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Oilpatch labour shortage looms in Alberta

It’s deja vu in the oil patch.
Canada’s energy industry, the bulk of which is concentrated in Alberta, could once again face a labour crunch if the pace of development continues.

Consulting firm Mercer predicts that by 2014, the country’s energy sector could experience a shortage of 24,000 workers. Mercer surveyed 135 oil and gas companies, as well as utilities, for its report.

This latest report comes less than three weeks after the Petroleum Human Resources Council had predicted a similar shortfall.

“Workforce planning is more important than ever for those employers wishing to avoid the market frenzy that was observed in 2006 to 2007,” the report said.

The report’s findings, however, hardly come as a surprise: Several companies, following the recessionary freeze, have started up their labour-intensive oilsands projects as oil prices started climbing toward US$80 a barrel from lows near $30.

The only damper on the mood in Alberta’s energy sector are low natural gas prices.

“We knew that after this bump-in-the road recession that we just had, that labour shortages would plague Alberta once again,” said ATB Financial economist Todd Hirsch. “We do expect that labour shortages will be the order of the day, particularly in the oil patch.”

Anecdotal evidence from the oil patch is already pointing toward a labour crunch similar to the commodity boom that had lured workers from across Canada to Alberta in search for employment.

With a labour crunch come higher costs, which in the mid-decade boom had been a major contributor to rapid cost escalations of oilsands projects.

Hirsch said the problem didn’t stem so much from wage inflation as it did from working overtime.

Many oilpatch employees work under a multi-year union contract. But because of the labour shortage, double or triple overtime often were the norm.

“That really blows your cost out of proportion,” Hirsch said.

To deal with the issue, Hirsch said industry should work more closely with polytechnic colleges and promote a career in the trades, rather than a university education.

“Once the paycheques of pipe fitters are compared with the paycheques of PhD’s in philosophy, there’s a little bit of payback in the industry,” Hirsch said.

“The trades pay very attractively.”

By Markus Ermisch, Calgary Sun