

Development of the services sector workforce needs to keep pace with technological change. Over the next 10 years, the oil and gas industry will face another challenge, as many of the industry’s most experienced and skilled workers begin to retire.

To examine the possible impact of worker retirements on the industry labour force, the Petroleum HR Council developed and analyzed three scenarios based on different energy prices and corresponding industry activity levels.

In each of these three scenarios, according to the council’s analysis, the industry will face a labour shortage.

“Even in the scenario where the industry’s activity levels remain low, the petroleum industry will need to hire 39,000 workers, just to replace the number of people retiring,” said Knight.

“If prices for oil and natural gas rise and stay high, the need for new workers is staggering. In this scenario, the industry will need over 130,000 new hires.”> Knight said workforce challenges will continue to get worse before they get better.

“For many companies, managing labour challenges will be key to sustaining their growth,” she said.

Calgary-based Cenovus Energy Inc., which operates two SAGD projects in Alberta and has 10 emerging projects, has a long-term workforce plan. The plan includes guidelines for the number of staff it will need to meet its production goals.

“We’ve hired over 500 staff in 2011, as part of our plan to hire an additional 1,700 staff by the end of 2015,” said Cenovus spokeswoman Jessica Wilkinson.

“By 2021, we expect to have a staff of about 7,000 people, compared to just over 4,000 now. “The majority of these jobs will be in the field to support our oilsands operations.

” Wilkinson said that although Cenovus isn’t experiencing a labour shortage now, but is preparing for the future. “(We are) ensuring we have the appropriate staff needed to expand our operations is an important part of our business planning,” he said.

“The reality is that retiring baby boomers and demand for workers in the same talent pool will affect the entire industry, which is why Cenovus has developed a long-term workforce strategy to address these issues.”

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