Construction contractors at LNG export megaprojects on the U.S. Gulf Coast are coming face to face with the challenge of finding, training, retaining and coordinating thousands of skilled laborers on site during one of the biggest construction waves the country has ever seen.

In the current market, there are more jobs than qualified workers. Among the four main projects under construction in Texas and Louisiana, more than 30,000 workers may be needed over the next several years to complete the plants. Those four LNG export facilities, with a projected price tag of more than $50 billion, will increase U.S. capacity to ship the supercooled liquid gas by roughly 6.6 Bcf/d.

Construction difficulties are pushing back some timelines and pressuring others. In response, companies are throwing more bodies at the problem. The Freeport LNG project was recently cleared by federal regulators to increase its peak workforce from 4,200 workers to 9,100 workers. Sempra Energy's twice-delayed Cameron LNG project has the OK to deploy up to 11,400 workers at the site.

"Where are they going to get all these extra people, and at what cost?" asked Macquarie analyst Sameer Rathod. "Putting more bodies on a project doesn't necessarily mean it's going to get done on time. If anything, it increases the complexity quite a bit."

Chicago Bridge & Iron Co. NV, which is building both Cameron and Freeport, attributed delays at Cameron in part to lower-than-expected worker productivity and said those problems are pressuring the schedule for the first of three liquefaction trains at Freeport.

The issues have become even more complex after Hurricane Harvey, which temporarily shut down construction as workers evacuated. While some employees have come back to site, others may be unable to get back to work quickly because of their personal experiences with the storm.

"That is a bigger challenge than any type of structural damage," said Michael Ferguson, an analyst at S&P Global Ratings. "The bigger the staff is, the more difficult it is to get everyone back together in order to resume — not just at a normal pace, but to get to the accelerated pace that you're obviously seeking if you've brought in that many people."

Big workforces for megaprojects

When a big increase in U.S. shale gas production in the last decade turned the nation from import plans to export plans, developers' first concern was getting a "solid" contract for the engineering, procurement and construction of planned export terminals, known as an EPC contract, said Scott Greer, a partner at law firm King & Spalding who leads the firm's construction transactions practice. That focus changed when Cheniere Energy Inc. and other LNG developers prepared to break ground on their proposed projects.

"After those projects started going, it got to a point where labor started to be a bigger concern," Greer said.

LNG export ventures differ from other industrial construction projects in their sheer size and hefty price tags. Cheniere, which operates the first major LNG export project in the Lower 48, said in April that workers at the Sabine Pass and Corpus Christi LNG terminals have logged roughly 78 million construction hours and created more than $7 billion in wages on the expanding projects.

"It used to be a $1 billion project in the United States was a megaproject," said Greer. "But if you look at all these LNG projects on the Gulf Coast, then you've got all the petrochemicals projects, there's probably more construction going on than has ever gone on in the United States."

Most industrial construction workers do not exclusively work on one type of project. That means the Gulf Coast LNG industry is fighting for a limited number of laborers with other projects in the area, the most notable being petrochemical projects that, like LNG ventures, are massive undertakings that carry a steep price.

"The workforce has been quite mobile," said Farhan Mujib, president of the Americas' engineering and construction unit at KBR Inc., which serves as an EPC contractor for several proposed U.S. LNG projects. "They go from project to project, which means you have less experienced workers staying on the project for a longer period of time."

In order to keep workers from moving to a competitor, contractors focus on ways to make the job more appealing to workers, said Dennis Noland, founder of Alpha Resources, a Birmingham, Ala.,-based human resources consultancy serving the industrial construction sector. The most obvious way to retain workers is offering wages that beat out those of competitors, but Noland said contractors can also reduce what he calls the "hassle factor," a big part of which is making it easier for employees to get onto the project site.

'You better be willing to pay more'

"On the Gulf Coast, wages are not high as much as they are competitive," said Daniel Groves, CEO of Construction Labor Market Analyzer, a firm that tracks the supply and demand of labor for the industrial construction sector. "You better be willing to pay more in order to attract [workers], because there's so much opportunity in the Gulf Coast."

That competition is most dramatic for "higher skilled" labor, such as welding and pipe fitting, Groves said. Pipe fitters in Texas make on average $17.73 an hour, according to August data from job search engine Indeed, which used salary reports from 250 workers over the past year. In Louisiana, about 380 pipe fitters reported they make an average of $24.56 an hour. Welders make an average of $17.57 an hour in Texas and $20.85 an hour in Louisiana.

"What happens is you end up trying to pay as high wages as you can in order to get the highly skilled workers from another project to your project," said Groves. "Rather than the industry as a whole making the investment in the workforce that needs to happen ... what we find ourselves doing is trying to move the most highly skilled workers around as much as possible, because nobody wants unskilled workers on their project."

One way around the need for thousands of workers is to opt for a natural gas liquefaction and export project that uses modular trains. Kinder Morgan Inc. is taking that approach for its Elba Island project under construction near Savannah, Ga., where 10 trains would each produce 0.25 million tonne per annum of LNG.

Shell, which developed the modular technology and has a 20-year contract for all of Elba Island's liquefaction capacity, refers to the setup as a "movable modular liquefaction system." The trains are prefabricated off-site and can be relocated, making them cheaper and less labor intensive to install.

The Elba Island developer expected the workforce at the site to peak at 1,300 in early 2016, according to Federal Energy Regulatory Commission. That is the lowest number for all LNG export projects under construction in the U.S.

But there might be a more basic solution to the labor shortage, Groves said.

"We continually push folks toward college, and there's nothing wrong with that, but if we're pushing everybody toward college and they exit college with big debt and the belief that they should be doing something other than construction ... that's not good for us," he said. "We need to give the same credibility to jobs like construction as we do to other careers."