Australian LNG Industry Faces Severe Labor Crunch
Australia's dire need for workers to staff the numerous LNG processing facilities is set to increase by the thousands in line with 14 new gas trains that are slated to be brought online, according to a report published by Western Australia's Department of Mines and Petroleum (DMP) last week.
All of the gas trains will have to be brought onstream as scheduled, as the LNG volumes are already fully contracted to Japan, South Korea and China.
Looking beyond 2020, the DMP forecasted that the country's LNG industry will continue to grow, in sync with Asia's unrelenting appetite for the clean burning fuel.
In addition to the seven LNG projects that have already reached their final investment decision (FID) stage – Gorgon, Prelude, Wheatstone, Ichthys, Queensland Curtis LNG (QCLNG), Gladstone LNG (GLNG) and Australia Pacific LNG (APLNG) – and are slated to be brought onstream by 2018, there are eight other LNG developments in the planning stage, Australian Workforce and Productivity Agency (AWPA) noted in a report published in October last year.
Queensland Demands Large Number of Drillers, Support Personnel
In Queensland, coal seam gas (CSG) and LNG projects are struggling with a shortage of drillers.
QCLNG, GLNG and APLNG have a total of six LNG trains with a combined production capacity of 28.3 million tonnes per annum (mtpa). AWPA noted that owing to the nature of CSG technology, which requires a significant number of production wells being drilled, each train will need between 550 and 650 professional and technical staff during operations, requiring nearly 3,900 workers to keep the six trains operational throughout its production period.
But it is not just technical employees that are needed. After a project moves past its production phase and into the operation and maintenance timeline, more workers – primarily in the oilfields services sector – will also need to be hired. The CSG/LNG sector alone will employ 6,000 people during the operation and maintenance phases, Energy Skills Queensland (ESQ) estimated last year.
AWPA's and ESQ's estimates of manpower requirements for a world-scale LNG project are backed up by figures from QCLNG.
QCLNG – a project with two LNG trains that are scheduled to produce first gas in 2014 – said in its Social Impact Management Plan that it expects to employ 800 workers involved in well development activities this year. The company will subsequently require an additional 400 workers for well development works that will continue well beyond 2014. For its gas operations and maintenance, QCLNG estimated that it will need to maintain around 750 workers on an on-going basis.
The Australian Petroleum Production & Exploration Association (APPEA) forecasted that including development, production, operations and maintenance staff, the CSG/LNG sector will generate as many as 18,000 new jobs.
This number could see an upward revision if Shell reaches a FID on the CSG-based Arrow LNG project; a joint venture with PetroChina that could see two LNG trains with a production capacity of 4 mtpa being brought onstream.
Western Australia Competes for the Same Skills
In the case of Western Australia, the number of workers required for each LNG train differs slightly from that of the Queensland-based developments.
For the LNG projects in Western Australia, AWPA gauged that each train – depending on whether the project is a greenfield or brownfield development – will require around 150 to 300 workers. With the eight LNG trains, comprising of Gorgon, Prelude, Wheatstone, Ichthys LNG projects, scheduled to be started up by 2017, this means that an additional 2,400 workers will be needed as the developments move into their production phase.
In 2011 to 2012, the average number of petroleum employees working onshore and offshore Western Australia reached 8,705 persons, DMP reported. Around 5,820 employees are located in the state's offshore waters and on LNG processing facilities.
The Gorgon and Wheatstone LNG projects are being spotlighted by DMP as crucial with first gas deliveries slated by 2014 and 2016 respectively.
In the case of projects such as Wheatstone LNG, the number of workers required on the development could increase moving beyond its start-up phase. Chevron, the operator for Wheatstone LNG, has plans to eventually expand the two-train processing facility to a five-LNG processing train facility, with final production capacity planned for 25 mtpa.
Additional trains built alongside an existing train will require significantly fewer operational employees due to existing processes, work flows and team capacity, AWPA added.
Chevron expects the Wheatstone and Gorgon projects to bring about 16,500 job opportunities, both through direct and indirect employment, the company noted in a May 2012 fact sheet.
"Many of these employment opportunities are for generations – highly-skilled, long-term jobs in the LNG and domestic gas plant operations, maintenance and logistics support," Chevron said.
Employment Trends in the LNG Industry Moving into 2016-2017
The oil and gas extraction industry will average an employment growth rate of 11 percent between 2011 to 2012 and 2016 to 2017, Australia's Department of Education, Employment and Workplace Relations (DEEWR) disclosed in a report last year. The sector is expected to increase from having 16,700 workers in 2011 to employing 28,100 workers by 2016-2017.
For the gas sector, DEEWR projected an employment growth rate of 3.6 percent between 2011 to 2012 and 2016 to 2017. The total number of workers needed on gas projects will reach 13,900 in 2016 to 2017, up 2,300 from 11,600 workers in 2011 to 2012. The occupations with the highest growth rates are for operators, plumbers and administrative roles.
DEEWR also noted that workers in the oil and gas sector moved within the same industry.
"Surveyed employers indicated that employees leaving the company were often taking up employment elsewhere in the offshore oil and gas sector. This suggests a high level of movement within the sector rather than recruitment from other sectors," DEEWR said.
The Australian government recognizes that the shortage of skilled workers in the LNG industry is an issue that has to be dealt with swiftly.
The government has made changes to migration arrangements, such as introducing the Enterprise Migration Agreements (EMA) initiative - a custom-made arrangement available for projects with a capital expenditure of over $2 billion and a workforce requirement of over 1,500. The GLNG, Gorgon LNG, Pluto (train 1), QCLNG, APLNG, Ichthys Gasfield and Wheatstone LNG projects qualify for this scheme, according to a document by the Australian Bureau of Agricultural and Resource Economics.
Chevron has invested $12 million in training 40 apprentices and is employing university graduates as part of its Horizons graduate program. The company also provides apprenticeships that are targeted specifically at Australian Aboriginals.
GE Oil and Gas has on-going manpower initiatives which include working with schools to promote and chart career paths in the oil and gas industry, dishing out summer internship programs to transfer industry best practices from North America to Australia and providing flexible work packages for its women employees to increase retention rates.
It is a well-acknowledged fact that Australia's LNG industry will continue to expand, yet the country will undoubtedly face challenges in securing the skilled workforce needed to bring all the projects to fruition. The Australian government and industry leaders need to work together to address the impact of skill shortages, both on the immediate and the long-term fronts.
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