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.

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: d.dixon@cmewa.com

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.

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

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 production 1 . 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 2029-30 3 . 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 drilled 5 . 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 underconstruction category are dominated by LNG projects. Projects include:
1 2

Woodsides Pluto Train 1 LNG project ($12 billion), the Gorgon LNG Joint Venture ($43 billion), Browse LNG project at James Price Point, Wheatstone.

Department of Mines and Petroleum, Petroleum in Western Australia, April 2010 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

Page 1

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 year 6 . 2008-09 Calendar Year Quantity and Value for the WA Petroleum Sector
CALENDAR YEAR 2008 % of Total WA Resource Value 3.10% 5.10% 31.90% 0.40% 0.00%
7

CALENDAR YEAR 2009 % of Total WA Resource Value 19.20% 32.70% 37.60% 3.60% 6.90%

UNIT Condensate Crude Oil LNG LPG Natural Gas Kl Kl t t km

QUANTITY 5,725,013 13,324,422 12,381,004 764,668 8,502,567

VALUE A$ 3,512,416,903 9,737,620,320 8,157,477,515 731,502,315 1,191,442,427 23,330,459,482

QUANTITY 7,492,544 11,246,917 15,252,516 950,524 9,312,415

VALUE A$ 3,232,733,058 5,505,448,017 6,320,744,991 612,776,966 1,156,235,342 16,827,938,375

TOTAL PETROLEUM

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%.

$ValueBy Conde PetroleumProduct

LNG 37% LPG Butan eand Propa ne
Figure 1 Sale value of Western Australian minerals and petroleum commodities

nsate 19%

Natura lGas Crude 7% Oil 34%

Figure 2 Sale value of Western Australian petroleum products

6 7

Department of Mines and Petroleum: Western Australian Minerals and Petroleum Statistics Digest 2008-2009 http://www.dmp.wa.gov.au/1521.aspx#7873 Prerelease09.xls

Page 2

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 billion 8 . 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 ApacheOperated 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 salt 9 . 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 9

Department of Mines and Petroleum: Western Australian Minerals and Petroleum Statistics Digest 2008-2009. Department of Mines and Petroleum: Mineral and Petroleum Exports by Commodity 2009-2010 Exports0910.xls

Page 3

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 Australia 10

10

Department of Mines and Petroleum, Petroleum in Western Australia, April 2010

Page 4

Figure 4 North West Shelf production facilities and significant hydrocarbon discoveries 11 .

Figure 5 Timor Sea production facilities and significant hydrocarbon discoveries 12 .

11 12

Department of Mines and Petroleum, Petroleum in Western Australia, April 2010 Department of Mines and Petroleum, Petroleum in Western Australia, April 2010

Page 5

Figure 6 ROC Oils Exploration Permit WA-286-P in the offshore Perth Basin 13

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 plants 14

13 14

Department of Mines and Petroleum, Petroleum in Western Australia, April 2010 Australian Petroleum Production and Exploration Association (APPEA):Gas Market Report, May 2010

Page 6

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 Midwest regions where new and expanding projects, in particular iron ore, are planned. Anticipated 15 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. 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.

Other issues related to the remote location of the resource operations include:

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

Page 7

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

Figure 8 Age distribution of Australian oil and gas industry workers 2006-08 16

Figure 9 Age distribution of oil and gas workers and the national average June 2008 17

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 matureage 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 fitnessfor-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 17

APPEA APPEA

Page 9

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

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 Petroleum Engineer Associated Qualification(s) Bachelor of Engineering Petroleum Bachelor of Engineering Sub-sea Master of Science in Reservoir or Petroleum Engineering Bachelor of Engineering Bachelor of Science - Geology and Geophysics Bachelor of Geophysics Bachelor of Engineering - Surveying and Geoinformation Systems Bachelor of Engineering Chemical Bachelor of Science Petroleum Engineering Bachelor of Geophysics Bachelor of Engineering -Process Master of Science in Reservoir or Petroleum Engineering Bachelor of Engineering - Civil Bachelor of Engineering - Project Engineering and Management Bachelor of Civil and Environmental Engineering Bachelor of Engineering Master of Science - Safety Engineering and Risk Management Bachelor of Applied Science - Geology Bachelor of Applied Geographical Information Systems Bachelor of Applied Science - Marine Environment Bachelor of Arts/Bachelor of Business - Accounting Bachelor of Business - Human Resource Management Bachelor of Business - Marketing Bachelor of Business - Public Relations Bachelor of Media and Communication Bachelor of Laws Bachelor of Commerce, Bachelor of Laws

Engineers (all disciplines) Geophysicists

Chemical Petrophysicist Process Engineer Reservoir Engineer Project Engineer Environmental Engineer Risk Engineer Geologists and Geophysicist* Marine Environmentalist* Commercial Analyst/Accountant* Human Resources Adviser/manager * Marketing* Public and Media Relations * Lawyers and Contracts Management * Contract Manager MAINTENANCE ROLES Maintenance Technicians and Mechanical Trades* Electrical And Instrumentation Trades*

Certificate III in Engineering Mechanical 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# Pipeline Technicians# Control Room Technicians/Operators# Ballast Controller Certificate III in Process Plant Operations + skill sets Certificate IV in Process Plant Technology Pipeline Transmission Skill Set from PMA Certificate IV in Process Plant Technology

Page 11

Offshore Crane Operator Deep Sea Diver

Offshore Crane Driver Skill Set from PMA 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) Certificate III in Transport and Distribution (Maritime OperationsIntegrated Rating) Radio Operator Licence, Sea Rescue ROV Operator Certificate 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) Diploma of Drilling Oil/Gas (Off shore) Diploma of Drilling Oil/Gas (On shore) Certificate III in Security Operations Skill Set: Incident response team leader Skill Set: Incident response commander Skill Set: Emergency centre team Certificate III in Commercial Cookery Certificate IV in Laboratory Operations Bachelor of Nursing Bachelor of Health Science - Paramedic Diploma in Project Management Certificate IV in Frontline Management Certificate III and IV in Business Engineering Drafting Certificate III in Transport and Logistics Certificate IV in Warehousing and Logistics Bachelor of Business - Logistics and Supply Chain Management* Certificate IV in Occupational Health and Safety Diploma in Occupational Health and Safety

Integrated Rating Radio Operator* Remote Operated Vehicle (ROV) Operator Offshore Driller, Roustabout, Derrickman, Floorman

Offshore Driller Supervisors, Toolpusher Facility Security Officer Offshore Supervisors

PARAPROFESSIONAL ROLES Hospitality Catering and Cleaning* Laboratory Technicians* Medics and Paramedics Project Managers* Frontline supervisors Administration* Draftspersons* Warehousing and Logistics*

OHS Advisors and Managers

# 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.

Page 12

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. 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

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

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

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 Australia 18 . 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

Page 14

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.

Page 15

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

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

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 Project Investment Gorgon Joint Venture $43 billion Kimberley Browse LNG Precinct $30 billion Chevrons Wheatstone LNG $23 billion Woodsides Pluto Train 1 LNG Plant $12 billion North Rankin Redevelopment $5 billion BHP Billiton Pyrenees Oil $2 billion Woodsides Cossack-Wanaea $1.8 billon BHP Macedon $1 billion Apaches Devil Creek $800 million Apache Van Gogh Oil $700 million Construction Status Workforce Committed 3500 Committed 6000 Feasibility 5000 Committed 4000 Committed Commenced Committed Approvals Committed 200 Commenced Operational Workforce 300 400 400 300

20 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 year 20 .

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 20

Department of Mines and Petroleum: Prospect Magazine; September - November 2010. Department of Immigration and Citizenship: Subclass 457 Business (Long Stay) - State/Territory Summary Report, BR0008.

Page 18

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 Storey 21 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.

Page 19

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 Working away from family Helicopters and small planes are often used to transport personnel to site. 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. Offshore oil and gas employment requires residing and working on remotely located ocean platforms. 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. This may prevent employees from meeting their religious obligations. May not enable employees to meet religious (e.g. Sabbath) obligations.

Working over water Working at heights

Lack of halal catering 7 days a week operation

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 Page 20

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. 2. Life of operation Heat, dirt, dust, wages. 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. 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. May not enable some employees to meet religious obligations. 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.

3. Childcare and after school care

4. Shift work and rosters 5. Regional infrastructure

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 selfmanagement 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 Page 21

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.

Page 22

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
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.

Strategies
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 twoyear 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. The Commonwealth government could consider excluding FBT in instances whereby employers pay school boarding

Outcome
1. 2. 3. Tax regimes are reviewed to encourage workers to become involved in FIFO or relocate to regional areas for the purposes of employment. Tax incentives for families to relocate are provided on an ongoing basis, rewarding those families that relocate for the long term. Regional taxation allowances reflect the additional costs of living in regional areas. Responsible parties: State and Commonwealth governments.

2.

Page 23

3. 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. 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. 2.

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. Review of regional tax allowances to truly reflect the additional cost of living in the regions. There is a need for the provision of soft infrastructure such as 24/7 childcare services, libraries, recreational and cultural facilities. Similarly, governments could provide funding and support for increasing literacy, numeracy and science uptake in regional schools and communities.

Priority: High

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

1.

2.

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. 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

Page 24

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 industry is looking for in candidates, and career pathways. Attracting individuals to apply for process operator roles in the gas and oil industry is not an issue. Unfortunately, many applicants do not have the prerequisite skills and attributes required by the industry. As the industry is highly technical and potentially hazardous, applicants are required to have high levels of literacy and numeracy, as well as a mechanical aptitude, mature work ethic and strong safety focus. In addition, the large pool of applicants when jobs are advertised has led to the industry having no operational reason to consider affirmative action to address the diversity discrepancy that is evident on platforms and in process operations. However, many companies have seen the benefits of a representative workforce and are encouraging women and Indigenous individuals to apply. To address the issue of the lack of literacy, numeracy and mechanical skills held by many Indigenous persons and lack of mechanical skills in many females, a customised pre-entry course aimed at capacity building should be considered. This could involve a combination of the Certificate II in Process Plant Operations and Certificate I in Engineering courses with WELL and CAVS programs. This extended and customised program would allow time for essential literacy, numeracy and mechanical skills to be developed in a supportive environment. The concept of the amalgamation is twofold: (1) it allows additional time for numeracy, literacy and mechanical skills to be developed; (2) it provides skills utilised in a number of industries which may be attractive alternatives to those not wanting to work in the petroleum industry after completing the course. Although the final units would need further industry advice, the following units from the engineering qualification could build relevant underpinning skills. Use hand tools, use power tools/hand-held operation, perform computation, maintain marine vessel surfaces, work safely on marine craft, follow work procedures to maintain the marine environment, apply fibre-reinforced materials, prepare surfaces by abrasive blasting (basic), prepare surfaces using solvents and/or mechanical means (basic), apply protective coatings, organise and communicate information, interact with computing technology, perform electrical/electronic measurement, perform engineering measurements. Graduates who have demonstrated the required safety and work attitudes required by the industry could then proceed to the mainstream Certificate III in Process Plant Operations. They would then have a greater likelihood of being recruited into the petroleum industry.

Issues
Lack of diversity within the workforce and lack of literacy, numeracy and mechanical skills.

Strategy
1. To address the issue of the lack literacy, numeracy and mechanical skills held by many Indigenous persons and lack of mechanical skills in many females, a customised pre-entry course aimed at capacity building should be considered. This could involve a combination of the Certificate II in Process Plant Operations and Certificate I in Engineering courses with WELL and CAVS programs. This extended and customised program will allow time for the underpinning literacy, numeracy and mechanical skills to be developed in a supportive environment.

Outcome
1. An increase in the number of Indigenous and female graduates from the Certificate II in Process Plant Operation who gain employment in the petroleum or allied industries. Responsible parties: ACEPT, employers. Priority: Medium

Page 25

ATTRACTION AND RETENTION

As previously stated, attracting individuals to apply for process technician roles in the gas and oil industry is not an issue. The 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 of 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. This means that not everyone is going to make an easy transition (either into the oil and gas industry or to new locations). Industry and governments have roles to play in promoting advice on skills acquisition, the attributes the oil and gas industry is looking for in candidates, and career pathways. Developing an interest and awareness of the oil and gas industry should begin at school. This would allow children to see a need to develop their numeracy and literacy skills and may inspire them to take up careers in the sector such as engineering, geology or marine science. The gas and oil sector believes it is vital to provide school children with good quality information on the important role of energy in the economy, and accurate information on the gas and oil industry today. Improving young peoples understanding of the oil and gas industry will not only help develop their awareness of the importance of energy in our everyday lives but it will also assist in ensuring that school children make choices in respect to maths and science options that will enable them to choose careers in the resources sector when they leave school. Currently, individual companies provide various levels of sponsorship and assistance for school education programs, some of it in the hundreds of thousands of dollars. For example, BP spent a significant sum of money developing an eleven-part energy education program which has been provided to every secondary school in Western Australia. However, to date there has not been a coordinated approach and it requires work to be undertaken to develop a consistent and comprehensive approach. The Petroleum Club of WA with the support and sponsorship of APPEA and a number of oil and gas companies (including Woodside, Chevron, Apache, ConocoPhillips, BHP Billiton petroleum and Eni), provides Year 10 students with an appreciation of the industry through the Schools Information Program (SIP). The program has been running since 1991 and has entertained and educated more than 11,000 students. SIP involves six one-hour sessions, with each session focusing on a different aspect of the industry. The program is delivered by oil and gas company employees. While SIP is well regarded by those familiar with it, resources limit the programs exposure to just 25 schools (effectively, 25 classes) and only in Western Australia. There is also a view amongst some within the industry that SIP would be more effective if it was targeted and tailored at primary rather than secondary school students. However, with all schools subject to the national curriculum from 2013 onwards, the future of SIP remains unclear.

Page 26

Issue
Realistic expectations of pre-employment courses Many people undertake the Certificate II in Process Plant Operations thinking they will get a job in the petroleum sector. This is not true in many cases as the individuals do not possess the skills and attributes being sought by employers.

Strategy
1. Review course brochures to reflect the likelihood of obtaining employment in the gas and oil sector on completion of the course. Provide an overview of how new entrants are employed by gas and oil companies and their preference toward the traineeship pathway rather than institutionalised pathway. Provide graduate destination statistics indicating where graduates have been employed. Government could assist industry in ensuring that the national curriculum includes an oil and gas industry awareness component. Government could also assist in the funding and development of an education program that would be delivered consistently and in a coordinated way across the country. This new approach could involve the full-time employment of former teachers, familiar with the education system, who would work with industry to develop and deliver the program. A website would also be established allowing teachers and students to access updated information. A longer-term aim would be the development of an oil and gas education complex which would operate as a museum and learning centre (with an auditorium for school classes and guest lecturers) to be based in Perth.

Outcome
1. Applicants who are applying for preemployment courses have the prerequisite skills, knowledge and attributes sought by the industry. Responsible parties: RTOs Priority: High

Awareness of the oil and gas industry

1. 2.

1.

More students are aware of the gas and oil industry and what it contributes to the economy, the types of jobs offered and the environment in which the sector operates. Responsible parties: State and Commonwealth governments, APPEA. Priority: Medium

3. 4.

Page 27

TRAINING AND PRODUCTIVITY

The skills market was considered as to where it fails. We only address the failures. We proposed an 80/20 split (based on some modelling work done for Skills Australia). This split supports our focus being only on the 20% of the higher skills needs, as the rest of the skills issues will be adequately addressed by the market, particularly middle to lower skilled jobs (or construction jobs unless they are highly specialised LNG construction skills). So, in effect our focus will be 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; it is possible to get sufficient information to assess the future demand for skills.

A major barrier to effective institutionalised education and training in the gas and oil sector is the need for education and training to provide industry-competent graduates. Education and training infrastructure needs to mirror current industry usage, and training delivery needs to be delivered with a stronger safety focus, more realistic employment conditions and within processes that are utilised by industry. Training needs to be conducted by trainers with current industry competencies and under typical industry conditions (workplace policies and procedures). Challengers ACEPT facility was developed in response to industry demands for a more realistic training venue, i.e. one that simulates industry practices and processes. Overseen by industry leaders, this facility shows that a joint commitment to the development and management of realistic training venues is possible and should be encouraged. ACEPT delivers the following qualifications from the PMA08 Chemical, Hydrocarbons and Refining training package: Certificate II in Process Plant Operations; Certificate III in Process Plant Operations; Certificate IV in Process Plant Technology; Diploma of Process Plant Technology; and Advanced Diploma of Process Plant Technology. Employers are very satisfied with the training that ACEPT delivers for both technical (operator) and maintenance roles. A replication of the ACEPT facility in the Karratha or Dampier area has been identified as a priority by oil and gas producers, as has the development of both a Perth-based and a Pilbara-based training LNG processing facility. ACEPT is well placed to be upgraded to deliver the LNG training. The development of centres of excellence in petroleum and LNG training can be achieved by expanding the scope of ACEPT to both LNG and regional Western Australia. If regional expansion is not possible, a key opportunity exists to improve industrys ability to access the existing training facility by the establishment of accommodation near the facility to allow people from outside the Perth area to attend for block training. This accommodation facility could be co-funded by employers. These facilities would not only deliver training in process control but would be expanded to teach the dual and mixed trades that are utilised and being demanded by industry. Dual trades currently in demand include electrical instrumentation, mechanical fitting and hydrocarbon processing. Linkages with universities teaching petroleum engineering could provide synergies to both sectors.

Page 28

This development of a Petroleum and LNG Centre of Excellence needs to occur in a partnership between government(s) and industry. Pre-employment Training The Certificate III in Process Plant Operations has been identified by employers as a prerequisite for entry into the petroleum industry. Although this qualification does not equip graduates to be effective in the workplace, at least they will understand the process of extraction and processing and appreciate the focus on safety. Most companies who do employ graduates with Cert II or III do so through a 2+ year traineeship. Many employers utilise the Energy Apprenticeships Group. Employers have expressed varied levels of support for employing graduates of Certificate levels III and IV who do not have any industry experience. There is a strong preference for the Certificate III to include a significant portion of industry placement. The majority consider the Certificate IV would be of little value without any actual industrial work experience. An institutionally-delivered Cert IV in Process Plant Technology would need to ensure coverage of the following areas: 1. advanced control room operator skills such as abnormal situation management and process optimisation, 2. personnel management supervisory skills and 3. an understanding of the advanced principles underlying oil and gas processing, such as thermal dynamics and fluid flows. Apprenticeships The shortening of some apprenticeship terms to three and a half years has not been met with the universal approval of industry. This is particularly so for the highly skilled nature of most jobs in the oil and gas sector. The increasing complexity of work skills requires more time, not less, in training. Given the relatively long training times required and the need to access real and practical workplaces, the government could assist by: Creating clear pathways between school and work; Considering influencing state governments to remove other possible disincentives such as state payroll taxes for apprentices; Extending government funding and support to enable on hosted apprentices e.g. with approved suppliers; Provide funding for partnerships between existing training experts such as EAG and ACEPT and training providers/workplaces in regions where existing expertise may not be sufficient or does not exist; Support companies with existing formal, structured training programs that deliver or are aligned with National Training Packages (e.g.: PMA08) by providing some funding or a percentage rebate. Support other companies to establish similar structured and verified competency assurance systems. Fund costs for assessors, give rebates for some training costs and cover some administrative or third party audits.

As a result of the increasing activity in the resources and construction sectors, there will need to be an increase in training delivery, particularly with apprenticeships in traditional trade areas and in paraprofessional studies related to process/operational technicians and mechanical engineering. The innovative approach to paraprofessional apprenticeships taken by the Energy Apprenticeships Group (EAG) in packaging a broad level of qualifications together (e.g. process, instrumentation and operator maintenance) is an example of flexible but in-depth skill building. EAG is a subsidiary service of Apprenticeships Australia, established to specifically address the long-predicted skill shortage problems of the oil and gas resources sector. The purpose of the venture was to deliver a value-added service to the oil and gas industry by forming a mutually beneficial joint venture between the Chamber of Commerce and Industry Western Australia and the ACEPT. The program delivers combined training in Electrical Instrumentation, Mechanical Fitting and Hydrocarbons Process Operating and is extremely important in addressing skill shortage and consolidation issues. The approach to combining skills is an innovative and flexible solution to the industrys skills needs. There are currently around 800 apprentices and trainees within the apprenticeships program, with about 200 currently from the oil and gas sector.

Page 29

There have been some criticisms of group training schemes for failing to deliver on industry needs, and being a costly model of employment. The EAG scheme however, has remained closely responsive to industry and has been quick to adapt to meet emerging LNG skills needs for the industry. It is well suited to the contractual and cyclical nature of the gas and oil industry, as the scheme management, not the host company, is responsible for the continuity of the traineeship. The group scheme management: recruits suitable applicants, although the host company has the final say in selection; indentures the apprentice and covers all administration requirements; provides for all employment-based costs (superannuation, workers compensation, etc.); focuses on the apprentices welfare and safety; manages all training requirements as per the appropriate training package; enables apprentices to get valuable work experience in broader workplaces than the host company, and liaises with the host company to ensure strong ownership; partnering with all stakeholders simplifies charging to incorporate an annual total cost thus allowing accurate budgeting.

School-based Apprenticeships Industry believes that school-based apprenticeships are better focused on general technical trade levels (they are not oil and gas industry specific), and that these school-based schemes must ensure that the curriculum (which can become very crowded) maintains the necessary maths, literacy and science levels required in the hightechnology-skills world. Oil and gas specific apprenticeships are best suited for the post-school world. The UK Apprenticeship Scheme Industry and government(s) could investigate a possible model whereby industry as a whole agrees to train a certain number of people every year and, where necessary, host those trainee/apprentices in their workplaces to ensure they get the necessary workplace experience. Government(s) could fund additional places, for example fifty trainees/apprentices each year; and explore incentives (for example, providing 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 real opportunities for the retention of mature-age workers. In late 2009, the UK oil and gas industry celebrated the milestone intake of the one-thousandth Modern Apprentice to its hugely successful technician training scheme, marking the tenth anniversary of the industrys efforts to provide a grassroots solution to the need for a competent, stable and flexible workforce, both now and in the future. The UK oil and gas industry has invested 73 million in the training scheme since its inception in 1999. The scheme is run and organised by Oil & Gas UK, the Offshore Contractors Association (OCA) and the relevant skills bodies, OPITO, the Oil and Gas Academy, and the Engineering Construction Industry Training Board (ECITB). The partnership has allowed a fully integrated industry approach to attracting new talent that provides a visible and long-term commitment to technician training in the UK Continental Shelf (UKCS). Around 100 trainee positions are available annually on the four-year program which boasts one of the best retention rates in the country; a massive 91 per cent of apprentices complete the course and go on to find employment, compared to the national average of 55 per cent.

Page 30

Universities and Petroleum Engineering The industry faces a long-term shortage of skilled professional engineers. When the industry picks up strongly, as it is poised to do over the next decade, the industry has to search for anyone who has necessary skills and experience, and this includes academics from the oil and gas engineering departments of Australian universities. This then depletes the stocks of quality oil and gas engineering teachers. This approach results in a weakening of the education system that is expected to provide the future quality graduates. In addition to this, the geographical challenges in Australia mean that we have four universities covering oil and gas engineering. In the 1980s, the only major oil and gas fields in Australia were those located in Bass Strait. As a result, the then Sydney-based ESSO supported the establishment of an oil and gas engineering educational capability at the University of NSW in Sydney. In the 1990s, new discoveries were being made in northern South Australia and offshore in the North West Shelf area of Western Australia. During the mid-1990s, a number of oil and gas engineers from the Perth industry were attracted to Curtin University to set up its Masters program in oil and gas engineering. Meanwhile, Santos decided to underwrite a local school of oil and gas engineering at the University of Adelaide to supply its expanding needs for qualified engineers. Soon after, the University of Western Australia established a Masters program in oil and gas engineering, which was more downstream-focused than the other three university upstream programs. The oil and gas sector is exploring the setting up of a collaborative approach to achieve world-class delivery of oil and gas engineering in Australian universities. This would ensure that new graduates and postgraduates seeking careers in the oil and gas industry have access to opportunities to learn relevant industry skills before and/or after graduation. There has been similar work done in the mining sector through Mining Education Australia. Joint funding between government(s) and industry is required to address the critical issues facing the university sector in Australia to skill sufficient numbers of petroleum engineers for the next decade. With a collaborative approach to the delivery of petroleum engineering across Australia, there are real opportunities for: better access to academics with the appropriate skills and experience to deliver high quality, internationally competitive, undergraduate and postgraduate courses; an increased ability to deliver comprehensive worlds best courses; and the development of courses based on core engineering skills and a broad knowledge of geology (and ability to apply this) and specialist technical skills (which require industry support).

Page 31

Issue
Apprenticeship schemes The shortening of some apprenticeship terms to three and a half years has not been met with the universal approval of industry. This is particularly so for the highly skilled nature of most jobs in the oil and gas sector - the increasing complexity of work skills requires more time not less in training.

Strategy
1. Given the relatively long training times required and the need to access real and practical workplaces, the state and Commonwealth governments could assist by reviewing the issue of the length of apprenticeships.

Outcome
1. Apprenticeship durations are appropriate for individuals to obtain workplace competency and be able to work in a safe manner. Responsible persons: State and Commonwealth governments, industry. Priority: High

Fully institutionalised training and assessment An institutionally-delivered and assessed Certificate IV for process plant operators has not been fully supported by industry. Many employers consider that the Certificate IV should be undertaken only through on-the-job training and assessment. Given that in times of skill shortages employers will take on trainees who have completed institutionalised training, there needs to be a mechanism to manage the safety risks associated with graduates from fully institutionalised training.

Mentoring and skills passports 1. Introduce a buddy system where companies allocate a technically and workplace-competent person to become a mentor who guides the student throughout the Certificate IV course. Most companies indicated support for this concept but had reservations whether it can actually be implemented due to industrys lack of commitment in past initiatives and concerns for the time availability of workers to act as mentors. Introduce a skills passport for individuals who are new to the industry but have worked on production processing which involves similar functions or transferable skills (which will need to be taught in the right context once they are employed). Individuals will be required to maintain a journal/recording to document experience and its relevance to the oil and gas industry. There are only a small number of companies that will support this concept but with time others may see the benefits of such a system.

1.

Increased level of satisfaction within industry with graduates completing the Certificate IV. Responsible persons: APPEA, employers. Priority: High

2.

Petroleum engineers The industry faces a long-term shortage of skilled professional engineers.

1.

2.

Joint funding between government(s) and industry for a collaborative approach to the delivery of petroleum engineering across Australia to address critical issues facing the university sector in skilling sufficient petroleum engineers for the next decade. Shared lecturers, industry releasing key personnel to deliver lectures and exposure to work experience are all ideas that need further investigation. Government could consider listing petroleum engineering as an HECS exempt course.

1.

A successful model established for the delivery of quality university petroleum engineering is available in Western Australia. Responsible parties: APPEA, UWA, Curtin University, industry and Commonwealth government. Priority: High

Petroleum engineers

1.

The oil and gas sector is exploring the setting up of a collaborative approach to achieve world-class delivery of oil

1.

The university sector has access to highquality lecturers who can deliver

Page 32

Issue
The industry faces a long-term shortage of skilled professional engineers. When the industry picks up strongly, as it is poised to do over the next decade, the industry has to search for anyone who has necessary skills and experience, and this includes academics from the oil and gas engineering departments of Australian universities. This then depletes the stocks of quality oil and gas engineering teachers. This approach results in a weakening of the education system that is expected to provide future quality graduates. In addition to this, the geographical challenges in Australia mean that we have four universities covering oil and gas engineering: 1. 2. 3. 4. University of NSW Curtin University University of Adelaide, University of Western Australia.

Strategy
and gas engineering in Australian universities. Joint funding between government(s) and industry is required to address the critical issues facing the university sector in Australia to skill sufficient numbers of petroleum engineers for the next decade. 3. A collaborative approach to delivery of petroleum engineering across Australia, provides real opportunities for: better access to academics with the appropriate skills and experience to deliver high-quality, internationally competitive, undergraduate and postgraduate courses. increased ability to deliver comprehensive worlds best courses; and development of courses based on core engineering skills and a broad knowledge of geology (and ability to apply this) and specialist technical skills (which require industry support). 2.

Outcome
petroleum engineering courses. Responsible parties: APPEA, industry and Commonwealth government. Priority: High

Regional training centre Given that the bulk of Western Australias LNG operations are in the Pilbara, there has been a call for a training facility to be located in the Dampier/Karratha area.

1.

ACEPT board of management could consider expanding into a regional centre for petroleum training excellence, with training facilities for both petroleum and LNG in the Perth and Pilbara regions. The centre could further meet the needs of industry by including accommodation facilities, trade training and process technician training.

1.

Pilbara residents and employees have access to local training opportunities. Responsible parties: ACEPT, employers, APPEA, state government, Department of Training and Workforce Development. Priority: Medium

Page 33

PLANNING AND COORDINATION

Resource sector-dominated towns can be divided into a number of community groups: The local Indigenous community; The resource sector employees mainly comprise Woodside, Rio Tinto, Pilbara Iron and Dampier Salt employees. This group is, relative to other sectors, highly paid, with good access to housing; The FIFO community consists mainly of resource and construction company employees who either do not wish to relocate to regional WA or do not have subsidised housing provided. This group do not tend to spend money in the community nor do they financially support local facilities (service or recreational). A community of others includes small businesses, service providers and government employees. This group faces challenges in high labour, housing and living costs. Unable to match the salaries of the resources sector, this group often loses staff to mining. Housing standards and availability for public sector employees contributes to a high turnover of doctors, teachers and nurses. Pilbara shires have experienced periods of having up to 30% of local government positions vacant. In the Pilbara the non-Indigenous group can also be loosely described according to the goals of individuals. Colloquially, there are two, five, 10-20-year people 22 . Twoyear people generally only stay for one summer and two winters before leaving the region; five-year people typically have a savings goal and leave the region once they have achieved it; 10-20-year people either stay for financial reasons or because they like the way of life. Interviews 23 show that the majority of Pilbara residents intend on living there for a defined period and do not intend to put down roots. For this reason, the majority of savings and investment (including residential housing) is done outside the region. Housing investment in the region is affected by the dominance of company housing and the boom-bust cycles that affect residential housing prices. The emergence of FIFO workforces further compounds the issue. FIFO options have given employees flexibility to live in Perth and commute to work. A lack of community and sense of belonging can result from transient and FIFO populations. Resultant perceptions about Pilbara towns include a lack of community leadership blended with social apathy and a sense of isolation. There are perceptions of increasing crime rates; levels of domestic violence are almost three times the state average; and the suicide rate among males aged 18 to 25 is much greater than state norms. There is a level of frustration about costs of living (overall, prices for goods in the Pilbara are 11.3% higher than in Perth and median housing prices are far higher than the state average), and a lack of choice and availability in services such as day care and medical facilities.

22 23

Understanding the Pilbara Region and its Economy: Rio Tinto Understanding the Pilbara Region and its Economy: Rio Tinto

Page 34

Issue
Regional residential employment Relocating to regional Western Australia is not seen as an attractive or viable option due to a combination of issues including but not limited to: Cost of relocation; High cost of housing and accommodation; Quality of affordable accommodation and housing; High cost of living (fuel, water, power, food, transport); Isolation from family and family support; Lack of infrastructure, including 24/7 affordable childcare, quality schools, university access, libraries, cultural activities; Perceived levels of crime; Social apathy; Lack of sense of community; Climate; High levels of boredom for non-working residents.

Strategies
State and Commonwealth governments can play a part in minimising the costs of relocation by introducing tax and financial incentives for families to relocate to the regional areas where employment opportunities exist. 2. The regional tax allowances need to be reviewed to more accurately reflect the additional costs of living in regional Western Australia. 3. The state and Commonwealth governments could implement an infrastructure program to provide affordable water, affordable electricity, adequate transportation, and access to quality hospitals, libraries, schools and university campuses in the regional areas to help attract people. 4. The state government could develop and fund public awareness campaigns to be delivered to the eastern states with the aim of raising awareness of the lifestyle, job and career opportunities in the regional areas of Western Australia. 5. The Commonwealth government could consider taxation incentives to offset the additional costs of living in the regional areas of Western Australia. 6. Both state and Commonwealth governments could consider the release of affordable land in the regional areas with tax incentives to offset the additional cost of construction. 7. Government could consider tax-deductible interest on home loans for owneroccupied regional housing. 8. Local governments could consider the building of large-scale caravan parks and other temporary accommodation for families who are willing to relocate and live in either their own or rented caravans. 9. The government could consider tax-deductible boarding school fees for regional families. 10. The state and Commonwealth governments could support the development of affordable 27/4 childcare facilities and recreational facilities to support shift workers. They could consider making 100% of the costs of childcare tax deductible if both parents are in full-time employment. 11. Mining companies could consider reintroducing the home purchasing scheme available in the 1980s whereby employees who work for the company for 15 or more years had the right to purchase or sell the company house in which they had lived at a price set at the date of occupancy. 12. Local, state and Commonwealth governments could look at ways of encouraging companies to support residential employment and making FIFO accommodation less attractive. 1.

Measure of success
1. Karratha, Port Hedland and Newman become attractive, thriving townships with viable populations, along with the necessary soft and hard infrastructure representative of the Perth metropolitan area. Responsible parties: State and Commonwealth governments. A range of affordable permanent (housing) and semipermanent (caravan park) accommodation is available. Responsible parties: industry, local, state and Commonwealth governments. Affordable 24/7 childcare is available to families where both parents work. Responsible parties: local, state and Commonwealth governments. Priority: High

2.

3.

Page 35

The Way Forward

This industry workforce development plan should be considered along with the information and recommendations in other industry development plans, the regional development plans and the state workforce development plan. Given the limited sphere of influence of training councils, this workforce development plan is provided to the Department of Training and Workforce Development and interested persons for consideration. The information and strategies provided that require government action and funding which are considered worthy of actioning will need to be driven by the Department of Training and Workforce Development, using its influence in the Western Australian public sector. Industry associations may like to consider their role in addressing the industry-level strategies. Employers may also find value in considering the strategies and evaluating them for possible effectiveness within their organisations. Training providers could evaluate any training strategies suggested to determine if they are viable and to determine the appropriateness and cost-effectiveness of the recommendations.

Industry Area Coverage

GROUP CLASS B B B 1200 1511 1512 DESCRIPTION Oil and Gas Extraction Petroleum Exploration (Own Account) Petroleum Exploration Services

Page 36

Project BassGas (Yolla Mid Life Enhancement) Gorgon LNG Kipper gas project (stage 1) Kitan Montara/Skua oilfield NWS CWLH

Company Origin / AWE / Calenergy Gas Chevron/Shell/ExxonMobil Esso/BHP Billiton/Santos Eni/Inpex/Talisman Resources PTTEP Woodside Energy/BHP Billiton/BP/Chevron/Shell/ Japan Australia LNG Woodside Energy / BHP Billiton / BP / Chevron / Shell / Japan Australia LNG Woodside Energy

Location

Status

Expected Startup 2012 2015 2011 2011 mid 2011 2011

New Capacity

Capital Expenditure $345m $43b US$1.1b (A$1.3b) na US$700m (A$795m) US$1.47b (A$1.7b) $5.1b (A$5.8b) $12.1b (inc site works for train 2) US$744m (A$845m) US$1.25b (A$1.4b) $35b (based on 14 -16 Mt LNG), includes production wells, 4 LNG trains and 400 km pipeline na na

Construction Employment

Operational Employment

Bass St, Tas Barrow Island, WA 42 km offshore Gippsland, Vic 500 km NW of Darwin, NT Timor Sea, 650 km W of Darwin, NT 150 km NW of Dampier, Carnarvon Basin, WA 150 km NW of Dampier, Carnarvon Basin, WA Carnarvon Basin/ Burrup Peninsula, WA 80 km NW of Dampier, Carnarvon Basin, WA Bass St, Vic

Expansion, committed New project, under construction New project, under construction New project, committed New project, under construction Expansion, under construction New project, under construction New project, under construction New project, under construction New project, under construction

field life extension 15 Mt LNG 30 PJ pa gas, 10 kbpd condensate 35 kbpd 38 kbpd 60 kbpd of oil, 35 PJ pa gas 967 PJ pa

3000

600

NWS North Rankin B

2013

Pluto (train 1) Devil Creek gas processing plant (phase 1) Turrum

late 2010

4.3 Mt LNG

2000

150

Apache Energy/Santos ExxonMobil/BHP Billiton

late 2011 2011

40 PJ pa gas 11 kpbd condensate, 77 PJ pa

Australia Pacific LNG

APLNG (Origin / ConocoPhillips)

Surat/Bowen basins/Gladstone, Qld

New project, EIS under way

2014-15

7-8 Mt LNG (initially) 14-16 Mt (ultimately)

4000-5000

1000

Basker, Manta and Gummy gas development Basker, Manta and Gummy

Roc Oil / Beach Petroleum Roc Oil / Beach Petroleum

Offshore, Gippsland Basin, Vic Offshore, Gippsland

Expansion, on hold Expansion, on hold

na na

up to 46 PJ pa 10 kbpd,

Page 37

oil development Bonaparte LNG (floating) Santos/GDF Suez Woodside Energy / BP / BHP Billiton / Chevron / Shell Apache/Kufpec

Basin, Vic Bonaparte Basin, NT Browse Basin, offshore WA NW of Dampier, WA New project, prefeasibility study under way New project, feasibility study under way New project, feasibility study under way New project, feasibility study under way Expansion, prefeasibility study under way New project, FEED studies completed na 2 Mt LNG na

Browse LNG development Brunello / Julimar (supply for Wheatstone LNG project) Condensate processing facility Coniston / Novaro (tie back to Van Gogh)

na

Up to 15 Mt LNG

na US$1.84b (A$2.1b) $525m 250 60

2013

na 60 kbpd of gasoline, diesel, LPG and jet fuel

Darwin Clean Fuels

Darwin, NT 50 km N of Exmouth, Carnarvon Basin, WA Timor Sea, 600 km N of Broome; 700 km W of Darwin, NT

2013

Apache Energy/Inpex Alpha

2012

na

na

Crux liquids project

Nexus Energy/Osaka gas

2013

38 kbpd condensate

US$650m (A$739m) $8b (includes production wells, LNG plant and 380km pipeline) US$805m ($915m) US$300m ($341m) $7.7b (includes production wells, 1 LNG train and 435 km pipeline) US$110m (A$125m)

Curtis LNG project

BG Group

Gladstone, Qld

New project, awaiting govt approval

2014

7.4Mt LNG (12Mt ultimately)

3600

820

Fisherman's Landing LNG project (train 1) Fisherman's Landing LNG project (train 2)

LNG Ltd/Golar/Arrow Energy LNG Ltd/Golar/Arrow Energy

Gladstone, Qld Gladstone, Qld

New project, environmental approval received Expansion, feasibility study under way

late 2012 na

1.5 Mt LNG 1.5 Mt LNG

Gladstone LNG project

Santos/Petronas

Gladstone, Qld

New project, EIS under way

2014

3.5 Mt LNG (initially) 10 Mt (ultimately)

1900

1900

Halyard

Apache Energy / Santos

120 km N of Onslow, WA

New project, FEED studies under way

2011

26 PJ pa

Page 38

Ichthys gasfield (incl Darwin LNG plant) Kipper gas project (stage 2) Macedon Monash Energy project Pluto (train 2 and 3) Prelude (floating LNG) Puffin oil field Scarborough Gas

Inpex Holdings / Total Esso/BHP Billiton/Santos BHP Billiton/Apache Energy Anglo American/Shell Woodside Energy Shell AED Oil / Sinopec ExxonMobil / BHP Billiton

Browse Basin (440 km N of Broome), WA 42 km offshore Gippsland, Vic 100 km W of Onslow, WA Latrobe Valley, Vic Carnarvon Basin/ Burrup Peninsula, WA 450 km N of Broome, WA 700 km W of Darwin, NT 280 km NW of Onslow, WA Gladstone, Qld Timor Sea, 500 km NW of Darwin, NT 600 km W of Darwin, NT Timor Sea, 275 km NW of Darwin, NT Timor Sea, 275 km NW of Darwin, NT Bass St, Vic 145 km NW of Dampier, Carnarvon Basin, WA

New project, FEED studies under way Expansion, feasibility study under way New project, FEED studies under way New project, on hold Expansion, FEED studies under way New project, FEED studies under way Expansion, feasibility study under way New project, prefeasibility study under way New project, feasibility study under way New project, prefeasibility study under way New project, feasibility study under way New project, prefeasibility study under way New project, prefeasibility study under way New project, FEED studies under way New project, FEED studies under way

2016 2015 2013 na na 2016 2012 na

8 Mt LNG, 100 kbpd condensates, 1.6 Mtpa LPG (initally) 27 PJ pa 77 PJ pa gas 6070 kbpd liquid fuels 2 x 4.3 Mt LNG 3.5 Mt LNG 10 kbpd 6 Mt LNG

US$20b (A$22.7b) na na na na na US$323m (A$367m) na

2000

300

Shell Australia LNG

Shell Woodside Energy/ ConocoPhillips/Shell/ Osaka Gas AED Oil / Sinopec Methanol Australia/Air Products and Chemicals Methanol Australia 3D Oil Chevron/Apache/KUFPEK/ Tokyo Electric

2014

16 Mt of LNG

na

400

50

Sunrise Gas project

na

5.3 Mt LNG

na

1000

100

Talbot oil field Tassie Shoal methanol project Timor Sea LNG project West Seahorse Wheatstone LNG

2012 Phase 1: na Phase 2: na na 2012 2016

1020 kbpd Phase 1: 1.75 Mt; Phase 2: 1.75 Mt methanol 3 Mt LNG na 8.6 Mt LNG (initially) 25Mt LNG (ultimately)

na

na US$2.1b ($2.4b) US$80m (A$91m) US$17.8b (A$20.2b)

Page 39