In 2007, the Australian oil and gas company Woodside began work on an ambitious facility on the Burrup Peninsula on the coast of Western Australia. This facility was designed to liquefy natural gas from an offshore field called Pluto, about 200 kilometres off the coast. When construction began, the company expected the plant to be completed by February 2011 at an estimated cost of US$11.2 billion. In reality, the project was eventually completed in April 2012, by which time it had racked up extra costs of US$3.7 billion.
One of the main problems for Woodside was a tight labour market, according to David Ledesma at the Oxford Institute for Energy Studies, UK, and his colleagues, who published a report in September on the future of Australian liquefied natural gas (LNG) exports. A shortage of skills drove up employment costs, and employees also took strike action over pay and conditions.
Gas construction projects in other parts of Australia have also suffered from skills shortages – as well as financial issues or management and design problems. Ledesma’s report points to seven big projects that have suffered delays, some of more than a year, while incurring additional total costs of as much as $17 billion.
The country is clearly gearing up to take advantage of the country’s huge gas reserves. With the current spending on LNG projects accounting for more than a third of all business investment in Australia, an important question is whether the country’s workforce is up to the challenge.
The unprecedented investment in Australian gas is the result of the discovery of several large natural gas reserves in the 1990s. “In Western Australia, very big offshore discoveries were made between Perth and Darwin,” says James Hendersen, also at the Oxford Institute for Energy Studies and a co-author of Ledesma’s report. And in the east, new gas reserves have been found in coal seams.
With international demand for gas rising, energy companies are now racing to take advantage of these discoveries. And they are all leaping into action at the same time, hence the seven new projects under construction and scheduled to begin operating between 2015 and 2018. These include drilling units to extract the gas, and LNG production plants that make the gas easier to export to countries such as China and India. “There’s a big demand in Asia for Australian gas,” says Eric May, the Chevron Chair in Gas Process Engineering at the University of Western Australia.
Once up and running, these projects are expected to make huge contributions to Australia’s economy. Currently, natural gas contributes around A$12 billion to the Australian economy. “By 2018, when these projects come on stream, natural gas will contribute A$60 billion,” says Hendersen.
But the construction of drilling units and processing plants is already behind schedule, in part due to a lack of skilled workers. “There have been skills shortages across the board, from welders and truck drivers to more skilled engineers,” says Hendersen.
But the skills in demand are set to change soon, and rapidly, as construction winds down. “We’re heading from a construction phase to an operating phase,” says May. “There will be more of a demand for engineers and operators.” This demand will come in the form of about 1800 new engineering roles in the next few years, says May.
A 2013 report by the Australian government’s Australian Workforce and Productivity Agency (AWPA) found that the number of people employed in the construction of oil and gas projects will peak this year at 83,300, and then decline to about 7700 by 2018. The number of people employed in operating these projects, however is set to rocket from around 39,000 in 2013 to 61,200 in 2018.
If you’re hoping to take on one of these new roles, an engineering degree will come in useful, says May. “Flow assurance, process, mechanical and civil engineering degrees will be valuable,” he says. Geophysics is also important: teams of scientists need a full understanding of rock formations to understand where gas may be located, and how best to drill down to it. And for those who will be conducting remotecontrolled undersea investigations, electrical engineering degrees and mechatronics are vital qualifications.
University courses on these topics are growing in number and course size, says May. “We’re trying to expand the intake as much as we can,” he says. And even if you’ve already started a science degree, it’s not too late to switch to engineering, May adds. “A lot of engineering degrees are becoming a lot more flexible, so you can move between degrees,” he says.
But such courses can only be taken by people who already have some level of scientific understanding. That is why schools have a key role to play in meeting the demand for engineers, says Stephen Durkin, CEO of Engineers Australia, a group that represents professional engineers. “As engineering is a profession that relies heavily on advanced science and mathematics, it is crucial that we invest heavily in promoting education in these areas from an early age,” he says. “Australia as a whole should be concerned that participation in subjects like advanced mathematics is only around 10 per cent.”
The government shares Durkin’s concerns. In October, it announced plans to inject A$12 million into primary and secondary schools across the country to improve the resources, exposure to and participation in science, technology, engineering and mathematics. The bulk of this investment will go into mathematics resources.
Beyond academic qualifications, experience is also key. That is why energy companies are ramping up traineeships and apprenticeships. In 2008, energy companies in Australia employed 100 apprentices in oil and gas extraction, and 100 in exploration. By the end of 2012, 200 people were taking on apprenticeships in oil and gas extraction, while 400 were training in exploration.
In times of need, it is also worth stealing people who are working in other industries and retraining them. For example, non-profit organisation Maritime Employees Training aims to re-skill people working in the declining maritime industry so that they can move into careers in the oil and gas sector. The authors of the AWPA report recommend that a similar programme be implemented on a national scale.
Those who make the leap can expect to be well rewarded. Between July 2013 and June 2014, the average Australian worker could expect to earn A$80,000, but the salaries of those working in the mining, energy and resources industry were earning, on average, just over A$120,000.
Many of those well-paid jobs will be found in Pilbara in Western Australia and the Darling Downs and Mackay regions of Queensland, according to the AWPA report. But sites across northern and eastern Australia are likely to become employment hotspots, too.
The sudden, rocketing demand for scientists and engineers to work in Australia’s oil and gas industry is unique, says Ledesma, because of the number of projects that are being undertaken at the same time. “You wouldn’t normally see this number developed in parallel,” he says.
Consequently, it’s easy to see how the skills shortage has come about. Ledesma doesn’t point a finger of blame at the Australian government for approving so many projects at once. “There has been unprecedented growth in the industry, and it is not the role of the government to police the development of gas,” he says.
“It is simply the economics of the project that drive whether it goes ahead.”