Sarnia manufacturers hatch plan to sell oil sands equipment

But who will pay for shipping to Alberta?

A wide load to riches

Barry Kough/Lewiston Tribune/AP

Standing in the middle of his nearly empty, massive workshop, Paul Healy states what is already obvious: “Not many shops are very busy in Ontario.” Healy, the president of LamSar Industrial Contractors, which manufactures equipment used in petrochemical plants and refineries in Sarnia, Ont., is feeling the pinch of the slowdown in Canada’s manufacturing heartland.

“Our heavy industrial customers have not been spending in the last few years,” he says. But Healy, the co-chair of the Sarnia-Lambton Industrial Association, sees a world of opportunity just a few kilometres down the road. Sixteen kilometres away, to be exact, at the St. Clair River, Sarnia’s link to the Great Lakes and to potential riches in Canada’s western oil sands projects.

The Oil Sands Developers Association says Ontario stands to make $63 billion from the oil sands in the next 25 years by manufacturing equipment and even processing the crude. Healy and his competitors, as well as the nearly 5,000 people who work in industrial trades in the area, want a piece of the action. “The Alberta market is an exact match for what we do here in southwestern Ontario,” says Healy.

Ken James, the CEO of the oil sands firm Oak Point Energy, recently spoke with Healy and his competitors about the possibilities in Alberta. James has developed a portable oil refinery and is looking for companies to build it, but he says skilled workers are hard to find in Alberta, and expensive. “They’ve got fabricating shops here, they’re hungry and they’ve got a very experienced labour pool, so it is a natural fit,” says James about Sarnia.

The problem is that 16-km stretch, and getting the refinery modules, which can be as tall as a three-storey house and as long as a hockey rink, from Sarnia to Alberta without incurring the extra costs of moving power and telephone lines and reinforcing bridges for each shipment. Sarnia has a large port downtown, but it’s hard to get to because power and telephone lines criss-cross the streets. Lifting them can add hundreds of thousands of dollars to the shipping costs. Healy’s group is looking at other options on the river—a route outside the city where power lines can be permanently buried. “We are near the water, it’s just that last few miles that has to be tuned up, because once you’re on the water you have no limitations.”

The Sarnia group says it is going to need the help of the provincial and federal governments. It will take infrastructure money to create a dedicated heavy load route in Sarnia and to clear a better path from Thunder Bay to Alberta. Industry officials say that could cost $300 million. James says that’s a drop in the bucket considering the payback. “Fifty per cent of the cost of these oil sands projects could be exported to Ontario, and we’re talking a $10- or $20-billion-a-year investment, so it is massive, more than the automotive industry ever was,” says James. “The scale of capital is so huge, there is incentive to put a lot of money into infrastructure.”

The local Tory MP, Pat Davidson, has met with James and has been encouraging ties to Alberta (though she hasn’t talked to local businesses about specific infrastructure projects). The province has not been as receptive. Sarnia Mayor Mike Bradley has been talking to provincial officials about investing in Sarnia’s oil opportunity and has found “absolutely no interest.” He thinks it could be linked to the province’s determination to develop environmentally friendly fuel sources. “There’s that Shangri-La that we all want to get to, but we’re not going to get there for a couple of generations.” And, he says, Sarnia might as well cash in on the world’s healthy appetite for Canadian oil. The local member of provincial parliament, Conservative Bob Bailey, agrees. He’s asked Premier Dalton McGuinty to sit down with Alberta Premier Alison Redford to talk about the possibilities for Ontario.

Healy, standing in his cavernous shop, is well aware of the premier’s views. But he’s still hopeful. “The federal government is going to be a partner for this,” he says. “I think McGuinty will come around once he realizes we can literally put thousands of people to work in Ontario in manufacturing.”

“We just have this last 10 or 15 miles to deal with, and as soon as we solve that riddle, I think you’ll see southwestern Ontario as a major concern.”