Energy boom job bonanza

Keith Orchison

Barrow Island and Braemar are about as far apart as it is possible to get in Australia, but each is in the news this month as part of the energy jobs boom that can deliver a significant contribution to national economic recovery.

Barrow Island, off Western Australia, is to be the site of the much-publicised Gorgon liquefied natural gas project, which is claimed to be able to deliver up to 10,000 direct and indirect jobs during peak construction and 3500 full-time jobs when commissioned.

Braemar, built by Arrow Energy and ERM Power, is the site of Australia’s newest power station, a $546 million, 450 megawatt development near Dalby in Queensland. While its employment profile is at the other end of the scale – creating 400 jobs during peak construction — the Braemar development is the tip of a potentially huge infrastructure drive by the gas industry for a much bigger share of Australian electricity generation.

The new Energy Supply Association of Australia yearbook lists 15,000MW of gas-powered projects – using conventional natural gas or coal-seam gas – under construction, in advanced planning stages or under consideration for development across the country. The list includes 5500MW of gas-fired projects in NSW, 5150MW in Queensland, 2100MW in WA, 1950MW in Victoria, 420MW in South Australia, 270MW in Tasmania and 112MW in the Northern Territory.

Belinda Robinson, chief executive of the Australian Petroleum Production and Exploration Association, says projects such as Gorgon and other LNG plants on the drawing boards for WA, the Territory and Queensland (drawing feedstock from coal-seam gas), plus the large number of gas-fired power stations and the petroleum production and pipeline activities needed to support them, could create up to 55,000 jobs in Australia in 10 to 15 years. The grand total of this investment is up to $200 billion.

To these fossil-fuelled developments and jobs can be added a claimed 28,000 employment positions to be established as a result of the new renewable energy target the Rudd government and the Coalition combined to pass through the Senate this month.

Origin Energy chief executive Grant King estimates that 6000MW to 9000MW of renewable energy projects will need to be built to deliver the RET’s 2020 ambition of increasing Australia’s power supply from green energy to 20 per cent. Estimates of the capital outlay needed broadly agree that it will be $25bn to $30bn, to which will need to be added about $5bn in infrastructure contributions from augmenting Australia’s high-voltage transmission system to link remote renewable generators to the grid.

Some of the new gas-fired generation will be needed to support intermittent supply from wind farms, which are expected to gain the lion’s share of RET investment between now and 2017. It may not be plain sailing, however, for the gas and green-project developers in finding sufficient skilled workers to deliver all their proposed work. Consultant ACIL Tasman, in research undertaken for the petroleum industry, has pointed out that securing skilled labour, particularly for construction, is one of the key challenges for developers.

In building a complex project such as Gorgon, ACIL Tasman says, the engineering and construction processes involved will require a wide range of highly specialised skills that are in short supply and cannot be acquired rapidly through training.

“This is by no means a problem limited to Australia,” it says. “It is evident across the upstream oil and gas industry across the world.

“The specialist workers needed to build an LNG plant tend to be globally mobile, moving from project to project [and often between projects under construction], wherever their services command the highest price.”

ACIL Tasman’s warning can apply equally to power station development, including a large-scale roll-out of new renewable plants.

Skilled labour shortages contribute to upward pressure on construction costs, increasing the risk of capital outlay over-runs and increasing the risk that projects will be delayed. Big project developers also need also to be wary that engaging less experienced personnel could lead to higher error rates in construction and therefore to delivery delays and increased costs.

Chevron Australia – partner with Shell and ExxonMobil in the $50bn Gorgon development, which they say will result in $33bn in purchases of local services and goods – reinforces the consultant’s perspective. Industry and governments need to work together to address the employment issues, it says.

Governments, it says, should seek to play an important role in building skills capacity by investing in education and, in particular, strengthening the capabilities of the science, technology, engineering and mathematics disciplines at schools, TAFE colleges and universities while also increasing support for apprenticeships and traineeships.

Governments also need to get a handle on the multiple links in the energy supply chain.

In a submission to the Australian energy white paper being prepared by federal Resources and Energy Minister Martin Ferguson, the giant international company points out that a development such as Gorgon requires not only wells to be drilled and platforms and pipelines to be constructed but investment in liquefaction trains, specialised insulated ships to deliver the LNG, regasification at the destination and investment by the ultimate end-users, such as power station operators, petro-chemical plants and local gas distribution networks.

“The challenge of these investments is not just in the scale of the costs,” Chevron says.

“They require simultaneous capital investments by all the parties involved along the value chain.”