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Western Australian GAS and OIL Industry: WORKFORCE DEVELOPMENT
PLAN
November 2010
The Resources Industry Training Council is a State Government
funded, APPEA (www.appea.com.au) and CME (www.cmewa.com) joint
venture initiative to represent the training and workforce
development needs of the Western Australian resources (mining, gas
and oil) and downstream process manufacturing industries.
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PETROLEUM INDUSTRY WORKFORCE DEVELOPMENT PLAN Note and
Disclaimer:
This document is a workforce plan for the Western Australian gas
and oil sector and was developed by the Resources Industry Training
Council (RITC). Its purpose is to provide the Department of
Training and Workforce Development and the State Training Board
with an overview of the industry and includes a number of possible
options for meeting the skills and labour needs of the petroleum
and exploration industries of Western Australia. These options have
not been endorsed by either the Government or the industry and have
been put forward to promote discussion and further debate.
This report is supplied in good faith and reflects the
knowledge, expertise and experience of the developer. The
information provided is derived from sources believed to be
reliable and accurate at the time of publication.
The use of the information in the workforce plan is at your own
risk. The RITC does not warrant the accuracy of any forecast or
prediction in the plan. The plan is provided solely on the basis
that users will be responsible for making their own assessment of
the information provided therein and users are advised to verify
all representations, statements and information for decisions that
concern the conduct of business that involves monetary or
operational consequences. Each user waives and releases the
Resources Industry Training Council and the State of Western
Australia and its servants to the full extent permitted by law from
all and any claims relating to the use of the material in the
workforce plan. In no event shall the Resources Industry Training
Council or the State of Western Australia be liable for any
incidental or consequential damages arising from any use or
reliance on any material in the workforce plan.
The Resources Industry Training Council
7th Floor, 12 St Georges Terrace, Locked Bag N984, Perth, WA,
6844 Phone: +61 8 9325 2955 Facsimile: +61 8 9221 3701
For information regarding this report contact:
Debra Dixon Executive Officer Resources Industry Training
Council Telephone: +61 8 9220 8538 Email: [email protected]
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Foreword With more than $88 billion worth of resource
development and expansion projects either commenced or committed in
Western Australia, labour and skill shortages are already being
felt despite the global financial downturn. Large-scale petroleum
and iron ore projects are employing significant numbers of
tradespersons during construction. Construction requires around ten
times the number of employees as does the operational phase of a
project. The demand for construction skills and labour is having an
effect on other industries, with employees moving from other
sectors into resource project construction and so creating a skills
vacuum in other sectors.
The request for the development of the workforce plan was a
response to the serious labour shortages experienced across all
industries prior to the global economic downturn and the knowledge
that a resurgence of skills and labour demands in the resources
sector has begun. Labour and skills shortages threaten to constrain
economic development and prevent Western Australia from reaching
its full economic potential. This plan has been designed to assist
the Western Australian State government with developing training
policy, establishing VET funding priorities and the development of
a workforce plan for Western Australia. We urge caution with any
expectation that the RITC is capable of resolving the numerous
skills, workforce participation and social inclusion issues faced
by Australia.
There are multiple parties looking into workforce development.
At the national level the National Resources Sector Employment
Taskforce was established to:
examine the scope and timing of major resources projects,
analyse the expected demand for labour and consider supply issues,
and develop a plan to address labour and skills shortage issues in
the sector.
The Taskforce discussion paper Resourcing the Future indicates
that the Taskforce broadened its focus into a comprehensive attempt
to harness the potential economic benefits of sustained growth in
the resources sector whilst putting in place measures to minimise
some of the impacts of this growth on other sectors of the
Australian economy and society.
Another national body looking into skills shortages is Skills
Australia which released the Australian Workforce Futures A
National Workforce Development Strategy which provides a valuable
contribution to the broader issues. It focuses on the market
failures and on those jobs where:
the skills are specialised and there is a long lead time to
develop them; there is a good fit between what people train for and
the jobs they get, i.e. skills well used
by industry; there is a significant disruption if the skills are
in short supply ; and it is possible to get sufficient information
to assess the future demand for skills.
At the state level, as well as producing its own workforce
development plan, the Department of Training and Workforce
Development commissioned a series of regional development plans
(developed by local employers, local government and training
providers) and industry workforce development plans (developed by
the WA Training Councils).
Although direct employment levels within exploration and
production companies is estimated at around just 10,000, more than
30,000 people are engaged in providing indirect support to the gas
and oil industry.
Increasing investment in oil and gas exploration will lead to
increased production, regional economic and employment growth, an
increase in Australias wealth and a reduction of the nations rising
trade deficit in petroleum products.
Australia is currently the worlds sixth top LNG producer and
this is expected to change to second place within a few years. The
opportunity to make Western Australia a centre of excellence in gas
and oil research, training and development, is now within our
sights.
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Contents Petroleum Industry Environmental Scan
.........................................................................
1
Economic Overview of the Resources Industry
..............................................................
2
Economic Cycles and Cost
....................................................................................
3
Geographic Location of the Industry
..........................................................................
4
Regional Infrastructure and Availability of Adequate Local
Skills and Labour ....................... 7
Employment
.......................................................................................................
7
Construction versus Operational Workforce Needs
....................................................... 8
Current Trends in Staffing Patterns
........................................................................
8
Age and Gender Profiles for Oil and Gas
...................................................................
8
Diversity and Flexibility
......................................................................................
9
Maths, Science and Literacy
...............................................................................
10
National Competency Standards and National Training Packages
................................... 10
Current and Emerging Skill Shortages
....................................................................
13
Operation Critical Job Roles
...............................................................................
13
Emerging Occupations
......................................................................................
14
Education and Training
........................................................................................
14
Industry Qualifications Overview
..........................................................................
14
Future Directions for Education and Training
........................................................... 15
Forecasting Labour and Skills Demand and Supply
.......................................................... 16
Data and Information
..........................................................................................
16
Skills Shortages And Skills Gaps
..............................................................................
16
Workforce Sources
.............................................................................................
18
Skilled Migration
................................................................................................
18
Fly-In Fly-Out and Labour Mobility
..........................................................................
18
Issues, Barriers and Opportunities
..............................................................................
20
Barriers to Entry
.............................................................................................
20
What Makes Employment Less Attractive?
...............................................................
20
Barriers to Training
..........................................................................................
21
Action Plan
.........................................................................................................
23
Labour Market And Supply
....................................................................................
23
Workforce Participation
.......................................................................................
25
Attraction And Retention
.....................................................................................
26
Training And Productivity
.....................................................................................
28
Planning And Coordination
....................................................................................
34
The Way Forward
.................................................................................................
36
Industry Area Coverage
..........................................................................................
36
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Page 1
Petroleum Industry Environmental Scan The primary activities of
the Western Australian petroleum industry include:
Petroleum exploration, Petroleum extraction, LNG.
The major products and services of this industry include:
Crude oil, LNG, Offshore and onshore exploration drilling.
The petroleum industry includes activities that extract
naturally occurring crude petroleum and natural gas. The term
extraction is used in its very broadest sense to include well
operations (gas and oil) as well as beneficiation activities which
may involve separation and liquidifaction and other preparation
work customarily performed at the extraction site, or as a part of
extraction activity.
During the last ten years, Western Australia has had the fastest
growing state economy in Australia, achieving an average annual
growth rate of 4.4% compared with the national average of 3.5%.
Despite the global economic downturn and a fall in commodity
prices, Western Australias petroleum output rose by 9% in 2008-09
to reach $21.3 billion, with a 67% rise in the value of LNG
production making up for a drop in the value of crude oil and
condensate production1.
There are more than $130 billion worth of resource and
infrastructure projects under construction or being considered.
Western Australia accounts for approximately 83% of Australias
total value of mineral and petroleum sales. The state also has 41%
of Australias total merchandise exports.
Gas production in Australia services both the domestic gas
demand (56%) and export LNG markets (44%)2.Gas is projected to be
the fastest-growing fossil fuel over the period to 2029-303. The
forecast growth in demand is driven by the shift to less carbon
intensive fuels in the electricity generation sector.
There are two types of gas production: conventional (LNG) and
unconventional (coal seam gas). Conventional gas accounts for 92%
of Australias gas production with coal seam gas (CSG) making up the
remaining 8%. CSG is expected to account for around 29% of the
total as the Queensland CSG industry matures.
In April 2009, the Western Australian government announced
funding of a five-year, $80 million Exploration Incentive Scheme
(EIS) to encourage exploration in Western Australia for the
long-term sustainability of the states resources sector. In 2009,
38 new field wildcats were drilled, four onshore and 34 offshore,
resulting in a success rate of 26%4. In 2009, 23 appraisal wells
and 28 development wells were also drilled5. Offshore seismic
acquisition consisted of:
2,094 line km of 2D in the Bight Basin, 3,281 line km of 2D and
200 km2 3D in the Bonaparte Basin, 4,453 km2 in the Browse Basin,
3,608 line km and 21,182 km2 in the Carnarvon Basin.
Petroleum exploration for 2008-09 totalled $2.9 billion which
was 35% higher than in 2007-08. Offshore exploration accounts for
84% of the total expenditure and it was located mainly in the
Carnarvon and Browse basins.
More than $135 billion worth of upstream and downstream
petroleum projects are under way, planned or committed over the
next decade. Petroleum investment projects in the
under-construction category are dominated by LNG projects. Projects
include:
Woodsides Pluto Train 1 LNG project ($12 billion), the Gorgon
LNG Joint Venture ($43 billion), Browse LNG project at James Price
Point, Wheatstone.
1 Department of Mines and Petroleum, Petroleum in Western
Australia, April 2010 2 Australian Energy Regulator, State of the
Energy Market 2009, at 226. 3 Geoscience Australia and ABARE,
Australian Energy resource Assessment, Canberra, 2010 4 Department
of Mines and Petroleum, Petroleum in Western Australia, April 2010
5 Department of Mines and Petroleum, Petroleum in Western
Australia, April 2010
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Page 2
Despite the outsourcing to overseas companies and facilities of
the development of the large components of these construction
projects (for example LNG trains), this equipment will need to be
assembled and installed on arrival in Western Australia. During the
construction period the above large-scale construction projects
will increase demand for metal, electrical, mechanical and other
construction and commissioning tradespersons. After construction,
the number of workers falls dramatically as maintenance and
operating staffing levels are significantly smaller.
In summary, Western Australia accounts for approximately 46% of
Australias total value of mineral and petroleum sales (based on DMP
and ABARE published data). DMP and ABARE data show that in the 2008
calendar year Western Australias petroleum industry accounted for
66% of national crude oil and condensate production and 71% of
natural gas production. In 200809, 38% of Australias total
merchandise exports originated from Western Australia.
ECONOMIC OVERVIEW OF THE RESOURCES INDUSTRY The petroleum
industry is a major contributor. In 2009 the value of the Western
Australian petroleum industry reached $16.8 billion, a decrease of
8% over the previous year6.
2008-09 Calendar Year Quantity and Value for the WA Petroleum
Sector 7 CALENDAR YEAR 2008 CALENDAR YEAR 2009
UNIT QUANTITY VALUE A$
% of
QUANTITY VALUE A$
% of
Total WA Resource
Value
Total WA Resource
Value
Condensate Kl 5,725,013 3,512,416,903 3.10% 7,492,544
3,232,733,058 19.20%
Crude Oil Kl 13,324,422 9,737,620,320 5.10% 11,246,917
5,505,448,017 32.70%
LNG t 12,381,004 8,157,477,515 31.90% 15,252,516 6,320,744,991
37.60%
LPG t 764,668 731,502,315 0.40% 950,524 612,776,966 3.60%
Natural Gas km 8,502,567 1,191,442,427 0.00% 9,312,415
1,156,235,342 6.90%
TOTAL PETROLEUM 23,330,459,482 16,827,938,375
All commodities other than crude oil (-15.59%) increased in
quantity, with condensate up by 30.87%, LNG by 23.19%, LPG by
24.31% and natural gas by 9.52%.
All commodities experienced a decrease in dollars generated,
with condensate at -7.96%, crude oil at -43.46%, LNG at -22.52, LPG
at -16.23 and natural gas at -2.95%.
Figure 1 Sale value of Western Australian minerals and petroleum
commodities
Figure 2 Sale value of Western Australian petroleum products
6 Department of Mines and Petroleum: Western Australian Minerals
and Petroleum Statistics Digest 2008-2009 7
http://www.dmp.wa.gov.au/1521.aspx#7873 Prerelease09.xls
Condensate19%
NaturalGas7%Crude
Oil34%
LPGButaneandPropane
LNG37%
$ValueByPetroleumProduct
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Page 3
Royalties received by the Western Australian government from
Western Australian mineral and petroleum producers have increased
from $777 million in 19992000 to $2.8 billion collected during the
2009-10 financial year. Royalty revenue peaked in 2008-09 at $3.2
billion8. This represents royalties paid into the Western
Australian Government Consolidated Revenue Fund. It includes
Western Australias share of royalties paid by petroleum projects,
royalties collected in the Territorial Sea subsisting permit areas,
Barrow Island and the North West Shelf (where the state receives
approximately 65% of royalties) that are shared with the
Commonwealth.
In 2007/08, the total domestic market for gas was about 950
terajoules per day, representing 53% of gross state energy
consumption and 60% of electricity generation. Most gas for
domestic use is supplied by the North West Shelf Venture (63%)
through the Karratha Gas Plant and the Apache-Operated Harriet and
John Brookes joint ventures (33%), through Varanus Island. Domestic
gas projects under development or being considered for development
include Devil Creek (220TJ/D), Gorgon (300TJ/d), Macedon (170TJ/d),
Wheatstone (150 TJ/d) as well as Pluto. Gas is used predominantly
for industrial production (58%), in electricity generation (29%)
and by households for cooking and heating (4%). More than 75% of
this gas is consumed by just six large customers: Alinta, BHP
Billiton and Burrup Fertilisers for industrial purposes; Verve
Energy, ERM and Alinta for electricity generation and gas supply to
small customers.
Economic Cycles and Cost The levels of commodities produced by
the resources sector and the sectors profitability rely on global
commodity prices and demand. If commodity prices or demand fall too
low, resource operations will stop operating and go into care and
maintenance until commodity prices and demand improve. This
reaction to the global economy is reflected in the number of
projects that were put on hold after the global economic downturn.
Prior to the downturn severe skill shortages existed in most
Western Australian industries as the resource sector drew labour
from other industries.
Despite the global economic downturn, at an aggregate level the
value of Western Australian mineral and petroleum sales recorded a
19% increase to reach $71.3 billion in 200809. Iron ore was the
largest individual mineral sector by value; it accounted for almost
half of the total value of the states mineral and petroleum sales.
Other commodities to record significant growth in sales value in
200809 include LNG, natural gas, gold and salt9.
The shortage of labour and the need for an appropriately skilled
workforce are regularly identified as key impediments to the growth
of Australias resources sector. Given the number of variables that
will affect the future growth of the industry, including Australias
investment competitiveness, the economic climate and international
demand for Australian resources, it is impossible to forecast the
industrys skill and labour needs into the future with a high degree
of accuracy. Planning for uncertainty underscores the importance of
a strong partnership between the industry and government, both of
whom have very significant, though different, roles to play.
Industry costs generally have doubled around the world in recent
years (industry costs in Australia increased more than the global
average) and local factors like the increased remoteness of the
fields, in deeper water, with drier gas and higher impurities, are
also contributing to higher development costs. The higher the
industry costs, the less competitive the industry is in the global
market.
8 Department of Mines and Petroleum: Western Australian Minerals
and Petroleum Statistics Digest 2008-2009. 9 Department of Mines
and Petroleum: Mineral and Petroleum Exports by Commodity
2009-2010
Exports0910.xls
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Page 4
GEOGRAPHIC LOCATION OF THE INDUSTRY Large resource companies
typically have a head office located one of the large cities rather
than close to the operational sites. Head office functions
typically include setting production targets, corporate standards,
strategic planning, marketing and sales, along with corporate
compliance and reporting. Often the head office will develop and
drive the graduate and leadership programs across the sites.
Site personnel focus on production and maintenance with the
overall goal of meeting production and quality targets and shipment
dates set by head office. Sites are typically responsible for the
training of control room operators, process operators, production
technicians, emergency response and maintenance personnel.
Figure 3 Significant hydrocarbon discoveries in Western
Australia10
10 Department of Mines and Petroleum, Petroleum in Western
Australia, April 2010
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Page 5
Figure 4 North West Shelf production facilities and significant
hydrocarbon discoveries11.
Figure 5 Timor Sea production facilities and significant
hydrocarbon discoveries12.
11 Department of Mines and Petroleum, Petroleum in Western
Australia, April 2010 12 Department of Mines and Petroleum,
Petroleum in Western Australia, April 2010
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Page 6
Figure 6 ROC Oils Exploration Permit WA-286-P in the offshore
Perth Basin13
Most of Australias petroleum resources are located on the coast
of Western Australia, the Northern Territory and Victoria. Western
Australia has 64% of Australias economic demonstrated resources of
crude oil, 75% of condensate resources and 57% of LPG resources.
Geoscience Australia 2008, Oil And Gas Resources Of Australia
showed that Western Australias petroleum resources include 121 GL
of crude oil, 255 GL of condensate, 98 GL of LPG, and 2592 bcm of
conventional gas.
Figure 7 Australias existing, committed and proposed LNG
plants14
13 Department of Mines and Petroleum, Petroleum in Western
Australia, April 2010 14 Australian Petroleum Production and
Exploration Association (APPEA):Gas Market Report, May 2010
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Page 7
Regional Infrastructure and Availability of Adequate Local
Skills and Labour Due to a number of factors, including inadequate
regional infrastructure and local skilled labour, the majority of
employment in the gas and oil sector is fly-in fly-out (FIFO). This
enables employees to be sourced from across Australia, focusing on
the major cities. The majority of FIFO process technicians are
recruited from Perth.
The reliance on FIFO has:
placed an additional burden on airports and airlines, increased
the demand for temporary accommodation.
State-wide demand from the petroleum sector for water,
electricity and gas is projected to grow significantly in the
period 2010-14. The majority of this growth is expected in the
Pilbara and Mid-west regions where new and expanding projects, in
particular iron ore, are planned.
Anticipated15 state-wide demand from the petroleum sector for
water, electricity and gas includes:
water demand is projected to grow at a compounded annual growth
rate (CAGR) of 5.4% to 1129 gigalitres per annum (GL/a) by
2014;
electricity demand from the Pilbara is 13766 GWh/a. This
constitutes 82% of incremental growth;
state gas is anticipated to grow at a CAGR of 6.7% to 286 PJ/a
by 2014. The Pilbara region is expected to account for 82% or 78
PJ/annum incremental gas requirements in 2010.
Other issues related to the remote location of the resource
operations include:
lack of affordable housing, inadequacy of public transportation,
inadequacy of health care in respect of doctors and hospitals,
including emergency,
maternity, paediatrics, psychiatric and geriatric care, lack of
24 hours, 7 days a week childcare, lack of availability of quality
schools, TAFE and tertiary institutions and teachers, fuel prices
average 30 cents per litre more than in the Perth area, and lack of
desirability of geographic areas as places to live.
EMPLOYMENT Employment data collected and published by the
Australian Bureau of Statistics (ABS) is classified using reference
to the Australian and New Zealand Standard Industrial
Classification (ANZSIC). This data is therefore not directly
comparable with that collected by DMP. Under ANZSIC guidelines not
all employment is reflected in ABS mining industry classification,
and the classification is not able to be separated into petroleum
and minerals mining. For example:
employees engaged in liquefying natural gas are included in
Manufacturing; employees providing geophysical surveying services
on a contract or fee basis are included
in Surveying and Mapping Services; catering personnel working on
sites are reflected in the Accommodation and Food Services
classification; transport personnel (flight and maritime) working
transporting personnel to and from
platforms are reflected in the Postal and Warehousing
industries; contractors employed in site preparation on a contract
or fee basis are listed under Site
Preparation Services.
Employment data provided to NOPSA is recorded in man hours and
only accounts for people on platforms and rigs, not within head
office or field support.
The 2008 Chamber of Minerals and Energys publication Developing
a Growth Outlook for WAs Minerals and Energy Industry predicts the
demand for people, water and energy based on proposed developments
within the resources sector. According to this publication, the
long-term outlook for the resources sector is very positive. In
summary:
the resources industry is projected to grow significantly in the
period 2008-14; direct labour demand is expected to peak in 2012 at
~ 38,000; the highest growth regions are expected to be the
Mid-west (6,000), Goldfields/Esperance
(3,000) and the Pilbara (14,000) in 2014;
15 CMEs Developing a Growth Outlook for WAs Minerals and Energy
Industry
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additional employees will be fly-In fly-Out (FIFO) with a peak
incremental requirement of 27,000 in 2012 versus a residential
workforce requirement of 11,000 in the same period.
Construction versus Operational Workforce Needs It is important
to note that employment numbers and required skills in the
petroleum industry differ dramatically between construction phase
and operational phase. Construction typically requires large
numbers of traditional tradespersons to build and install the
necessary infrastructure to enable the operation to produce and
process its commodity. The operational phase requires significantly
fewer tradespersons (usually limited to maintenance personnel) and
an introduction of extraction operators and process technicians.
Construction phases normally have around ten times the number of
employees as the operational phase.
Both the construction and operational phases contribute
significantly to the economy. The industry has strong linkages with
other sectors, so its impacts on the economy go further than the
direct contribution of construction and operation. The level of
additional economic activity generated by a source industry is
referred to as a multiplier. There are two types of
multipliers.
1. Production induced, made up of first round effect: which is
all outputs and employment required to produce the inputs for
construction and operations; and an industrial support effect,
which is the induced extra output and employment from all
industries to support the production of the first round effect.
2. Consumption induced: which relates to the demand for
additional goods and services due to increased spending by the wage
and salary earners across all industries arising from
employment.
Clements et al (2006) suggested that basic employment
multipliers for construction and metals mining were 2.93 and 4.13
respectively. This means each construction position generates 1.93
jobs in a supporting industry. Therefore demand for one additional
construction job requires the availability of 2.93 employees. Once
the project is in operation, for each additional employee 4.13 jobs
will be created in an allied industry.
Current Trends in Staffing Patterns There is a distinction to be
drawn between labour shortage, or a lack of new entry-level
recruits, and a skills shortage or lack of qualified trades,
technicians and professional people. The petroleum industry has
suffered from skills shortages rather than labour shortages due to
its ability to pay wages that will draw employees from other
industries. Operational sites have little demand for labour as
their focus is on highly skilled, technically competent employees.
Construction sites do have a demand for both skills traditional
trades as well as general labour.
Short-term contracting is the norm in the construction phase of
a project. Contracting is a strategy to provide workforce
flexibility for projects with finite start and end dates and
different workforce needs at different stages of the construction
process.
Accurate construction labour demand forecasts are difficult to
obtain due to a number of factors. These include the reluctance of
enterprises to release commercially sensitive data and the
potential for double counting if there is overlap between
contractors and companies data.
Project construction and shut down maintenance work require
particular skills and flexibility, which has resulted in
experienced individuals being particularly sought by both service
sectors.
Age and Gender Profiles for Oil and Gas ABS data provides some
profile of the oil and gas industry but it is far from complete, as
LNG, the fastest growing sector of oil and gas, is captured in the
chemicals industrys data. Similarly, hydrocarbons processing is
captured in the process manufacturing industry, whilst drillers are
covered by mining. However, the graphs below do provide an overview
of the likely overall picture on age and gender. The findings are
supported by research undertaken in the UK by Oil and Gas UK
(APPEAs UK equivalent) on the ageing demographic that shows it is
not as severe as was first thought.
APPEAs Platform for Prosperity reported that skill shortages
were expected to get worse as investment in petroleum and other
industries increased and as older workers retire. In 2009 it was
reported that in some operational areas up to 50 per cent of staff
are due to retire within five years.
Page 8
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Page 9
Figure 8 Age distribution of Australian oil and gas industry
workers 2006-0816
Figure 9 Age distribution of oil and gas workers and the
national average June 200817
Diversity and Flexibility Issues that affect females and
Indigenous Australians choices about the occupations, type of work
and working conditions they will train and nominate for, often
affect other groups such as mature-age people, older carers and
others. In fact, the issue is one of diversity.
Based on industry data, there is clearly much opportunity to
increase the participation of women in the oil and gas sector.
Governments have a major role to play in addressing this issue as
the solution is long-term and requires putting effort and funds
into the promotion of maths, science and engineering options for
young women in schools, VET and universities. Industry has a role,
and it is gaining ground in the professional roles but much more
work needs to be done in the process technician and trade
levels.
As with most industries, Indigenous employment in the oil and
gas industry is not representative of the Australian population.
The oil and gas industry is committed to taking measures to promote
and increase the opportunities for Indigenous employment, within
both oil and gas companies and contractors. Many companies have
measures in place to build economic capacity for Indigenous
communities. The industry recognises the benefits of pursuing the
participation of Indigenous Australians in the workforce and
realises that much needs to be done in this area. However, many
Indigenous people located in the regional areas have low levels of
literacy, numeracy and fitness-for-work attributes which preclude
them from taking up training opportunities.
The gas and oil industry values diversity and has actively
pursued programs that tap into sectors of the population that have
not traditionally played a large part in its employment pool.
Flexibility in the structure of education and training programs
should encourage higher participation rates of 16 APPEA 17
APPEA
-
under-represented groups such as Indigenous Australians, women
and older workers, and provide more suitable arrangements for
apprenticeship completion as well as opportunities for retrenched
workers.
Again, harnessing technology and innovative training platforms
would provide some solutions to the issue of accessing
industry-informed training that provides practical and real
workplace experience but not always directly in an operating
workplace. Providing for flexibility where people live, work and
study will also open the door to oil and gas employment
opportunities for people all over Australia and overseas. Such
flexibility, however, requires strategies such as the provision of
social support services for those people and their families,
financial initiatives such as changes to the Living Away From Home
Allowance arrangements, and investment in associated infrastructure
such as affordable accommodation, transport, education/training and
recreation.
There is a growing demand for skilled, safety-conscious people
with initiative across the industry. Other personal attributes
required include the ability to work in a team, communicate ideas,
and have the resourcefulness to deliver results in remote,
challenging situations. Pathways into the industry can commence
through an apprenticeship, from TAFE, university and existing
employment in a relevant industry.
Employers encourage life-long learning and are supporters of
career advancement. Consequently, career progression,
multi-skilling and opportunities to gain experience in other
vocational streams or industry sectors are common.
Maths, Science and Literacy There is a clear and critical role
for governments in achieving far greater emphasis on, and funding
for, maths, science, engineering and literacy throughout
Australians education and training systems. The oil and gas
industry provides an excellent case study in regard to the skills
requirements of a modern economy, based as it is on often
cutting-edge technology and rapid change, and therefore requiring
multiple and high-level skills. Language, literacy and numeracy
skills were emphasised in Skills Australias Australian Workforce
Futures A National Workforce Development Strategy as fundamental to
improved workforce participation and productivity. This focus on
improving overall literacy and numeracy skills (and science skills)
benefits the nation as a whole, not just the resources sector.
The oil and gas industry needs to ensure it has the human talent
to deliver on growth through strategic workforce planning, key
skill pool development and by remaining focused on the key pathways
to employment such as cadetships, traineeships and graduate
programs. The industry will also continue to focus and invest in a
diverse workforce as one strategy to maximise a potential labour
pool.
National Competency Standards and National Training Packages The
Australian Qualification Framework (AQF) has been adopted by the
industry. The vocational education and training (VET) sector is
covered by training packages of which three cover petroleum process
employees:
1. the Resources and Infrastructure Industry (RII) for drillers;
2. the Chemical, Hydrocarbons and Refining (PMA) for operators and
technicians; and 3. the Metal and Engineering (MEM) for maintenance
workers.
These training packages comprise competency standards which have
been established to reflect the skills required by employees of the
sector. University qualifications are available for engineering and
science professionals. Competency-based training has been utilised
by the gas and oil industry for many years, with many companies
providing ongoing in-house training for operators and university
graduates.
For many years the national competency standards have been
recognised as a benchmark and much in-house
(non-nationally-recognised) training is aligned to these standards.
Industrys understanding of the training package and its associated
units of competency, qualification structure and assessment
guidelines continues to grow. Experience with, and the utilisation
of, the VET sector and nationally recognised training is also
growing as the pool of internationally skilled individuals is
diminishing.
The attainment of qualifications is not seen as a major focus
for the gas and oil industry but, rather, training occurs with the
aim of achieving an increase in safe work practices, improvements
in production rates and staff retention.
Generally the gas and oil industry does not access public
funding for training; the industry mainly operates out of remote
and regional areas and a large part of the gas and oil industry is
focused on
Page 10
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skill sets as opposed to full qualifications. This has resulted
in the need to fund its own development programs.
Job Roles and Qualification Utilised by Petroleum Industry
PROFESSIONAL ROLES Associated Qualification(s)
Petroleum Engineer Bachelor of Engineering Petroleum Bachelor of
Engineering Sub-sea Master of Science in Reservoir or Petroleum
Engineering
Engineers (all disciplines) Bachelor of Engineering
Geophysicists Bachelor of Science - Geology and Geophysics
Bachelor of Geophysics Bachelor of Engineering - Surveying and
Geoinformation Systems
Chemical Bachelor of Engineering Chemical Petrophysicist
Bachelor of Science Petroleum Engineering
Bachelor of Geophysics Process Engineer Bachelor of Engineering
-Process Reservoir Engineer Master of Science in Reservoir or
Petroleum Engineering Project Engineer Bachelor of Engineering -
Civil
Bachelor of Engineering - Project Engineering and Management
Environmental Engineer Bachelor of Civil and Environmental
Engineering Risk Engineer Bachelor of Engineering
Master of Science - Safety Engineering and Risk Management
Geologists and Geophysicist* Bachelor of Applied Science -
Geology Bachelor of Applied Geographical Information Systems
Marine Environmentalist* Bachelor of Applied Science - Marine
Environment
Commercial Analyst/Accountant* Bachelor of Arts/Bachelor of
Business - Accounting
Human Resources Adviser/manager * Bachelor of Business - Human
Resource Management
Marketing* Bachelor of Business - Marketing
Public and Media Relations * Bachelor of Business - Public
Relations Bachelor of Media and Communication
Lawyers and Contracts Management * Bachelor of Laws
Contract Manager Bachelor of Commerce, Bachelor of Laws
MAINTENANCE ROLES
Maintenance Technicians and Mechanical Trades*
Certificate III in Engineering Mechanical
Electrical And Instrumentation Trades*
Certificate III in Instrumentation and Control Certificate III
in Engineering Electrical/Electronic Trade Diploma of Engineering
Advanced Trade (Mechanical and Electrical) Certificate III in
Electrotechnology Electrician Certificate III in Instrumentation
and Control Certificate IV in Electrical Instrumentation
TECHNICIAN / OPERATOR ROLES
Process Operators# Certificate III in Process Plant Operations +
skill sets Certificate IV in Process Plant Technology
Pipeline Technicians# Pipeline Transmission Skill Set from
PMA
Control Room Technicians/Operators# Certificate IV in Process
Plant Technology
Ballast Controller
Page 11
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Offshore Crane Operator Offshore Crane Driver Skill Set from
PMA
Deep Sea Diver Diploma of Hyperbaric Operations (Diving
Supervision - Occupational SCUBA to 30 metres). Diploma of
Hyperbaric Operations (Diving Supervision - SSBA to 30m) Diploma of
Hyperbaric Operations (Diving Supervision - SSBA to 50m)
Integrated Rating Certificate III in Transport and Distribution
(Maritime Operations-Integrated Rating)
Radio Operator* Radio Operator Licence, Sea Rescue
Remote Operated Vehicle (ROV) Operator
ROV Operator Certificate
Offshore Driller, Roustabout, Derrickman, Floorman
Certificate II in Drilling Oil/Gas (Off shore) Certificate II in
Drilling Oil/Gas (On shore) Certificate III in Drilling Oil/Gas
(Off shore) Certificate III in Drilling Oil/Gas (On shore)
Certificate IV in Drilling Oil/Gas (Off shore) Certificate IV in
Drilling Oil/Gas (On shore)
Offshore Driller Supervisors, Toolpusher
Diploma of Drilling Oil/Gas (Off shore) Diploma of Drilling
Oil/Gas (On shore)
Facility Security Officer Certificate III in Security Operations
Offshore Supervisors Skill Set: Incident response team leader
Skill Set: Incident response commander Skill Set: Emergency
centre team
PARAPROFESSIONAL ROLES
Hospitality Catering and Cleaning* Certificate III in Commercial
Cookery
Laboratory Technicians* Certificate IV in Laboratory
Operations
Medics and Paramedics Bachelor of Nursing Bachelor of Health
Science - Paramedic
Project Managers* Diploma in Project Management
Frontline supervisors Certificate IV in Frontline Management
Administration* Certificate III and IV in Business
Draftspersons* Engineering Drafting
Warehousing and Logistics* Certificate III in Transport and
Logistics Certificate IV in Warehousing and Logistics Bachelor of
Business - Logistics and Supply Chain Management*
OHS Advisors and Managers Certificate IV in Occupational Health
and Safety Diploma in Occupational Health and Safety
# Denotes job roles for which training has traditionally been
provided on the job.
* Denotes job roles which are not seen as areas of skill
shortage, either because the sector can successfully recruit from
other industries or there is adequate supply.
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Current and Emerging Skill Shortages Petroleum companies were
asked to identify operational (not construction) job roles which
are hard to recruit due to, and including:
Skills shortages prior to economic downturn, or Current skills
shortage, or Inadequate-sized pool of suitable candidates, or
Forecasted strong demand which will likely lead to a skills
shortage.
PROFESSIONAL ROLES Engineering and Science Engineers (all
disciplines) Geophysicists Petrophysicists Process Engineers
Petroleum Engineers Reservoir Engineers Risk Engineers
Completions Engineers Mechanical Engineers
TECHNICAL ROLES Exploration and Drilling Drillers Drillers
assistants
Offshore Supervisors Control Room Operators Process Operators
Production Area Operators
MAINTENANCE ROLES Maintenance Technicians and Mechanical Trades
Maintenance Engineers (on and offshore) Metal Trades Apprentices
Electrical and Instrumentation Technicians/Fitters Electricians
Plant Mechanics SUPPORT ROLES Marine 1st Engineers Marine Engineers
PARAPROFESSIONAL ROLES Contract Managers and Specialists Health and
Safety Advisers and Specialists Group Leaders (i.e. Frontline
Supervisors) Warehousing and Logistics Officers
Procurement Officers Facility Security Officer Roles
Operation Critical Job Roles Petroleum companies were asked to
identify job roles which, if not filled, would cause disruption to
achieving core business. The following were identified.
PROFESSIONAL ROLES Offshore Facilities Managers Petroleum
Engineers Reservoir Engineers Petrophysicists
TECHNICAL ROLES Control Room Operators Process Operators Crane
Operators
MAINTENANCE ROLES Electrical Supervisor/Officers Electricians
Recognised Person Electrical Roles Instrumentation
Electricians/Fitters Plant Mechanics Permit Control Officer Roles
Process Technicians
SUPPORT ROLES Maritime Roles
Coxswain Roles Marine 1st Engineer Roles Marine Chief
Engineer/Officer Roles Marine Engine Room Watch-keeper Roles Marine
Engineer Watch-keeper Roles Marine Integrated Ratings Roles Marine
Master Roles Marine Navigation Officer Roles Marine Navigational
Watch-keeper Roles
Emergency Response Roles Medic Roles Emergency Team Member Roles
Emergency Team Leader Roles Emergency Commander Role Fire and
Rescue
Transport Helicopter Landing Officers Aeroplane and Helicopter
Pilots
Page 13
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Page 14
Emerging Occupations LNG is a relatively new industry in
Australia (in large-scale terms) with high technology, and
therefore a skills capability gap exists at a highly technical and
senior level. APPEA, RITC, MSA and LNG companies are developing
competencies for the national PMA training package to address this
new technology.
EDUCATION AND TRAINING The petroleum sector typically recruits
individuals over the age of 20. Although this is not a legislative
requirement, the industry links maturity to safety behaviour. The
Australian petroleum industry has traditionally preferred employees
who have been in the industry for at least five years; this has led
to the same employees rotating between companies within Australia
and overseas.
The gas and oil sector places a high level of importance on the
technical skills of its workforce, which contributes to the safety
and productivity performance. The industry expends a large amount
of money skilling and up-skilling its workforce. The industry
allocates by far the highest expenditure per employee ($1,643) on
training of any industry in Australia18. There is an adequate
number of training providers but there is a question as to the
suitability of the location of some institutions given the regional
nature of the oil and LNG operations.
In professional and technical-level training there is potential
for graduates not to be competent in meeting workplace
requirements. The industry links quality training and assessment to
improved safety behaviour and increased production and does not see
a need for training that is focused solely on qualifications.
Therefore the quality of training is paramount and the validity and
integrity of the assessment process is critical. Currently the PMA
Training Package does not address the LNG skill needs and so the
RITC is consulting with key stakeholders regarding the review.
There is a preference for onthe-job training, as training and
assessment are directly linked to the equipment and technology
being utilised by the individual and to the companys standards.
Industry Qualifications Overview The following are the VET
sector qualifications that are directly related to the petroleum
sector:
Certificate II in Process Plant Operations Certificate III in
Process Plant Operations Certificate IV in Process Plant Technology
Diploma of Process Plant Technology Advanced Diploma of Process
Plant Technology Certificate II in Drilling Oil/Gas (Off shore)
Certificate II in Drilling Oil/Gas (On shore) Certificate III in
Drilling Oil/Gas (Off shore) Certificate IV in Drilling Oil/Gas
(Off shore) Diploma of Drilling Oil/Gas (Off shore)
The following are skill sets from the PMA Training Package that
are utilised by industry.
Offshore incident response team member Incident response team
leader Incident response commander Emergency centre team Pipeline
transmission
The following are just a few of the VET qualifications utilised
by, but not restricted to, the petroleum sector.
Certificate IV in Occupational Health and Safety Certificate III
in Engineering Mechanical (Maintenance Diesel Fitting) Certificate
III in Engineering Electrical/Electronic Trade Diploma of
Engineering Advanced Trade (Mechanical and Electrical) Certificate
III in Electrotechnology Electrician Certificate III in
Instrumentation and Control Certificate III in Commercial Cookery
Certificate IV in Frontline Management Diploma in Project
Management Diploma Engineering Drafting
18 ABS EMPLOYER TRAINING EXPENDITURE AND PRACTICES 6362. 0 2001
02
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University Education The resources sector relies heavily on the
university sector for its professional-level employees. Graduates
are attracted to companies that provide quality graduate programs.
These graduate programs build on the knowledge gained at university
and usually involve rotation through a number of job roles and mine
sites to provide recent graduates with a greater understanding of
the company/industry and enable the development of practical
skills.
The following professions are utilised in the petroleum
sector:
Engineering, including Petroleum, Sub-sea, Reservoir, Chemical,
Materials, Offshore, Mechanical, Completions, Drilling,
Electrical/Instrumentation Control, Pipeline, Facility;
Installation Managers; Chemists and Scientists; Geophysicists;
Health and Safety; Environmentalists.
The following are not employed in large numbers, nor are they
seen as mission critical: Marine Biologists, Biologists,
Physicists, Lawyers, Archaeologists, Heritage Officers.
As with any other large enterprises the typical job roles
required to run an efficient organisation include (note that these
are not in short supply):
Human Resources and Industrial Relations, Public Relations
media, communication, community liaison, Finance and Commercial
professionals, Information technology: programmers, network
support, software support.
Future Directions for Education and Training Petroleum companies
have had a strong tradition in providing training to operational
employees. This training typically occurs on the job: utilising
peers to train new employees. Workplace assessment of competency is
normal practice for the industry, with new employees being required
to demonstrate competency in equipment operation and safe task
completion before being able to work under limited supervision.
Employers are becoming more aware of traineeships and public
funding that is available for existing and new workers through the
Productivity Placement Program (PPP). For the PPP to be successful,
training providers will need to become more flexible and responsive
to industry needs, which will lead to an increased confidence in
the VET sector.
The pre-employment program for the process operators in the
petroleum sector is the PMA20108 Certificate II in Process Plant
Operation. The pre-employment training program aims to equip new
entrants into the gas and oil industry but is not as yet valued by
the industry. Feedback highlights the lack of exposure to practical
industry working conditions (hours, shift work, isolation from
families, etc.) and the requirement for a stronger focus on safety
behaviours. Individuals therefore graduate without the skills
required for employment.
Although the industry does not consider that the current
pre-employment courses equip the individual to be a work-ready
employee, some employers do look at the completion of the program
as a demonstration of commitment to the industry and will look more
favourably on job applicants who have completed a course over a
similarly inexperienced applicant who has not completed a
course.
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Forecasting Labour and Skills Demand and Supply Given the number
of variables that will affect the future growth of the industry,
including Australias investment competitiveness, the economic
climate and international demand for Australian resources, it is
impossible to forecast the industrys skill and labour needs into
the future with a high degree of accuracy. Planning for uncertainty
must be a key part of any workforce planning strategy, and this
underscores the importance of a strong partnership between the
industry and government, both of whom have very significant, though
different, roles to play.
DATA AND INFORMATION For many years, labour forecast data has
been the Holy Grail of workforce planners and there have been many
attempts to collect it. The stumbling block for the oil and gas
industry in providing meaningful information has been the
uncertainties attached to proposed projects where the design phase
has not been completed and, importantly, the commercial sensitivity
of much of the data.
If a proposed project operator has no, or limited, information
on the design and engineering aspects of a project, they will be
unable to provide meaningful information on workforce numbers and
skills required. This is particularly true for projects that have
not gone to tender. If a major project has not gone to tender,
contracting companies also have little or no idea of what is
required in terms of labour and skills.
The industry does recognise that the scale of projects in the
resources sector over the next decade requires a focus and level of
planning not previously experienced in Australia. There may be
experiences on the international scene that Australia could
research and learn from.
There are a number of successful economic modelling exercises
that have already been undertaken or are in the process of being
completed. These modelling exercises, similar to the work
undertaken for Skills Australia by Access Economics, provide
essential information for the taskforce in looking at skills and
labour needs for the resources sector. They include for
example:
Energy Skills Queensland Workforce Planning Reports for the Coal
Seam Gas Sector; The WA Department of Training and Workforce
Development has commissioned Monash to
undertake some economic scenario modelling, including coverage
of the resources sector in Western Australia;
The Pit Crew Report is a specialist offering updated
twice-yearly, which reviews and presents information on the demand
and forecast for construction labour and engineering resources in
Western Australia.
SKILLS SHORTAGES AND SKILLS GAPS The demand for skills in the
oil and gas sector is broad across many areas and disciplines,
including various engineering disciplines, trades and advanced
trades, maritime, geosciences, logistics and various support roles.
The industry continues to face long-term skills shortages in the
disciplines of petroleum engineering, geosciences and chemical
engineering.
APPEAs Platform for Prosperity identified long-term shortages of
skilled labour as a major impediment to industry growth. It reports
that prior to the global economic downturn in 2008, shortages of
professionals (particularly in engineering and geoscience) and
technicians (particularly in oil and gas plant process operations
and maintenance) were experienced. This downturn provided some
short-term relief but economic recovery and a return to strong
commodities demand during 2010 has again increased skilled labour
demand and raised fears about the longer-term impact of skilled
labour shortages on the growth of this and other industry sectors.
Platform for Prosperity proposed a four-pronged strategy to
addressing skills shortages; that is, a focus on:
1. gaining a better understanding of the extent and nature of
skills shortages and future trends,
2. better resource planning and greater investment in training,
3. improving community understanding of the industry and its
attractiveness to potential
employees, 4. working with governments to ensure that education
and training budgets are directed to
areas of greatest need. Skills shortages are factors that affect
the industry in the short term, on a daily basis. Examples include
having the correct number of riggers or scaffolders and general
construction skills or having enough geoscientists or engineers to
work on specific industry projects, that is, the factors that
affect the industry right here, right now. Whilst to some extent
market-driven responses can address these shortages, the size of
the growth in potential projects across Australia means that
Page 16
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there are just not enough people, even with an open cheque book,
and the challenge here is to identify other strategies rather than
attracting staff through the payment of ever higher wages in a
competitive employment environment. On the positive side, the
increased remuneration does provide flow-on effects to the rest of
the economy in terms of the growth in demand for other products and
services. In addition, the oil and gas sector invests heavily in
the up-skilling/retraining of people working on their sites,
including during the construction phase of projects. These skills
range from safety to supervisory to technical skills.
In regard to the construction workforce required for the
resources projects, there are particular challenges which were
outlined earlier in regard to data and workforce planning. For
example, if a proposed project operator has no information on
design and engineering, it is unable to provide meaningful
information on workforce numbers and skills required. Further,
there is the issue of peak demand, and the fact that not all
projects will demand skills and labour at exactly the same time.
Clearly, the construction skills developed for Australia need to be
sustainable and build on core competencies that can be adapted and
transferred to other industries and jobs. This can pose challenges
in that not all companies will have the size and technical ability
to run effective human resource departments. Here there is a need
for the larger companies to provide support to potential
contractors. A very effective model for this already exists for
safety (Project Safe is a contractor engagement initiative in the
Western Australian oil and gas sector).
In terms of shortages, Manufacturing Skills Australia, in their
2010 Environmental Scan, quote Australian Industry Group and
Deloitte, National CEO Survey October 2009, Skilling Business in
Tough Times which included the following skill shortages:
Fabrication trades and advanced trades Boilermakers Sheet metal
Workers Welders Metallurgists at advanced trade and technician
levels Mechanical trades and advanced trades Maintenance Fitters
Mechanical Fitters Plant and Heavy Transport Mechanics Instrument
Technicians Electrical trades and advanced trades Electricians,
including HV/DC Process Control Specialists Engineering Designers,
including 3D CAD Draftspeople Engineering Technical Officers
Engineering Managers Toolmakers
Skills gaps are long term and linked to the learning provision
that supports the industry and its feedstock from education and
academia to training provision and technician and apprenticeship
programs.
The LNG specific labour and skills development is a critical
issue for the oil and gas industry. Skills gaps are inevitable as
LNG is a relatively new industry to Australia, and certainly new in
terms of the size and scale of proposed projects over the next
decade. In addition, the oil and gas industry is dynamic by nature
and driven by technological advancement. These skills gaps might be
in LNG technology, deep water, carbon capture, 4D seismic, Remote
Operated Vehicles (ROVs,) smart wells and problem-solver areas.
Here, the market cannot be relied upon, and the consequences of
market failure are potentially significant.
The oil and gas industry provides an excellent case study in
regard to the skills requirements of a modern economy, based as it
often is on cutting edge technology and rapid change, and therefore
requiring multiple and high-level skills.
Page 17
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Page 18
WORKFORCE SOURCES The petroleum industry has traditionally drawn
on the national and global pool of petroleum and offshore drilling
professionals to recruit personnel. Countries such as Norway, the
UK, Middle East countries and the USA are used to source
professionals. These are highly sought-after individuals who are
drawn from a very limited pool of qualified and experience
professionals.
Process technicians and maintenance personnel are trained
locally through high-cost, long-term structured training programs
such as apprenticeships and traineeships.
The resources sector has a number of large development projects
under way or planned. The construction phase of these projects will
require significant numbers of skilled tradespersons and labourers.
Major investment projects in the under-construction category are
dominated by iron ore and LNG projects. Major Western Australian
gas and oil projects are listed below. 19
Construction Operational Project Investment Status Workforce
Workforce Gorgon Joint Venture $43 billion Committed 3500 300
Kimberley Browse LNG Precinct $30 billion Committed 6000 400
Chevrons Wheatstone LNG $23 billion Feasibility 5000 400 Woodsides
Pluto Train 1 LNG Plant $12 billion Committed 4000 300 North Rankin
Redevelopment $5 billion Committed BHP Billiton Pyrenees Oil $2
billion Commenced Woodsides Cossack-Wanaea $1.8 billon Committed
BHP Macedon $1 billion Approvals Apaches Devil Creek $800 million
Committed 200 20 Apache Van Gogh Oil $700 million Commenced 80
SKILLED MIGRATION Whilst committed to building skills in
Australia, the oil and gas industry is a genuinely international
industry and, as such, skilled migration will always be one
essential skills strategy for this sector. In addition, with LNG
emerging as a growth sector, there is a need to bring hig- level
expertise and experience to Australia from overseas.
The government has already taken positive steps in relation to
skilled migration, with greater emphasis placed on varied and
specific local/regional needs through state migration plans, more
opportunities for employers to obtain sponsor status to enable more
effective and efficient management of visa applications, and more
responsive use of labour agreements. In addition, the changes to
the General Skilled Migration program to reflect Skills Australias
work on the new Skilled Occupation list is also a positive
move.
Given the international nature of the industry, the 457
immigration visa is utilised by this sector and there needs to be
recognition of the many benefits to be had from the international
movement of skilled workers. These skilled workers pass on their
techniques and experience through knowledge transfer to Australian
industry, thus sharing critical experience and good practices from
overseas and adding value to the economy.
During the 2008-09 financial year 110 457-visa applications were
granted for petroleum engineers. For the 2009-10 period, only 90
457 visas were granted. This is a reduction of 19.1% on the
previous year20.
FLY-IN FLY-OUT AND LABOUR MOBILITY The industry is undertaking
considerable work to build skills and employment opportunities
within communities near to where projects are located, including
the Kimberley and the Pilbara. Given the realities of the remote
nature of many of the workplaces associated with oil and gas
exploration and projects, accessing sufficient numbers of people
(either already with or who the industry can work with to develop
the right skills) means that fly-In fly-out (FIFO) will remain a
necessity for many decades to come. This is particularly true for
the construction phase of a project, which by its very nature
requires a high degree of mobility.
19 Department of Mines and Petroleum: Prospect Magazine;
September - November 2010. 20 Department of Immigration and
Citizenship: Subclass 457 Business (Long Stay) - State/Territory
Summary Report, BR0008.
-
Page 19
The industry has undertaken a lot of work in changing shift
rosters to address travel requirements and potential fatigue, and
in working with the airlines to put on new flights and additional
direct flights between various centres around Australia. The recent
direct flights from Karratha to mainland state capitals are but one
example. A flow-on effect is increased air traffic and pressure on
regional airports and the aviation industry for the supply of
planes and qualified air crews.
FIFO arrangements offer the potential for individuals in areas
with high unemployment to gain new skills and travel to job
opportunities. There is a need for support services for families in
adjusting to the pressures of FIFO arrangements.
FIFO began in the offshore petroleum industry in the late 1940s.
There was a rapid growth in FIFO in the 1970s. It was largely
driven by the expansion of remote resource projects.
Whilst there is a strong business case for companies to employ
local labour, FIFO employment is likely to be an increasing feature
of resource sector operations. The high proportion of FIFO workers
is due to a number of factors, including the lack of suitably
skilled local people; a lack of family accommodation available in
the local community or provided by companies; and the desire of
many personnel and their families to live in areas with greater
amenities, such as cities.
From the beginning of the resources industry to the 1950s,
numerous small mining towns were established. These towns were
built as a response to the poor capacity and reliability of the
transportation systems to deliver employees, goods and
services.
Historically, mining operations employed a township model. In
the 1960s to mid-1980s the states mineral boom relied on
residential workforces. The development and management of many of
these town sites were funded by the resource companies. Late in
this period, company towns became part of the local government
structure. From the mid-1980s to the present, in response to
economic reform and global competitive pressures, the establishment
of town sites was replaced by FIFO practices.
In 2001 Professor Keith Storey21 identified factors inhibiting
the development of new townships in remote locations. These
included:
The costs of building and operating new resource towns; The
absence of government financial support for township development; A
longer lead time for new town approvals and construction;
Environmental implications of new town construction; Administrative
implications of managing a town; Increased costs associated with
town closure, once the resources have been exhausted or the
operation is no longer viable.
Professor Storey also identified the following as factors
encouraging FIFO:
Improved quality of communications; Improvements in the safety,
reliability and cost of air travel; Lower turnover and absenteeism
levels in FIFO personnel; A preference for metropolitan over rural
living by workers and their families.
All gas and oil operations in Western Australia use FIFO. FIFO
rosters vary but the common pattern is two weeks on and one week
off (2 and 1). Twelve-hour shifts are the common practice. Whilst
many workers enjoy FIFO and the benefits it brings, there is also a
higher than normal turnover in the FIFO workforce as some workers
find the lifestyle difficult to maintain when family commitments
increase.
FIFO will continue to be a response to local skills shortages.
In reality, even if the issues relating to the increasing
participation of all unemployed and underemployed people, including
women, Indigenous people, and older workers, are addressed, many
remote and regional areas where the gas and oil industry operates
do not have a large enough local population of working age to meet
the needs of the petroleum industry. In a nation with a diversity
of regional growth, it is imperative that there be a balanced
approach between FIFO and local community development.
Public awareness campaigns are required to raise awareness of
lifestyle, job and career opportunities in the petroleum industry,
especially in Western Australia where east to west migration is
problematic. However, there are some key factors which militate
against mobility to areas of petroleum operations. These include
housing affordability, for example in Perth and regional Western
Australia; housing availability, for example in the Pilbara and
other regional
21 Australia Geographer, Vol. 32, No. 2, pp. 133-148: Storey, K.
(2001) Fly-In/Fly-Out and Fly-Over: Mining And
Regional Development In Western Australia.
-
centres; regional infrastructure issues; schooling and childcare
availability; and concerns or lack of knowledge about the family
and social impacts of intra/interstate migration or a FIFO
lifestyle.
Increased labour mobility of apprentices and trainees requires
additional on-site support, particularly for young apprentices
working away from home. In addition, apprentice and trainee
training models must be structured to take account of rosters,
travel and accommodation requirements while ensuring the
operational imperatives of enterprises.
Issues, Barriers and Opportunities Barriers to Entry For many
unemployed, underemployed and Indigenous individuals the barriers
to employment in the gas and oil industry include the lack of
foundation language, literacy and numeracy skills, the lack of
employability skills such as communication skills, teamwork,
problem-solving, planning and self-management, as well as a general
lack of fitness for work. For many the lack of basic education or
lack of local training opportunities reduces their ability to gain
the skills needed for the minerals sector workforce.
To work in the resources sector, the following are prerequisites
and therefore may be considered by many as barriers to entry into
the industry.
1. Fit for work: a pre-employment medical fitness examination is
usually required, as is a drug screening;
2. The ability to read and write English; 3. Colour blindness
may limit employment opportunities; 4. A minimum age of 18 years is
required except for apprentices.
Ongoing drug and alcohol testing may prohibit an individual from
obtaining or retaining employment.
What Makes Employment Less Attractive? Many people choose not to
seek employment in the resources sector, particularly if it
involves relocating from a metropolitan area to a regional area, or
interstate, or if moving from another industry sector. There are
financial barriers to relocation to remote and regional areas and
concerns over return on investment and effects on the family.
The minerals sector has a culture of full-time work and long
hours, which also impacts on its ability to attract and retain
people. Ten to twelve-hour days, and rosters for anywhere between
five days and three weeks can be found.
FIFO employment is becoming the main method of employment for
remote operations. This requires employees to be transported to the
site or platform for the duration of their swing. A swing may
consist of 14 to 21 days on site followed by a period of time when
employees are transported back to a major centre/airport for rest
and recreation with their family.
Some conditions at fly-in fly-out sites make working in the
industry unattractive.
Fear of flying Helicopters and small planes are often used to
transport personnel to site.
Working away from family Employees may not be able to attend
some family functions and celebrations. They may not be able to
provide support during times of need and they may miss significant
events in their childrens lives.
Working over water Offshore oil and gas employment requires
residing and working on remotely located ocean platforms.
Working at heights Offshore oil and gas employment requires
residing and working on ocean platforms that are many metres above
the water. Many on-land process plants require working at heights
as well.
Lack of halal catering This may prevent employees from meeting
their religious obligations.
7 days a week operation May not enable employees to meet
religious (e.g. Sabbath) obligations.
Residential employment requires an employee to be located in the
local town or community. These towns and communities are typically
remotely located and it is expected that the employee will
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relocate to the area with their family. If an employee chooses
not to relocate, transport to and from the town site or community
is not provided, so employees must pay for their own transport.
Outlined below are some conditions that may make residential
mining employment unattractive.
1. Establishing new residence Reluctance to sell current home
and purchase housing in an area perceived as an investment risk or
of a less desirable standard.
Reluctance to relocate family to a regional area which may have
issues with the quality of education, housing, medical facilities
and social infrastructure.
Heat, dirt, dust, wages. 2. Life of operation Each resource
operation has a finite number of years in which
it will operate. Employees who relocate to the area may have
concerns over recovering any financial investment in housing
towards the end of operating life.
3. Childcare and after school care
With shifts of 10 to 12 hours a day being the norm, childcare
and after school facilities are not adequate. There is a need for
24-hour care as most employees do not have an extended family in
the area which they can rely on to assist with childcare.
4. Shift work and rosters May not enable some employees to meet
religious obligations. 5. Regional infrastructure The limited
supply or costs of water, energy, transport and
affordable housing make relocating to regional Western Australia
unattractive. The lack of quality local high-school education and
access to university education can be a prohibiting factor in
families wanting to relocate.
Barriers to Training The most significant barrier to training is
the availability of remote and regional training delivery and
training infrastructure that meets the operational needs and
quality expectations of industry.
Pre-employment Education and Training
Barriers to employment in the gas and oil industry include lack
of foundation language, literacy and numeracy skills, lack of
communication skills, teamwork, problem-solving, planning and
self-management skills. There is a need for government to focus on
expanding programs to improve the language, literacy, numeracy and
work-readiness skills of the disengaged. Regional and remote
communities deserve the same access to education and training as
their metropolitan counterparts. While there are thin student
markets within the regions, these individuals, if trained, can
provide ongoing valuable local labour and skills to support the
resources industry. It is important that regional education and
training providers are supported through more responsive regional
loading when it comes to funding.
There is a need in remote and regional areas for improvements in
the availability of childcare, as well as training opportunities,
to enhance womens opportunities to gain skills and take up
employment with local resource operations.
Government initiatives are needed to promote communication and
partnerships between resource employers and job service providers
to enhance job service providers information provision and ensure
that job-seeker eligibility for employment is evaluated prior to
any training occurring. There is a need to develop initiatives to
improve career advice for job-seekers and greater awareness of
entry requirements and career pathways in the resources sector.
Government and the minerals sector need to work in partnership
to establish further centres of excellence in training for the
resources sector, utilising the established model of ACEPT which is
overseen by an industry management team to ensure that the quality
of training delivery, trainer skills and infrastructure meets the
needs of industry.
Existing Worker Training
In relation to the retention and training of employees,
employers are responsible for internal policy relating to skills
development and existing worker training. However, there remains a
role for governments and the community in ensuring that the
supporting hard and soft infrastructure is in
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place to provide training as well as the community facilities
and amenities that encourage workers to remain in their current
location.
Whilst enterprises are principally responsible for training
existing workers, there is a role for government in the provision
of programs that enhance workers skills and contribute to the human
capital of Australia. Programs such as the Productivity Placement
Program (PPP) and the Enterprise Based Productivity Placement
Program (EBPPP) are to be commended and supported.
Employers are more interested in employees gaining skill sets
that relate to current or next job roles rather than qualifications
of which many competencies will not be utilised in current or
future roles. The funding model currently supports qualifications,
not skill sets, and therefore the VET sector should be funded to
deliver industry-relevant skill sets in addition to funding full
qualifications.
With most resource operations being located in the regional
areas, access to remote and regional training is an issue. With
thin markets, many training providers are not willing to service
the remote regions and there is often a compromise between quality
and cost of delivery. Employers cannot afford the time or expense
in flying employees to metropolitan locations for training, and so
regional and workplace training is preferred. Much offsite training
is scheduled around training providers operational timelines rather
than the requirements of industry. Weekly classes are still the
norm without consideration for the expense and effort required to
release a remote employee to attend training. The content of
training is also often driven by training providers rather than
industry. Western Australia needs to ensure that funding rates for
regional, remote and workplace VET delivery reflect the real cost
of delivery, especially for higher cost, technology-intensive
trades programs.
Oil and gas operators have expressed a need for process operator
training facilities in the Dampier/Karratha area. This would
require duplication of the Australian Centre for Energy and Process
Training (ACEPT) facility located in Henderson. The existing
Henderson facility and any regional facility should be expanded to
enable training delivery in LNG and possibly mineral processing as
well. Lecturers and trainers need to maintain industry skills and
delivery should be on current industry technology and under
industry working conditions.
Although industry is pleased with the level of service and
quality of training provided at ACEPT, it often expresses concerns
over the quality of other VET delivery. Government should play a
role in ensuring the quality of training providers, particularly in
regard to the rigour of training delivery and assessment, the use
of site standard equipment and appropriate job hazard analysis.
Whilst the Australian Quality Training Framework (AQTF) provides a
framework for auditing the systems and processes under which the
RTOs operate, it has not yet delivered the quality improvements
that would engender industry confidence in the VET product.
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Action Plan
LABOUR MARKET AND SUPPLY There is a need to differentiate
between the construction phase with the immediate challenges
needing to be faced over the next three to five years, and the
longer term (up to ten years and beyond) work needed to develop a
sufficient number of individuals with the required level of
operational skills. There are unique challenges associated with
these different phases. For the construction phase, an important
question is what do we need to plan for once the spike or peak in
jobs dissipates? We should not be planning for the peaks but rather
for steady growth with the peaks addressed through imported skills.
This means we need to look to a range of solutions to build a
sustainable workforce with a depth of skills that allow for
adaptability and movement between industry sectors. The workforce
can be supported as needed by skilled migration.
Public awareness campaigns are required to raise awareness of
lifestyle, job and career opportunities in the petroleum industry,
especially in Western Australia where east to west migration is
problematic. However, there are some key factors which militate
against mobility to areas of petroleum operations. These include
housing affordability, for example in Perth and regional Western
Australia; housing availability, for example in the Pilbara and
other regional centres; regional infrastructure issues; schooling
and childcare availability; and concerns or lack of knowledge about
the family and social impacts of intra/interstate migration or a
FIFO lifestyle.
There are challenges involved in labour mobility. Western
Australia is not always seen by Eastern states people as a location
of choice, and even within the Eastern states there is not always a
culture or expectation of working or living away.
In regard to labour mobility, where people are moving residence
from one area to another to take up work, one direct and relatively
easy way of supporting labour mobility is to seek modifications to
the tax treatment under the Fringe Benefits Tax (FBT) provisions.
For example, in relation to the Living Away From Home Allowance
(LAFHA), whereby after two years FBT is incurred on rental costs
even if a person is on a project which extends for longer than two
years, the government could extend the LAFHA period for the
duration of a project rather than the current two-year limit. This
would provide some additional incentive by way of a tax break to
people considering becoming mobile and would reduce the cost to
companies by eliminating FBT charges. Also, the government should
consider excluding FBT in instances where employers pay boarding
fees for an employee who has become mobile for a project. This is
especially relevant for projects in remote locations or locations
where schooling is not as suitable as in capital cities. In this
instance the children of an employee remain in the capital city and
go to boarding school.
Regional Tax Allowances need to be re-evaluated and updated to
reflect the current additional cost of living in remote and
regional Western Australia.
Issue Strategies Outcome There are challenges involved in labour
mobility. Western Australia is not always seen by Eastern states
people as a location of choice, and even within the Eastern states
there is not always a culture or expectation of working or living
away.
1. Commonwealth government could consider modifications to the
tax treatment under the Fringe Benefits Tax (FBT) provisions and
the Living Away From Home Allowance (LAFHA). The government could
extend the LAFHA period for the duration of a project rather than
the current two-year limit. This would provide some additional
incentive to people considering becoming mobile (by way of a tax
break) and would reduce the cost to companies by eliminating FBT
charges.
2. The Commonwealth government could consider excluding FBT in
instances whereby employers pay school boarding
1. Tax regimes are reviewed to encourage workers to become
involved in FIFO or relocate to regional areas for the purposes of
employment.
2. Tax incentives for families to relocate are provided on an
ongoing basis, rewarding those families that relocate for the long
term.
3. Regional taxation allowances reflect the additional costs of
living in regional areas. Responsible parties: State and
Commonwealth governments.
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fees for the children of employees who become mobile for a
project. This is especially relevant for projects in remote
locations or locations where schooling is not as suitable as in
capital cities and the children of an employee remain in the
capital city and go to boarding school.
3. Review of regional tax allowances to truly reflect the
additional cost of living in the regions.
Priority: High
Infrastructure
Underpinning all actions in regard to skills development must be
a firm commitment on behalf of state and federal governments to
fund and support critical infrastructure in regional areas, in the
form of affordable housing, quality schools and training, quality
hospitals and transport systems. There is a need to provide local
access to university courses and state of the art technology
(communication) infrastructure.
1. There is a need for the provision of soft infrastructure such
as 24/7 childcare services, libraries, recreational and cultural
facilities.
2. Similarly, governments could provide funding and support for
increasing literacy, numeracy and science uptake in regional
schools and communities.
1. The remote and regional communities have the infrastructure
required to attract and maintain a viable community to service the
labour and skills needs of the gas and oil industry. Responsible
parties: State and Commonwealth governments, APPEA, employers.
Priority: High
Shortage of process operators and process technicians Given the
projects under development and planned for Western Australia, there
is and will be a critical shortage of both process plant operators
and maintenance technicians.
1. Industry and government(s) could investigate a model whereby
industry as a whole agrees to train a certain number of people
every year and, where necessary, host those trainees/apprentices in
their workplace to ensure they get the necessary workplace
experience.
2. Government(s) could fund additional places for
trainees/apprentices each year and explore incentives (for example,
support for acquiring new skills such as training and assessment
skills, tax and superannuation) for experienced industry people to
work with training organisations. This might present opportunities
for retention of mature-age workers.
1. Both in terms of the quality and numbers of graduates, the
trade and process operator training is meeting the needs of
industry. Responsible parties: State and Commonwealth governments,
APPEA, employers. Priority: High
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WORKFORCE PARTICIPATION A critical issue is the need to manage
expectations and make available accurate information on pathways
and job opportunities. The completion of the Certificate II or III
in Process Plant Operations is not enough and does not guarantee
employment. This is because the highly skilled nature of oil and
gas work, the long lag times involved in developing those skills,
the remote nature of many projects and the need to build
sustainable jobs going forward, even for medium to lower-skilled
jobs, mean that not everyone is going to make an easy transition
(either into the oil and gas industry or to new locations).
Industry, career advisers and RTOs have roles to play in promoting
advice on skills acquisition, the attributes the oil and gas