Canadian unions, oil sands developers prepare for court battle

Vancouver (Platts)--19May2006

Organized labor, the Alberta government and oil sands developers will
clash in a provincial court Tuesday in a showdown that has implications for
work rules on oil sands construction sites and the hiring of temporary foreign
workers.

Six unions belonging to the Alberta Building Trades Council will be in
Alberta Court of Queen's Bench asking a judge to revoke a provincial cabinet
order in 2004 that granted special status to Canadian Natural Resources'
C$10.8 billion ($9.7 billion) Horizon project.

In a seldom-used exemption to the Alberta Labor Relations Code, Canadian
Natural was allowed to negotiate a blanket union agreement with the Christian
Labor Association of Canada (CLAC) that applies to all unions for the duration
of the construction phase and the operation of Horizon.

As of March 31, the initial C$6.8 billion phase of Horizon was 26%
complete, putting it ahead of schedule and slightly under budget, Canadian
Natural reported. The project is expected to employ 6,500 workers during the
peak construction period in 2007 and have 2,400 permanent employees once it
starts production in late 2008.

The blanket agreement covers pay and work schedules, including less
stringent overtime rules, scrapping the traditional double-time pay on
weekends.

Canadian Natural has raised union ire by arranging to bring Chinese
workers to Horizon this fall, and facilitating travel by building an airstrip
near Horizon to handle Boeing 737s, while 200 workers from the Philippines and
other countries are already working at the Nexen-OPTI Canada joint-venture at
Long Lake.

Gil McGowan, president of the Alberta Federation of Labor, the province's
largest union group, has accused the government of using its legislative
authority to undermine the negotiation of contracts and suppressing wages and
working conditions.

The issue is not the use of temporary foreign workers, he told reporters
earlier this month when about 500 construction workers protested outside the
Canadian Natural annual meeting in Calgary.

"From our perspective, this is union-busting, plain and simple," he said.
The CLAC has countered that the dispute is just a "turf war between unions."

The International Brotherhood of Electrical Workers claims that 1,600
trades people at Horizon could be brought in from overseas at a time when
Alberta workers are unemployed or underemployed.

Canadian Natural is not commenting on the three-day court hearing, but
company president Steve Laut told the annual meeting that Horizon's
contractors are responsible for who and where they hire.

He said the contractors have a "built-in bias" in favor of Canadians
because they must otherwise pay extra transportation, recruitment and training
costs, including the expense of assessment programs to ensure that foreign
workers meet Canadian skilled trades standards.

The demand for skilled labor on the oil sands construction front is
expected in 2007, 2008 and 2009 when 32,000, 36,000 and 32,000 workers,
respectively, will be needed, compared with 20,000 this year and 13,000 in
2005, according to Dominion Bond Rating Service.

A spokesman for Service Canada, a federal government agency that
co-ordinates the hiring of foreign nationals, told Platts earlier this month
that oil sands operators are seeking permits to overcome a projected shortfall
of up to 100,000 workers over the next decade.

He said it is possible up to 10% of that shortfall could be covered by
imported tradespeople.

--Gary Park, newsdesk@platts.com

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