Manufacturing oilsands-related equipment hundreds of kilometres away from where it’s needed may not appear to make economic sense. But the logic behind this practice become clear when Clay Vikse crunches the numbers.
General manager of operations for Calgary’s Gemini Corp., which has a fabrication plant in Ponoka that employs up to 200 workers in peak periods, he described how it can cost an extra $150 to $250 per day to transport and retain a worker on site at Fort McMurray. Plus, added Vikse, fabrication in a shop tends to be more efficient than field construction.
Consequently, he said, much of the infrastructure for major oilsands projects built during the past decade originated off-site.
“You’ll see the process modules, you’ll see pipeline modules, you’ll see the buildings themselves,” said Vikse. “Then the interconnects are done on site.”
Although much of this fabrication work is done in the Edmonton region and points north, a big chunk now also spills into Central Alberta.
“Per loaded mile, it’s not that much more expensive for them to come here versus Nisku or somewhere a little further north like Lloyd or Bonneyville,” said Jason Greene, sales and marketing manager with Innisfail’s Bilton Welding and Manufacturing Ltd. — another company that does a great deal of work for oilsands clients.
Greene agreed that labour costs are lower here than near oilsands centres, and suggested that quality control is easier to maintain in a shop environment.
Bilton, which currently employs about 150 and is poised to hire about 35 more workers, did very little oilsands-related manufacturing prior to the recession. But it was then forced to look north.
“Really, those were the only projects that were going,” said Greene. “The money had been allocated for those projects many years in advance.
“It started out of necessity, and then it sort of became a niche that we’ve gotten into.”
Craig Nykyforuk, president of Crimtech Services Ltd., tells a similar story. His company, which operates in Gasoline Alley Business Park, previously focused on projects related to natural gas production — particularly coalbed methane plays. But then gas prices plummeted.
“Out of necessity, we had to switch,” said Nykyforuk.
Crimtech was able to forge relationships with pipeline heavyweights TransCanada Corp. and Enbridge Inc. — in the case of the latter as a result of an Enbridge executive noticing Crimtech’s shop as he drove through Gasoline Alley.
“The building was in the right spot at the right time,” chuckled Nykyforuk.
Crimtech currently employs 80, with oilsands-related products accounting for much of their work. Those projects are interesting and allows them to utilize their skills, said Nykyforuk.
“You’ve got some pretty interesting structural problems that you’ve got to solve for these companies.
hrichards@www.reddeeradvocate.com