Old timers keep wheels of oil and gas sector greased

AS HE enters his mid-60s, no one, least of all employers, can admonish Rob Anderson for clocking off and hitting the golf course.

But instead of spending his days on the links, the oil and gas veteran of 40 years has opted to keep working full-time on an offshore project in Papua New Guinea.

Mr Anderson still gets several job offers a week, as employers fight to keep his generation in the industry, prolonging an almost inevitable generational gap in experienced, skilled workers.

The federal government says the oil and gas sector needs about 90,000 more workers in the next four years to build and maintain seven new 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 growing energy landscape.

To find these skilled workers, gas-producing countries are competing fiercely for scarce labour. Global recruiters and academics say they are increasingly looking at hiring people who are well into retirement age, and offering them incredible incentives to stay in the game.

The world's largest online energy jobs' board, OilCareers.com, says demand for geologists, engineers, project managers and senior designers is at a record high.

Australian universities and TAFEs produce about 9500 engineering graduates a year, compared with annual national demand of as many as 20,000 graduates a year, the report of the Senate inquiry into engineering skills shortages shows.

Australia must compete to retain these scarce graduates, with skills shortages being felt worldwide.

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

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

The head of the department of petroleum engineering at Curtin University in Western Australia, Professor Brian Evans, says he knows of people working in the industry who were more than 70, even though they could have retired more than comfortably at the age of 50.

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

Guest says employers are left with little choice other than to lure back retirees because of the scarcity of younger workers to replace those in their 60s and 70s.

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

Guest says hiring and training contracted in the late 1980s and early 1990s, when the price of oil fell to US$10 a barrel and made many projects unviable.

"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," he says.

Although Australia offers competitive salaries, the higher price 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 here, Evans says.

"The average 10-year qualified petroleum engineering person in Perth is on about $250,000," he says. "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 University's four-year petroleum engineering undergraduate degree in the two years since the program was created, Evans says, but the numbers are still relatively low.

About 25 students enrolled in 2010 and almost double that number this year, and demand for the programs' graduates is very high, he says.

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

"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."

Evans's graduate students start on about $80,000 a year.

Many would be earning $110,000 within six months and as much as $160,000 by their second year after graduation.

However, these graduates will need years of on-the-job experience with long-time industry professionals before they can begin filling the more senior roles.

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

Guest believes senior workers need to be brought in from overseas, especially to help train the next generation of graduates.

He admits this will not be music to the ears of the trade unions, which have already campaigned hard against foreign labour being used on resource projects.

"If you don't bring in these people now, it won't just be senior people you'll have to bring in, it will be graduates from other countries as well," Guest says.

The Senate inquiry's findings suggest employers agree with Guest, with employee-sponsored 457 visas for engineers more than doubling in seven years to almost 7000 in the 2010-11 financial year.

Anderson says he has watched as some of his counterparts retired but many of his age still work full-time.