July 14, 2008

Sarnia construction trades suffer blow as Shell Canada cancels refinery project

VINCE VERSACE

staff writer

Shell Canada’s cancellation of plans for a Sarnia refinery is a huge blow to prospective new apprenticeship and trades numbers for the area, says a Sarnia Construction Association (SCA) member.

“It is a big disappointment,” says Ray Curran, chair of the SCA’s local labour-relations council. “We had planned on a lot more apprentices. This is a big blow to our young people, but at least we are not talking about losing existing jobs.”

The proposed $8 billion Shell refinery in Sarnia would have been the first new North American oil-processing facility in decades. The SCA anticipated that apprenticeship numbers at Lambton College could have doubled to up to 800 if the refinery went ahead, Curran said.

There currently are 1,000 apprentices in the system in Sarnia and the SCA graduation ceremony typically averages 100 apprenticeship graduates.

The Shell refinery would have required an estimated 4,000 to 5,000 construction workers and resulted in 800 full-time jobs after completion. The refinery was slated to process between 150,000 to 200,000 barrels a day of tar-like crude from Shell’s Alberta oil sands operations.

Inflation, rising equipment costs, long lead times on equipment, a shortage of managers and engineers and a stretched labour force all contributed to Shell’s decision.

“This decision is a very difficult one for Shell and it is only taken after careful consideration,” Amrik Ahluwalia, Shell’s general manager of manufacturing expansion, said in a statement.

In November 2006, Shell Canada announced its plan to study the viability of constructing and operating a new heavy oil refinery in St. Clair Township, near Sarnia, as an expansion of its existing Sarnia Manufacturing Centre.

Shell conducted early design work and initiated a comprehensive environmental assessment, consulting extensively with stakeholders through informal and formal processes. A reported price tag for all this due diligence and preliminary work is at $50 million.

“This project would have helped the entire valley but there appears to be a lot of concern in the energy sector,” said Curran.

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