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EDMONTON SUN: Shell eyes expansion

EDMONTON SUN: Shell eyes expansion

30 April 05

TIMOTHY LE RICHE, EDMONTON SUN

Shell yesterday applied for a more than $4-billion expansion that is sure to raise the spectre of cost overruns and labour shortages.

On the other hand, a majority of the project spending will provide another energy boost to the Edmonton and Fort McMurray economies, said Neil Camarta, senior vice-president of oilsands for Shell Canada Ltd.

The project would expand capacity at both the Muskeg River Mine near Fort McMurray and the Scotford refinery upgrader outside Edmonton.

In addition to provincial regulatory approval, the project still requires a final “investment decision” by Shell and its partners. Construction could begin next year.

The mine expansion could require up to 4,000 construction workers at its peak in 2008 while the Scotford segment may need 6,400, said Camarta. The schedule would overlap with other labour-intensive, multibillion -dollar expansions planned by other oilsands ventures.

A skilled labour shortage in Alberta has raised the possibility of foreign labour being brought in temporarily. Labour groups held a protest at the provincial Legislature earlier this week, saying the jobs should go to Canadians.

That’s exactly what Camarta wants as well. But he admits he may have to look elsewhere.

“That’s what keeps me up at night,” said Camarta. “It’s the people. It’s a real issue. We’re worried about pinch points in the next five years.”

In addition to the oilsands labour demand, the Vancouver Olympics are also sucking up workers, said Camarta.

“I’m an Albertan and I’m a Canadian,” said Camarta. “I certainly want to see every Albertan or Canadian we can find working on our project. But if we can’t find enough, we will look at the option of temporary foreign workers coming in to fill the gap.”

But foreign labour is expensive and a last resort, said Camarta.

Shell and its partners are also approaching the new expansion in stages, learning a tough lesson from the original Athabasca project that suffered huge cost overruns.

“We’re going to do something different,” said Camarta. “This time, we’re looking at a continuous approach. We will do one expansion after another. We will simply move the construction force from one to the other. We’ll keep everybody rolling.”

The project will double Athabasca production to 300,000 barrels per day by 2010. Shell would eventually like to build to 500,000 barrels per day.

The expansion will be a boon for Edmonton, said Camarta.

“Edmonton is the gateway to the oilsands,” said Camarta. “We have so many workers from Edmonton. A lot of the prefabricated modules are made in and around Edmonton. Edmonton is world-class.

“The last time around we spent $6 billion and 60% of that was spent in the Edmonton-Fort McMurray region. A huge benefit comes to Edmonton.”

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