Worker Shortages Seen in Australia’s Energy Sector


This is the first article of a three-part series on “How to Work in Australia”.

Long-term global demand for natural gas has triggered construction for a number of liquefied natural gas (LNG) export projects in Australia in recent years and has created significant demand for workers within Australia.

Chevron Corp. reported earlier this year that it will hold information sessions from Feb. 13 through March 7 throughout Australia and New Zealand as a means of recruiting workers for its Australian energy projects.

The company is seeking to hire engineers from a range of disciplines, including subsea, civil/structural, pipeline design/construction and marine. Chevron, which is the largest holder of gas resources in Australia, is leading development of the Gorgon project — a LNG and domestic gas joint venture supplied by the Greater Gorgon gas fields — and the Wheatstone project as an LNG and domestic gas operation near Onslow in the Pilbara region of Western Australia.

The company is also investing in the Browse LNG development, another proposed LNG project offshore Western Australia.

The LNG boom in Australia presents an exciting time for Bechtel Corp., which has built more than one-third of the LNG projects in Australia, but finding enough workers to participate in the already complex, challenging process of constructing an LNG facility presents a challenge for the energy industry, said Dick McIllhattan, LNG manager for Bechtel, at an Australian American Chamber of Commerce-Houston 2012 Energy Conference earlier this year.

At Gladstone in Queensland, the company has been involved with construction at Curtis Island, where it faced the challenge of moving 6,000 workers back and forth across the harbor for work, and moving between 5,000 tons and 10,000 tons of material on a daily basis.

Bechtel has learned from its global experience to tailor a specific strategy for each country, which includes reaching out to the local community and communicating early and often its plans. This approach has helped the company to manage the numerous elements involved in LNG construction, which include addressing logistics and safety issues.

The company also is participating in Chevron’s Wheatstone project. Ground was broken in December for the new facility, which will have two 4.95 million tones per annum trains, two LNG tankers and a domestic gas plant.

Finding Ways to Overcome Worker Shortages
Bechtel had dealt with the worker shortage issue in Australia by modularizing its job processes, farming out portions of its projects to shipyards across Southeast Asia. Bechtel was able to take care of one-third of its labor demands through this process, but still faces a significant challenge in delivering between 40 million and 45 million man hours. Filling the labor demand will require lots of planning; the company also has been working with government consultants to see what is available in terms of labor.

The Australian government has recognized the need for more workers for LNG projects, and is taking steps to implement programs to train mid-career workers in other careers for skilled labor roles in oil and gas.

Australia is experiencing a labor shortage due to the age gap between the Baby Boomers, who are beginning to retire, and the younger workers due to the lack of focus on training of technical and trade workers in the 1990s, said Dane Groeneveld, regional director with NES Global Talent.

LNG projects typically need between 5,000 to 15,000 workers for the peak phase of construction, and between 500 and 1,000 workers to operate an LNG facility. Australia must source its workers from the global pool of professionals; typically, 10 to 15 different nationalities of workers are represented in an Australian LNG project, Groeneveld noted.

Australia offers a number of advantages as a place to work, including a great quality of life with public health and education programs, sports, culture and geography. The country is riding a wave of energy infrastructure development. Australia has a small population and large energy resources, which are located far from the nation’s populated areas.

Its developed economy and legislative system create a stable environment for foreign companies looking to invest, said Groeneveld. Australia has significant engineering talent thanks to its universities, and a culture that encourages training among its citizens. Several national apprenticeship programs are in place to allow talent to be grown.

“The stories of 19-year olds making six figure salaries have generated interest among Australians to work in oil and gas,” he noted.

Australia’s Immigration Quota, Higher Costs of Living
However, Australia faces a number of challenges in recruiting enough workers for oil and gas projects. Oil and gas companies previously have faced challenges in bringing in enough skilled labor due to Australia’s immigration quotas, which allows workers with certain job skills and roles to enter the country. However, the list of roles can rule out workers whose skills are needed for LNG projects – with more than 70,000 skilled workers expected to be needed for LNG projects in Australia, a way to bring in workers was needed.

To address this issue, enterprise management agreements (EMA) allow companies to bring in workers under an umbrella agreement if a project has a capital expenditure of over $2 billion and will generate more than 1,500 jobs. In September 2011, EMA guidelines were released.

Companies also are making internal role changes, shifting workers within the company to meet needs, or using temporary local workers at project sites for maintenance roles.

The use of project bonuses also has been implemented for completions of contracts or project milestones to help offset the longer rate of inflation.

Australia’s isolation from other countries and its large size can present a challenge in attracting workers. Even Australians living within the country may be reluctant to move to the remote areas where Australia’s energy resources are located due to the small communities that might lack educational and other opportunities.

Housing costs, which are significantly higher in Australia versus other countries, presents another issue. Overall cost of living is higher in Australia as well. Additionally, the oil and gas industry in Australia also must compete with the mining industry and other industries for workers.



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