Alberta Oil-sands Boom has Companies Piling on Perks to Draw Workers

By Cindy Waxer

Apr. 7, 2006

Operating heavy machinery in subzero temperatures in a remote Alberta mining town may not seem like a dream job, but Canada’s oil and gas giants are bending over backward to make it a worthwhile endeavor for qualified candidates.

   With more than 175 billion barrels of oil reserves–second only to Saudi Arabia–Alberta’s oil-sands deposits have courted an estimated $86 billion worth of projects that are now either under way or in the works in the region. Oil sands are deposits of bitumen, a molasses-like oil, that are contained in three major areas beneath more than 55,000 square miles of north­eastern Alberta. That is an area larger than the state of Florida. However, only about 2 percent of the lucrative resource has been produced to date.

   Hoping to cash in on this modern-day gold rush, oil and gas behemoths including Suncor Energy, Imperial Oil, Shell Canada and Canadian Natural Resources Ltd. are investing billions of dollars in oil-sands production, creating considerable demand for a wide range of talent from mechanical engineers and project managers to welders and electricians.

   “If you know how to swing a hammer properly, use a blowtorch or weld, the world is your oyster,” says Roger Soucy, president of Petroleum Services Association of Canada, a Calgary-based association representing Canada’s oil-field service, supply and manufacturing companies.

   In fact, according to the provincial government, oil and gas extraction has prompted substantial growth in employment, with a 5,600-person increase from 2004 to 2005. Such record activity, however, has created a labor shortage that is forcing today’s oil-sands companies to develop more creative recruitment and retention strategies. From building airstrips for shuttling shift workers to handing out housing allowances, companies aren’t sparing any expense to find employees for their far-off mining sites.

   But engaging in an arms race for talent comes with risks. After all, companies drove up salaries–and expectations–for an entire generation of technocrats in their quest for dot-com talent. Intent on not succumbing to recruitment fever again, today’s oil-sands companies are attempting to win over employees with longer-term propositions.

Long-distance commuting
   Canadian Natural Resources Ltd. (CNRL) is one company with a strong view of the future. CNRL’s Horizon Oil Sands Project, located 44 miles north of Fort McMurray, Alberta, is an $8 billion undertaking with three phases of development over a seven-year period from 2005 through 2012. Currently in its first phase of construction, CNRL is relying on nearly 20 recruitment agencies to add 3,000 employees to its existing 1,700-person workforce by the end of this year.

   Because the project is situated in a remote part of northeastern Alberta, CNRL is building a trio of three-story dormitories at a cost of about $30 million each. Capable of housing 2,000 workers, each facility includes a cafeteria. Every dorm room features a desk, television and Internet access.

   Shelter only skims the surface of CNRL’s employee offerings. Rather than subject its shift workers to an all-expense-paid, six-hour bus ride home to Edmonton every 10 days for a four-day respite, CNRL opened its own airstrip in September. On a regular basis, nearly 25 percent of the company’s workforce is shuttled back and forth using a fleet of small aircraft. As that figure nears an anticipated 75 percent, a Boeing 737 is also scheduled to run about once a week.

Just how long can the oil companies’ game of one-upmanship last before the well runs dry? “There needs to be a collaborative approach. There’s simply no point driving the costs up for each other, shooting each other in the foot.” –Cheryl Knight, Petroleum Human Resources Council of Canada
   “When you only have four days off with your family, it’s nice to be able to quit work and within an hour or two be back home,” says Lynn Zeidler, vice president of Horizon Construction Management, which is owned and operated by CNRL. Although CNRL’s air taxi service represents “a significant investment,” Zeidler says that the company would not have been able to recruit the talent it needs without accommodating employee demand for work/life balance.

   For those workers left on site, CNRL is building a convenience store, a recreation facility, an ice rink, exercise facilities and a training center so that students willing to forfeit their final year of college can serve as apprentices while completing their studies. Even the construction of a Tim Hortons–Canada’s largest doughnut chain and a national icon–is in the works.

   Accommodating a transitory workforce, however, hasn’t played a part in Shell Canada’s strategy for recruiting talent for its Athabasca Oil Sands Project. The Athabasca development is a joint venture between Shell Canada, Chevron Canada and Western Oil Sands that consists of the Muskeg River Mine, located 46 miles north of Fort McMurray, and a refinery situated just north of Fort Saskatchewan, Alberta.

   With plans to add 600 new hires to its oil-sands division this year, Shell Canada opted to focus on community, rather than high-cost commuting, to lure qualified candidates to its remote work sites. The company’s inner-city staff is eligible for free emergency day care passes and financial assistance with postsecondary tuition fees. Shell Canada’s oil-sands workers, meanwhile, may qualify for a $17,000 contribution toward a home mortgage. That amount is prorated over a three-year period.

   Providing adequate housing is one of the toughest hurdles that oil-sands companies face. Fort McMurray’s population has grown 70 percent in the past decade to nearly 70,000. According to the Fort McMurray Landlord and Tenants Advisory Board, apartment vacancy rates were as low as 0.7 percent in February, and the average cost of a single-family dwelling is $370,000–steep indeed for this community. By helping employees pay down their mortgages, Shell Canada aims to encourage homeownership as well as a sense of permanence among new recruits.

“Whereas a lot of companies are looking at a fly-in, fly-out workforce, Shell’s position is that we’re in this business over the long term, and we want our operating employees to live in the community where they work,” says Janet Annesley, Shell Canada’s public affairs manager.

   Shell Canada also is seeking to retain employees by investing petro-bucks in its own back yard. To date, the company has contributed more than $1.7 million to the communities of Fort McMurray and Fort Saskatchewan. These contributions include a $390,000 to the local YMCA for greater day care accommodations and enhanced recreational facilities, as well as a $215,000 investment in the construction of the Keyano College Sport and Wellness Centre in Fort McMurray. The community-use complex will include a running track, a gymnasium and indoor playing fields for sports such as indoor soccer, lacrosse, tennis, basketball and volleyball.

   In November, Shell Canada also contributed $645,000 to Northern Lights Regional Health Foundation to assist in the purchase of a magnetic resonance imaging, or MRI, machine to provide diagnostic services to Fort McMurray and nearby communities. “Many doctors want to work with the latest diagnostic equipment, and that was actually a limiting factor to attracting doctors to the region,” Annesley says.

Leaving college
   Air taxis and housing allowances may attract candidates, but such pampering is also setting unrealistic expectations, according to Duke Anderson, dean of the MacPhail School of Energy at the Southern Alberta Institute of Technology in Calgary. Anderson says that it’s not uncommon for a welder to receive an annual salary of $100,000 fresh out of college, with an added four-year retention bonus that can easily equal a full year’s pay.

   By creating “opportunities that are almost without parallel,” Anderson says that today’s oil and gas industry is prompting many students to abandon school early. That is a decision that could leave workers academically disadvantaged in the event of a market downturn.

   “Our completion rates in some of our programs are concerning to us,” says Anderson, noting that nearly 40 percent of students do not complete their two-year programs. Nevertheless, enrollment in the institute’s energy program is up 20 percent from last year, and there are nearly four applicants for every opening.

Just how long can the oil companies’ game of one-upmanship last before the well runs dry?

   “There needs to be a collaborative approach. There’s simply no point driving the costs up for each other, shooting each other in the foot,” says Cheryl Knight, executive director of the Petroleum Human Resources Council of Canada, a not-for-profit organization that addresses human resources issues within the nation’s petroleum industry.

   Some companies are taking steps to band together. Oil refineries require frequent maintenance checks, a process that can take as long as eight weeks and requires the assistance of as many as 2,000 temporary workers. Rather than take on the enormous task of recruiting thousands of workers for these refinery turnarounds, Shell Canada recently joined forces with Petro Canada, Imperial Oil and Dow Canada.

   “Since there’s this large need for labor, we have been able to work with our industry partners and line up the turnarounds in a sequential order,” says Brian Sarkadi, a traction and recruitment manager for Shell Canada’s oil-sands division. Proof that even in the most competitive of times, “business drivers lead to creativity in action,” Knight says.

Workforce Management, April 10, 2006, p. 40-43Subscribe Now!

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