Boom caught short by skilled labour shortage
Federal Resources and Energy Minister Martin
Ferguson addressing the 2008 APPEA conference.
Image by Ray Cash

A shortage of skilled labour is seriously undermining Australia's oil and gas boom, with the potential to jeopardise $100 billion worth of projects about to get underway over the next five to ten years.

But science and technology - and the training of more science-based workers - have the potential to turn that around, speakers told the Australian Petroleum Production and Exploration Association's annual conference in Perth last week.

Speaker Jim Willets of Woodside Energy revealed that the next 10 years would see a flurry of activity in Australia, with 25 substantial projects in the pipeline amounting to a combined value of more than $100 billion.

But he warned that sharply escalating costs and skills shortages in all parts of the industry posed a threat to the delivery of these projects.

The lack of trained professionals presented the upstream petroleum industry with one of its toughest challenges, Dalton Boutte, Executive Vice President of global energy company Schlumberger, told the APPEA conference.

Most in demand were professionals with science backgrounds, especially engineers, geologists and geophysicists, but drilling and process workers were also in short supply, along with tradesmen.

Despite the labour shortages, sustained higher oil prices and new geoscience technology developments were making complex exploration highly attractive, according to Mr Boutte.

Federal Resources and Energy Minister Martin Ferguson told the conference that Australia was one of the world's energy superpowers.

"Almost 20 per cent of our total exports are energy resources - and that is growing," he said.

He said the demand for energy, especially from our rapidly growing neighbours in Asia, would need to be balanced with environmental concerns.

But the government was committed to unlocking the wealth of Australia's vast resource potential, particularly our natural gas, as well as finding new frontiers in petroleum exploration, he said.

Of Australia’s 50 sedimentary basins, only 12 are currently producing any oil and gas, and only four have been ruled out as not having any petroleum potential, according to Geoscience Australia.

That leaves 36 basins that are unexplored or under-explored and could hold substantial oil and gas reserves.

Geoscience Australia is undertaking extensive geochemical and seismic surveying work in many of these frontier basins in order to attract explorers, work which Minister Ferguson said was very important.

"It is a real challenge to find the next Bass Strait - or anything like it," he said.

"While we are oil challenged, Australia is a world-class gas province.

"We have been finding gas faster than we produce it for a quarter of a century and we have well over 110 years worth of remaining resources at today's production rates."

Like many speakers at the conference, he stressed that training enough people to work in the oil and gas sector was crucial. He called on companies to include indigenous Australians in workforce training as a way of meeting the challenge.

"The labour force challenge is a great opportunity for us to advance the social and economic inclusion of Indigenous communities, many of which are located on the doorstep of the oil and gas industry," he said.

Another speaker, Ben Hollins from analyst consultancy Wood Mackenzie, said Australia could be another Qatar, which aggressively set out to become the world's largest supplier of liquified natural gas. But he said Australia was “underweight” as a producer of LNG compared to where it could be.

APPEA Chief Executive Belinda Robinson said while there were tough challenges - skilled labour, equipment shortages, land access amongst them - it would be extraordinarily defeatist to suggest that these were insurmountable.

"To throw in the towel and say 'it is all too hard' when the demand for LNG in the Pacific Basin has been estimated by Wood Mackenzie to grow by 83 percent by the end of the next decade would be to deny the determination of Australian governments to establish Australia as the world’s number three producer," she said.

The APPEA conference attracted more than 2,500 delegates to the Perth Convention and Exhibition Centre for the four day meeting from 6-9 April 2008.

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