By Julie Gordon
VANCOUVER, June 12 (Reuters) - The Canadian province ofBritish Columbia is on the brink of a liquefied natural gasboom, but a shortfall of thousands of workers is imperilingbillions in investment dollars.
More than a dozen LNG export terminals are being consideredfor the Pacific coast province, and analysts expect three tofive will go ahead. They will also need hundreds of miles ofpipeline and thousands of wells, which use the same frackingtechnology that has transformed the U.S. natural gasindustry.
To meet industry needs, British Columbia has promised tobuild an army of workers, but competition from rival projects,an aging workforce, and tight timelines could mean conditionsare ripe for the same sharp cost overruns that cut short asimilar energy boom in Australia.
Provincial workforce projections reviewed by Reuters showthat the province could face a shortage of nearly 12,000 skilledworkers to staff the most in-demand trade jobs at peak LNGconstruction. The province plans to address the gap by sharplyboosting training, more than quadrupling intakes for certaintrades. But it likely will still face a shortfall in some keyroles.
Foreign workers could ease some of that strain, but Canadaclamped down on its controversial temporary foreign workerprogram after a spate of recent abuses, raising the risksprojects might not fill jobs quickly and easily.
Royal Dutch Shell, Chevron Corp andMalaysia's Petronas are all contemplating projects inBritish Columbia, but none have made final decisions ondevelopments worth C$175 billion ($161.2 billion).
"I want to move a project forward as quickly as I reasonablycan," Marvin Odum, President of Shell's U.S. subsidiary and amember of the Anglo-Dutch company's executive committee, toldreporters at a Vancouver LNG conference last month.
"But until there's some clarity on workforce issues andlabor availability, you can't make that decision."
Companies also want clarity on taxes and need to securesales contracts before projects can move ahead.
TRAINING TIME
To help address labor concerns, British Columbia has pledgedto re-tool its education system, shifting funding away from artsprograms and into training for careers like engineering and theconstruction trades.
Even the trainers say it may not be enough for peak demand.
"The priority is giving B.C. residents the opportunity to befirst in line," said Gary Herman, interim head of the IndustryTraining Authority, the provincial agency that managesapprenticeships, adding: "We're still going to have to bringfolks in to help."
Canada's temporary foreign worker program has come underfire in recent years over reports of Canadians being passed overfor jobs. That has prompted a broad program review and isfanning worries that the government could cut off access.
In the resource sector, even union officials see a need fortemporary help, though only as a last resort. Many regularly tapsister unions in the United States when short-term demand forcertain skills outpaces supply in Canada.
"Without temporary foreign workers going in there, jobs aregoing to be delayed, jobs are going to be canceled and it willhave an impact not only on the Canadian economy, but also on theCanadian workforce," said Joseph Maloney, Western Canadian VPfor the International Brotherhood of Boilermakers.
British Columbia projects its entire economy may need anextra half million workers over the next decade, since amajority of the workforce is close to retirement and there arenot enough young people to replace them.
To get a clearer snapshot of the LNG need, Reuters looked atthe province's expectations for the 10 most in-demand LNG jobsat peak construction in 2018, which include seven trades, twounskilled labor roles and one office job, and together representabout 80 percent of direct jobs at peak construction.
For those 10 roles alone, British Columbia expects it willneed just over 26,000 new workers, including nearly 12,000skilled 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 LNGjobs, including adding 11,000 to 12,000 new skilled workers.
But even with the ambitious training program, the provincewill still be short hundreds of workers in each of four keytrades, according to the projections. That may seeminsignificant, but if just a few specialty workers are notavailable for a key task, it can mean expensive delays.
"In the short run, we may not have enough workers to meetthe needs of industry," said Craig Alexander, chief economist atTD Bank Group, Canada's second largest bank.
"But shortages would raise wages encouraging more workersinto these fields and the market to eventually adjust."
LEARNING FROM AUSTRALIA
Canada's tight labor supply has drawn comparison toAustralia, where LNG companies ended up battling with miners,and each other, for staff and materials, leading to costblowouts that dramatically slowed a natural gas bonanza.
At Chevron's Gorgon project in Western Australia, projectcosts have soared 46 percent to $54 billion, driven by priceylabor, high turnover and low productivity, along with poorplanning and logistical delays for the island-based build.
"Finding the labor, particularly the right skills sets, tomove Canadian LNG projects forward is going to be a criticalchallenge for industry to overcome," said Barry Munro, CanadianOil & Gas leader at global professional services firm EY.
Part of the issue in Australia, labor experts say, was thatas the number of workers on projects rose sharply, the skilllevel and years of experience decreased, cutting productivity.
"In Australia, our onsite workforce went from 30,000 tonearly 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 alsoproved to be bottlenecks for massive projects, he said.
British Columbia Premier Christy Clark acknowledged the riskto reporters at a recent industry event, and said her governmenthad 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 investmentbecause they couldn't afford to build the facilities. It got tooexpensive on the labor side," she said. "We intend to avoidthat." (Editing by Jeffrey Hodgson and Peter Henderson)
