With Chevrons “Wheatstone” LNG project getting final investment decision on 26 September, I thought it timely to write about the incredible story of gas that is unfolding throughout Australia at present. Wheatstone will be the second largest resources project in Australia’s history, second only to Chevrons other majority owned project, GORGON ($43b).
Wheatstone initially had a project cost of around $25b, and with the latest news that’s already crept up, with the announcement yesterday of an estimated cost at Final Investment Decision (FID) of $29b. And I’m pretty sure that won’t be the end of the spend.
The Chevron/Wheatstone project will be competing in an already full project market. The wave of investment in LNG projects has raised concerns about cost overruns due to labour shortages. The vice-chairman of Chevron, George Kirkland, said he had concerns about looming skills shortages in Australia..
Wheatstone is the fourth major LNG project to be given the go-ahead in Australia this year, after Santos’s GLNG project in Queensland, Shell’s Prelude floating project and the Australia Pacific LNG project led by Origin Energy and ConocoPhillips. The Japanese oil and gas company Inpex’s $25bn Ichthys LNG project in Darwin is also expected to be approved within months.
Not only is Australia welcoming monster natural gas projects, like Chevron’s, we’re also seeing world first projects coming up the pipeline – Floating LNG (Prelude) and CSG to LNG (like GLNG & APLNG).
Finally, there is another boom looming onshore, with land grabs and joint ventures springing up across Australia’s shale gas plays, with potential to supply the current LNG projects in the Cooper, Canning and North Perth basins. Shale gas, which has seen phenomenal growth in the US, has arrived in Australia very quickly. Committed project expenditure has gone from zero to $500m in just 12 months.
To put this into a jobs perspective, Wheatstone will require 6500 workers during construction and around 300-400 for operations. That’s in addition to the CSG to LNG projects which have estimated skills requirements of 4500-5000 personnel for construction and 900-1000 once operational. The additional operational roles in CSG to LNG projects is mainly due to the thousands of CSG wells that must be drilled and serviced, compared to conventional gas projects.
From a ‘spend’ perspective, Iron Ore in WA will account for 14% of project spend over the next 12 months, whereas LNG projects on the other hand will represent a massive 61% of project spend. Wheatstone going to FID has strengthened that trend and puts Australia well and truly on the path of ousting Qatar as global No.1 supplier by around 2025.
Ultimately, this wave of oil and gas projects will put even more pressure on skills shortages. The skills needed in the construction phase particularly, have a huge crossover with traditional mining projects, and it’s the construction phase that’s starting right now. So skilled tradespeople will be in even hotter demand and will be able to take their pick from a number of massive projects.
Once these projects are operational, the skills required become much more specific. But with those skills already in short supply- and of critical importance to keep projects running- we must look at upskilling workers now in preparation. The construction phase of these projects lasts between 3-4 years. That doesn’t give us much time.
After Col’s blog post providing tips on how to get a job in the resources sector, here’s a great opportunity for job seekers in Queensland to find out more about local opportunities.
The Work for Queensland Mining and Gas Jobs Expos are an initiative of the Queensland Government and will be held throughout five regional areas of Queensland in October and November 2011, including Gold Coast, Sunshine Coast, Fraser Coast, Cairns and the Whitsundays.
Each Expo will be open to job seekers/the public from 10am until 4pm. The aim of the expos is to provide information to job seekers about how to get a job in the mining and resource industry, the types of jobs that are and will become available, and the training/tickets/skills these job seekers will need to access current and future jobs in the resources industry.
Expo participants include representatives from resources sector companies and major contractors, TAFE, relevant industry skills bodies and Skilling Solutions Queensland.
ManpowerGroup are participating in the Gold Coast and Sunshine Coast expos. See you there?
Find us at Booth 22 at all expos
Gold Coast – Wednesday 19 October 2011
Gold Coast Convention Centre
Cnr Gold Coast Highway & T.E. Peters Drive
BROADBEACH QLD 4218
Sunshine Coast – Friday 21 October 2011
The Events Centre Caloundra
20 Minchinton Street
Friend or foe? A collaborative approach to solving the skills shortage seems to have fallen off the agenda for state governments, opting instead for a combative strategy that aims to poach skills from other Australian regions.
The Queensland Government has recently made an offer to New South Wales workers – move to Queensland and we’ll give you a $10,000 bonus to help you “make the shift”. The bonus is designed to help relocating job seekers build new homes in Queensland – which might be particularly appealing for job seekers looking at creating a more convenient base for fly in-fly out work in Queensland’s resources sector.
The offer might be good for Queensland, but it’s not so good for New South Wales. Skills shortages are everywhere, and New South Wales is no exception.
Earlier this year, Mike Sacco wrote a blog post on the issue of skills poaching. In it, he talked about the resources sector poaching skills from other industries, warning that poaching skills was a short term band-aid – not a solution – that would eventually result in widespread poaching of skills from other resources companies. And he was right. Now, we’re not just seeing skills poaching from other industries and companies, but from other states that have just as many skills shortage problems.
Of course, the term ‘skills shortage’ can often be misleading. A skills shortage is different to a people shortage. What we really mean is ‘talent mismatch’ – there are plenty of people, they just don’t have the right skills, the ones most in demand.
On one hand, encouraging job seekers to consider a change in location to find work is a good idea. It works when job seekers can’t find work in their current location, but their skills are in need somewhere else. For example, the displaced Bluescope Steel workers from Port Kembla – the target of Anna Bligh and the QLD Government in her address to a trade & investment roadshow in Sydney – may in fact need to relocate to find work relevant to their skill set.
But on the other hand, poaching skills from other states is a slippery slope – it’s a difficult line to draw between attracting job seekers to another state who are finding it difficult to find work in their current location, and attracting job seekers willing to leave a state that still needs them – for one which offers more financial incentives. That type of thinking won’t solve the national skills shortage problem. It’s just shifting the problem elsewhere.
Instead, we should look at planned, sustainable workforce movements that effectively share the workers we have while we build up and train the workforce we need. The Federal Government’s Connecting People With Jobs program goes some way towards a more thought-out process, but clearly it needs to link more directly with state government attraction programs to have its intended effect.