NPRA '07: Soaring costs confront Canada projects

26 March 2007 23:29  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS news)--Spiralling costs, particularly for skilled labour, were a mounting challenge for oil sands projects and associated petrochemical developments in Canada's Alberta province, a government official said on Monday.

A welder working on the oil sands projects in the Fort McMurray area could earn as much as C$150/hour ($129/hour), said George Mandrapilias of the Ministry for Economic Development and Trade in Ontario province.

That compares with a typical rate of C$40/hour in Ontario, the biggest provincial economy in Canada, Mandrapilias said on the sidelines of the NPRA chemical conference.

The oil sands projects are serviced by a single road and rail link stretching 500 kilometres north from the provincial capital, Edmonton. Wages have to be high to attract workers to the remote location.

Project developers are looking at innovative ways to reduce costs and overcome the transportation and logistical bottlenecks, such as pre-fabricating elsewhere large-scale units such as storage tanks.

Mandrapilias said a Chinese company has made an outside-the-box proposal to transport large tanks – too big for conventional road or rail shipment – via Arctic ocean waters and then across a series of lakes to reach the Fort McMurry area.

While the costs of such an undertaking would be vast, the potential to save as much as $1bn is enough to keep the idea alive, he said.

(C$1 = $0.86)

By: Stephen Burns
+1 713 525 2653

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