STOP: Stop Tar Sands Operations Permanently

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For some in Alberta, slower growth is welcome

Posted by notarsands on January 13, 2008

CALGARY — In Alberta, where job creation has hit record levels, there are signs that the province’s white-hot growth may be slowing – and that may be good news for some. One such industry: food services. The industry would welcome some weakening of the job market in “superheated” Alberta, said Neil MacLean, chief financial officer of the Keg Royalties Income Fund, which runs the Keg restaurant chain.

In Alberta, he said, it remains hard to recruit employees, and “we haven’t seen a softening in the labour market.”

What could bring relief to employers, such as Mr. MacLean, is conventional oil and gas drilling, which looks set to face a downturn in 2008.

Weak natural gas prices, high costs and the impact of higher planned provincial royalties are pushing major firms to scale back exploration plans for 2008, from the already low levels seen in 2007. Oil sector job losses at spring breakup – when thawing snow effectively ends the drilling season – could number “in the thousands,” said Roger Soucy, President of the Petroleum Services Association of Canada.

PSAC expects only 14,500 wells to be drilled in Western Canada in 2008, down from 18,500 in 2007 and 23,000 in 2006, he said.

But that may not mean a slackening in the job market. The booming oil sands will continue to suck up skilled construction workers and tradespeople, and put pressure on the rest of the province’s economy.

Producers are relocating workers to other projects such as the oil sands, said Cheryl Knight, chief executive officer of the Petroleum Human Resources Council of Canada. “Most of our [producing] companies have the ability to shift their resources quickly,” she said, “There may be significant changes in sectors, but not in actual employment [levels].”

However, the total number of people employed in Alberta’s oil and gas industry in December, 2007, is actually up 9,000 workers from November and almost 10,000 from December, 2006, according to Alberta government statistics.

But some slowing in growth rates could create more flexibility in the labour market. “If there is any silver lining, it’s that any softness perhaps creates a bit of breathing room for the tight job market in Calgary,” said Calgary Economic Development chief executive officer Bruce Graham. “For some companies, getting by with fewer people has become the norm.”

The recruiting problems are made thornier by the oil patch’s aging work force, a legacy of a hiring freeze in the 1980s because of low oil prices. Producers in Alberta are struggling to replace the large numbers of their workers who are reaching retirement age.

Alberta’s construction industry did shed almost 7,000 jobs in December from the previous month. However, this is a normal seasonal fluctuation related to the province’s cold weather, and employment in the sector is still “very tight,” said Ken Gibson, executive director of the Alberta Construction Association.

“Total employment has been increasing year-on-year for a number of years, and I’m hearing from our members that the market is still tightening … We anticipate that there will be very high levels of employment [in the industry] through to 2010 and beyond.”

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