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Chinese labor eyed
EnCana explores bringing in workers for Colorado gas fields

By Gargi Chakrabarty, Rocky Mountain News
July 6, 2005

EnCana, Colorado's top gas producer, is exploring the option of hiring Chinese companies to build and operate oil and gas drilling rigs in Garfield County's sprawling Piceance Basin.

Hiring Chinese rigs and crews would cut costs for the Calgary, Alberta-based company at a time when drilling rates have nearly doubled since last year. But it also could raise immigrant labor concerns.

EnCana, however, says it has no immediate plans to bring in Chinese contractors.

"This is not something that EnCana is actively pursuing," said Doug Hock, spokesman for the company's U.S. subsidiary, EnCana Oil and Gas (USA), headquartered in Denver.

"And if we did, it would serve as a short-term solution to deal with increasing demand for rigs and crews in the Piceance Basin."

EnCana executives told analysts during a recent tour of the company's gas fields in the Piceance Basin, which covers thousands of acres in Garfield County, that drilling rates have jumped to $14,000 a day from $8,500 a year ago. Those executives mentioned the hiring of Chinese companies as an option, Hock said.

EnCana has 23 operating rigs in the Piceance Basin.

A Canadian newspaper recently quoted a spokesman saying that EnCana is exploring the possibility of having rigs built in China and then imported to the United States, along with crews to run them.

Tom Clark, executive vice president of the Metro Denver Economic Development Corp., likened the Chinese entry into the U.S. energy industry to the Saudis buying farmland here in the 1970s and the Japanese buying high-tech companies in the 1980s.

"This is the emergence of an economic competitor for America that is to be watched and competed with," Clark said. "American workers are increasingly comfortable competing in international marketplaces. This would come as no surprise to them and certainly would be something they will respond (to) in kind."

However, a labor union representative cautioned that hiring of Chinese crews could raise issues much like the controversy raised in the 1800s when Chinese laborers were used to build most of the West's railroads.

Chinese participation was limited after 1882, when Congress passed the Chinese Exclusion Act, which prohibited Chinese workers from entering the country and declared Chinese immigrants ineligible for citizenship. The law was repealed in 1943 when China became an important ally against Japan in World War II.

"If American people are losing jobs (to the Chinese), I could see some form of labor unrest," said Howard Arnold, business representative of the United Association of Pipefitters Local Union No. 208. The union represents roughly 1,800 members, mostly employed by contractors in and around Denver.

But most of the crews on rigs don't belong to unions.

"China exports labor and equipment everywhere; it won't surprise me to see them in oil rigs," Arnold said. "However, everybody would be affected directly and indirectly if they import Chinese labor.

"If Americans lose jobs, we won't have money to pay taxes that support our schools and hospitals. The list goes on and on."

Duane Smith, professor of Southwest studies and history at Fort Lewis College in Durango, said American labor unions in the 1800s had fiercely resisted Chinese immigrant laborers in the mines of Colorado, including those in Leadville and Silverton. In fact, unions physically drove out Chinese workers from the mines in Caribou, near Nederland.

"One of the bases of that was certainly racism," Smith said. "But there were economic reasons, too. The Chinese worked for less. There was a feeling that if Chinese men came to a mining district, there wouldn't be much ore left, and white men couldn't make a living anymore."