Growth ahead for Alberta oilsands projects
An enormous resource and continuing global demand are driving the resuscitation of construction work in Alberta's oilsands, and it's good news for industry.
Brad Anderson, executive director of the Construction Owners Association of Alberta, says it's been a tough year for many in heavy industrial construction, with fewer people working and many leaving the province. But, he adds, that doesn't mean new projects won't see the same challenges experienced before the recession.
"I think when things ramp up, we're going to be challenged again," says Anderson, explaining that although there have been fewer heavy industrial construction jobs, there are also fewer people available. Many people left when projects were completed or put on hold. Others are working in maintenance on projects they helped build during the boom.
"As [oilsands projects are] built, they need a percentage of that construction workforce to stay on. It's a good thing because it creates permanent jobs. It's challenging on the construction side of things because we have to find new construction people to replace those," Anderson says.
According to the Conference Board of Canada, the future of the oilsands is bright. It is estimated that there are 170 Bbbl of bitumen in non-conventional reserves in Alberta and only 6.4 MMbbl have been developed, with another 27 billion more under development.
New projects, driven by the recovery of oil prices, are expected to lead to a 6.7 per cent growth in production in 2010, with growth hitting 2.1 MMbbl/d by 2014.
There have been declines in the cost of materials like steel. However, the Conference Board predicts that material costs will rise quickly as production and demand increase. Anderson points out that the cost of labour and materials for oilsands projects is related to the state of the construction industry not just in Alberta, but throughout Canada and even the world.
"What happens in one area affects the other area," he says.
In its industrial outlook for 2010, the Conference Board expressed concerns about the ability of the oil-extraction industry to meet growing demand fast enough, particularly because of constraints unrelated to the resource itself, such as politics, regulations, war, and environmental issues. A return to the severe labour shortages of the pre-recession years could also hamper development.
"Have we learned from what happened to us in 2006, in which we saw incredible growth in oilsands construction and other construction in Alberta?" Anderson asks. "It was just a wickedly exciting period, but boy was it ever difficult, and we were short of people everywhere."
He is optimistic that the construction industry is ready to tackle the challenge. A robust apprenticeship program has been developed and Anderson lauds the provincial government for taking steps to mitigate labour issues. Says Anderson: "I'm very impressed. They're focusing on their human capital plan and anticipating and planning for growth. I think we have learned; it's just a matter of, is it all going to come together?"