Energy industry labours under 'big crew change'

Older workers are having to postpone retirement, reports Rania Spooner.

Older workers are having to postpone retirement, reports Rania Spooner.

AS HE pushes into his mid-60s, no one least of all employers could admonish Rob Anderson for some well-earned golfing or a caravan-mounted souvenir spoon collection. But instead of spending his days out on the links, the oil and gas veteran a fixture on the scene for 40 years opted to keep working full time on an offshore project in Papua New Guinea.

He still receives several job offers each week, as employers fight to keep his generation in the industry, prolonging an almost inevitable generational gap in experienced, skilled workers.

The Australian oil and gas sector needs about 90,000 additional workers over the next four years, according to the federal government.

The bolstered labour force would be needed to build and maintain seven big, additional liquefied natural gas projects worth more than $290 billion in Western Australia, Queensland and the Northern Territory.

And LNG is just one piece of the broader, growing Australian energy landscape.

To find those skilled workers, hungry gas-producing nations are competing fiercely for scarce labour and according to global recruiters and academics increasingly looking to people well into the usual retirement age, offering them big incentives to stay in the game.

In fact, demand for geologists, engineers, project managers and senior designers is at an all-time high, according to oilcareers.com, the largest online energy job board in the world.

Australian universities and TAFEs produce about 9500 engineering graduates each year, compared with annual national demand of as high as 20,000 a year, according to the results of a Senate inquiry into engineering skills shortages released last Thursday.

And Australia must compete globally to retain these scarce graduates, with skills shortages being felt world-wide.

Oilcareers.com figures show vacancies for engineers have increased by 71 per cent globally in the past year, while oil and gas job advertisements on the Australian oilcareers.com site increased by a staggering 94 per cent.

"The demand that is there for oil and gas production globally outstrips the skills and it's as simple as that," oilcareers.com managing director Mark Guest said.

"The skills are retiring out of the industry and the only way you can stop them retiring is to increase their incentives to stay, which is usually financial, which pushes the whole cost base of the industry up."

Curtin University department of petroleum engineering head Brian Evans said he knew of people still working in the industry past the age of 70, even though they could have retired more than comfortably at

50.

"I see many of the people who would normally retire take their superannuation and become consultants back in the industry," Professor Evans said. "Not every day of the week, though, they're keeping one or two days open for their golf."

Mr Guest said employers were left with little choice other than to lure back retirees because of the scarcity of the next generation of workers, who should be there to replace the skilled seniors now reaching their 60s and 70s.

It's a global phenomenon known as "the big crew change" and although it has been a concern for the oil and gas industry for more than 10 years, the effects of this generational gap are expected to be fully felt in the next five years as Mr Anderson's generation goes into permanent retirement.

Mr Guest said hiring and training contractions had come in the late 1980s and early '90s, when the price of oil dropped to $US10 ($A9.70) a barrel and made many projects unviable.

"In most cases, it was costing more than $US10 to just take it out of the ground," he said. "If you're in that situation, you're not going to invest in new installations or in production, and if the industry isn't producing, skills aren't required so people didn't enter the industry, they went into other careers and that's why you've got this big flat spot the big crew change. There's nobody there."

Although Australia offers competitive salaries, the higher cost of living in Perth, for example, compared with Canada, the US and parts of Europe can work against employers seeking to lure or retain workers in Australia, Professor Evans said.

"The average 10-year-qualified petroleum engineering person in Perth is on about $250,000," he said. "And that's the average, that's nothing fancy I know some of them are up around $300,000. But they're not that impressed because it costs so much more to live in Perth than it does in the US."

There has been a 50 per cent increase in the uptake for Curtin's four-year petroleum engineering undergraduate program in the two years since the program was created, according to Professor Evans, but the numbers are still relatively low.

About 25 students enrolled in 2010 nearly 50 in 2012 and the demand for all of them from oil and gas graduate programs remained high.

"All of my present fourth-year students have got jobs," Professor Evans said.

"All have job offers before even taking their final semester they're across the board with Chevron, Woodside, Halliburton and the service industry the whole range of the industry."

Professor Evans' graduate students tend to start on $80,000 but could be bumped up by $30,000 within six months and could look forward to a salary of $160,000 by their second year out of university.

But these graduates would need years of on-the-job experience working with seasoned industry professionals before they could start to fill senior roles.

It is these seasoned industry professionals who are now considering retirement.

Mr Guest believes senior workers need to be imported. These workers would help train up the next generation of skilled Australian graduates.

He admits this would not be music to the ears of Western Australia's unions, which have already campaigned hard against foreign labour on resource projects.

"But if you don't bring these people in now, it won't just be senior people you'll have to bring in, it will be graduates from other countries as well," he said.

"And I think that's where your unions will be challenging it a bit more than they are now.

"If you don't have the local talent, then it's inevitable, because other countries are developing these people."

The Senate inquiry's findings suggest employers are of the same view as Mr Guest, with employee-sponsored 457 visas for engineers more than doubling in seven years to nearly 7000 in the 2010-11 financial year.

Mr Anderson said he had watched some of his counterparts retire, but many his age still worked full time.

"I've thought about it but I don't think there are many people who have gotten so much enjoyment out of their work for 40 odd years," he said.

"If companies took a long-term view, they could have been training them and keeping them multiskilled and then they are more useful when the upturn comes, because the upturn will always come."

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