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The Edmonton Journal: Oilsands work just getting started

Companies have global-level growth plans for Alberta’s rich-making resource

Monday, August 6, 2007   
Gordon Jaremko

Edmonton / A year after former Shell Canada president Clive Mather gave out a hint, the scale of development on Alberta’s horizon is coming into sharper focus.

“What we’re saying is this is only the beginning,” Mather said as he escorted U.S. Energy Secretary Samuel Bodman on an oilsands tour north of Fort McMurray.

“There’s an awful lot more to come,” Mather said. Syncrude Canada chief executive Charles Ruigrok echoed his Shell peer, saying the province’s 141,000-square-kilometre bitumen belt is catching and holding the attention of global industry and finance.

Bodman asked the question also on Albertans’ minds when he finished his state tour at a gala lunch with business and government leaders in Calgary. How big will the oilsands industry grow?

In January and last week, the Athabasca Oil Sands Project gave some answers in applications for regulatory approvals of its growth plans.

The Athabasca group alone — led by 60-per-cent owner Shell and backed by Chevron Canada and Western Oil Sands with 20 per cent each — has set its sights on achieving production of 770,000 barrels per day from its 1,200 square kilometres of Fort McMurray bitumen leases by about 2020.

It took the entire industry 67 years and 56,772 wells to build up Alberta output of conventional liquid oil into the 800,000-barrels-a-day range, from the first discovery at Waterton in 1902 until 1969, show records of the Canadian Association of Petroleum Producers.

The oilsands are “world class,” Texas giant Marathon Oil Corp. added in announcing its $6.5-billion takeover of Western.

Shell emphasized that all its majority share of the Athabasca reserves will be processed in Alberta, yielding maximum value to the firm’s Canadian operations and the provincial economy.

Marathon, a 120-year-old American industry mainstay with few Canadian assets, will eventually export most of its minority of the Athabasca bitumen to its seven U.S. refineries and 5,700 service stations.

Chevron has yet to make known plans for all its share of Athabasca reserves, or for an estimated 7.5 billion barrels of bitumen in 730 square kilometres of leases known as Ells River that the firm bought west of Fort McMurray 16 months ago. But the Shell program alone spells more than a decade of heavy industrial work in the Fort Saskatchewan area east of Edmonton. Forecast expenditures of $22 billion to $27 billion include nearly $8 billion in wages for local workers.

The Scotford mega-upgrader will be built as four 100,000-barrels-a-day plants. It will be a continuous construction project lasting about 13 years provided oil markets, government policies and economic conditions stay favourable.

Shell wrote an invitation to industrial housing builders into its construction applications to the Alberta Energy and Utilities Board and Alberta Environment.

The region could use the sprawling, hotel-like worker complexes known as “open camps” that have sprouted in the Fort McMurray region, the documents predict.

It would be a good idea “if one or more third parties were to construct and operate open accommodation camps in the region,” the applications suggest.

“Shell would consider working with camp providers to house out-of-region workers and transport workers by bus between the camp and the project,” the applications promise.

Building each of the four upgrader plants will require 3,000 to 4,000 trades personnel at construction activity peaks.

But the mega-upgrader is just the biggest of many large projects in the 310-square-kilometre Alberta Industrial Heartland district northeast of Edmonton.

Counting all currently known developments “the cumulative construction workforce is expected to remain high, at more than 8,000 workers, from mid-2008 to early 2013, with a peak of about 13,300 workers in late 2011,” Shell forecasts.

“Based on an estimated 7,500 local trades people available, additional workers from outside the region or province will be needed.”

In highly skilled occupations needed by industrial projects, Edmonton oilsands jobs will be more like careers than the traditional feast-or-famine pattern of construction contracting.

Shell vowed “to use the project’s lengthy construction schedule to offer the opportunity of long-term, stable employment as a means of attracting and retaining industrial workers and potentially attracting out-of-region workers.”

When finished, the chain of four upgrader plants is expected to create 1,438 permanent jobs including 1,138 full-time staff and 300 contractor positions.

Since the Edmonton area already has a population of more than a million, Shell predicts it will absorb the upgrader people without repeating the notorious boomtown trauma of Fort McMurray.

Environmental effects on local air, water, vegetation and wildlife are also forecast to be modest compared to total accumulated results of decades of Edmonton development.

But road planners and motorists will have to adjust.

“The long construction period will result in the local road network having to support not only construction-related traffic, but also overlapping increasing volumes of operations-related traffic,” the upgrader construction applications say.

Shell is volunteering to work with regional authorities on road improvements recommended by a recent Strathcona County engineering study.

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http://www.canada.com/edmontonjournal/news/business/story.html?id=2a3ffa67-5432-4e33-a49b-f6bf9ca2d1e9

© The Edmonton Journal 2007

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