Construction Skills Queensland CSG/LNG Industry. construction. developed in collaboration with

Transcription

1 Construction Skills Queensland CSG/LNG Industry construction WORKFORCE PLAN developed in collaboration with

2 Disclaimer: Whilst all care and diligence has been exercised in the preparation of this report, Construction Skills Queensland and/or Energy Skills Queensland does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as result of reliance on this information, whether or not there has been any error, omission or negligence on the part of Construction Skills Queensland, Energy Skills Queensland or their respective employees. A number of unforeseen variables can affect any projections used in the analysis, and as such, no warranty is given that a particular set of results will be achieved.

3 Acknowledgements The construction of the Queensland CSG to LNG industry is at a critical stage with many pivotal decisions yet to be finalised. Construction Skills Queensland and Energy Skills Queensland would like to acknowledge the generous support and contribution, despite very high workloads and tight deadlines, of staff from the following organisations and companies: ABB Australia ABIgroup Arrow Energy Astra Group Services Australian Construction Training Services (ACTS) Australian Manufacturing Workers Union (AMWU) Australian National Engineering Taskforce (ANET) Association of Professional Engineers, Scientists & Managers, Australia (APESMA) Australian Pipeline Industry Association (APIA) Baulderstone Bechtel Careers Australia Institute of Training (CAIT) Central Queensland Institute of TAFE (CQIT) Civil Train Construction Forestry, Mining and Energy Union (CFMEU) Construction Skills Training Centre (CSTC) Federal Department of Employment, Education and Workplace Relations (DEEWR) Ensign International Fluor Gladstone Engineering Alliance Inc (GEA) Gladstone Industry Leadership Group (GILG) Gold Coast Institute of TAFE (GCIT) John Holland Group Joint Industry Fire Protection (JIFP) Leighton Contractors MTA Institute of Technology (MIT) Origin Energy Partec Petroleum Human Resources Council of Canada Plastics Industry Pipe Association of Australia Limited (PIPA) QGC QR National Queensland Government Departments of: Education and Training (DET) Employment, Economic Development and Innovation (DEEDI) Infrastructure and Planning (DIP) Queensland Major Contractors Association (QMCA) Queensland Minerals and Energy Academy (QMEA) Queensland Resources Council (QRC) Santos Skills360 SkillsTech Australia Southern Queensland Institute of TAFE (SQIT) Stowe Sunshine Coast Institute of TAFE (SCIT) University of Queensland (UQ) Vertical Horizonz Group Wide Bay Institute of TAFE (WBIT) Work Skills Worley Parsons XLT Industrial Training 3

4 Executive Summary An Emerging Industry Increasing world demand for energy has intensified exploration for traditional energy reserves, along with development of alternative sources such as Coal Seam Gas (CSG) and Liquefied Natural Gas (LNG). With Australian CSG reserves ranked amongst the best in the world, Queensland is leading the development of conversion from CSG to LNG. The key market for this growth will be Asia, where by 2030 energy demand is expected to reach approximately 42% of forecast world marketed energy consumption. It is within this context that the Queensland CSG to LNG industry is embarking upon its construction phase. Whilst preliminary works have begun, imminent Final Investment Decisions (FID) by major proponent companies will herald the beginning of major construction packages. These packages are forecast to commence before the end of this year (2010), with the building of an initial four LNG trains over the ensuing four years. To meet projected 2014 commissioning and production schedules these trains will require upstream infrastructure to provide sufficient gas. This study has been conducted during a period in which the CSG to LNG proponents are yet to make FIDs. The confirmation of FIDs will signal the commencement of the significant project components such as construction of the LNG facilities. At present, FIDs are expected by the end of 2010, with construction assumed to commence in Phases of Construction The research divided the construction activities into two main aspects; 1. Upstream: CSG field facilities (exclusive of drilling), and; 2. Downstream: LNG processing facilities (exclusive of shipping and port facilities). Construction will proceed in packages, thus this research has divided labour demand into the general areas of construction work aligned to major CSG to LNG subcomponents. Consequently, the skill requirements for each component were mapped separately, and labour requirements were compiled to develop best estimates of on-the-ground skill demand. Labour Demand Analysis Labour demand analysis (predominantly trade) estimates approximately 6,700 workers required to construct the initial four (4) LNG trains and associated upstream and downstream facilities. This estimate does not include management and supervision. Assuming a 1:10 supervisor to worker ratio, and an estimate of project team personnel these initial CSG to LNG construction activities are forecast to require approximately 9,000 workers. Details of occupations are outlined below: Table 20: Labour Demand Summary Occupation Labour Demand Qualification Level Tradesworkers 3,610 Boilermaker 260 Certificate III Engineering (Fabrication) Butt Fusion welding 200 PMBWELD301B Carpenters 250 Certificate III Carpentry Concreter/Concrete Finisher 125 Trade experience Derrickman 80 Certificate III Drilling Driller/Asst Driller 80 Certificate IV Drilling Electrician 435 Certificate IV Electrotechnology Instrumentation & Control 65 Certificate III Instrumentation & Control Tradesman Insulators (inc. cryogenic) 215 Trade experience Floorman/Lead Floorman 240 Certificate II Drilling Leading Hand Lineworker 10 Cert III in ESI - Distribution Lineworker (Tradespersons) 120 Cert III in ESI - Distribution Mechanic 80 Certificate IV Mechanical Mechanical Fitter 110 Certificate III Engineering (Mechanical) Painter 65 Certificate II Building & Construction (Painting & Decorating) 4

5 Pipefitter 340 Certificate III Pipefitting Rig manager/ Tool Pusher 10 Diploma of Drilling Sheet Metal Worker 100 Certificate III Engineering (Fabrication) Steel Fixer 195 Trade experience Welder 80 Certificate III Welding Welder (Electrofusion) 100 PMBWELD302B Welder (Special Class) 450 AS1796 Certification Trades & Construction Support 1,380 Workers Electrical Trade Assistant 125 Certificate I Electrotechnology Leasehand 80 Statement of Attainment (Drilling) Labourer 510 Trade experience Pipe layer/rigger/scaffolder 540 Trade experience Trades Assistant (Power Workers) 125 Trade Experience, OH&S / Regulations Operators 810 Plant, Equip & Machine Operator 570 Ticketed operator Mobile Crane Operator 160 Ticketed operator Truck Driver 80 Operator licences Pipeline Workers 960 (Inclusive of trades/operators/drivers/ welders/general labour) Compression Station 2 TBC SUB TOTAL WORKERS 6,760 Management 1 1,780 Project Manager (inc. above) Diploma of Project Management Safety Advisor (inc. above) Certificate IV OH&S Site Supervisors (inc. above) Cert IV in Front Line Management Supervisors (1:10 Supervisor to 680 Worker Ratio) SUB TOTAL MANAGEMENT & 2,460 SUPERVISION TOTAL 9,220 Note: 1 Preliminary estimate. 2 To be confirmed. Competition for skilled construction labour is expected to be intense. Overall, this review found Federal and State Governments have budgeted in excess of $500 billion over the next 5 to 10 years, with the private Minerals and Energy sectors reporting infrastructure investment commitments likely to exceed $400 billion. These projects will all be competing for similar labour skills. With such unprecedented capital expenditure, the Australian skilled labour market can be anticipated to tighten significantly, with increased competition for skilled workers. Labour Supply Labour supply for the CSG to LNG industry has been difficult to quantify. The industry is emerging and detailed Australian historical data on workers employed in CSG to LNG construction activities is not available. Figures for employment by industry and occupation were sourced from the Australian Bureau of Statistics, providing an indication of the relative sizes of the various skilled labour pools that are of interest to the CSG to LNG construction phase. The likely availability of workers was also analysed through a review of skills vacancy (SVI) and unemployment. It should be noted that the inferences drawn from these labour supply data provide an indication only of relative supply levels. However, it is possible to clearly identify the size of the current Queensland skilled labour market for the skills in question, as well as the current trends regarding employment and vacancy levels. Combined with the detailed demand analysis above, it is possible to infer what skills areas will be of most critical significance and what skills should be targeted as priority investment areas. With respect to the existing workforce, it is specifically the Heavy & Civil Engineering Construction subsector that provides the largest potential for immediate employability in construction of the CSG to LNG industry. Industry stakeholders have indicated previous 5

6 difficulties in transitioning general construction workers into the field of Heavy & Civil Engineering Construction. Consequently, workers in the Heavy & Civil Engineering Construction sector have been identified as best equipped for immediate transition to CSG to LNG construction roles. While the recent conditions following the Global Financial Crisis have softened labour markets overall, there is a concern that any surplus available skilled labour generated by a short term rise in unemployment would quickly be outpaced by the size of investment that the CSG to LNG industry represents. Current unemployment and skilled vacancy levels in the industry are not far from their longer term averages, which have been characterised by a tightness of the labour market and consequent skills shortages. The scale of the proposed construction works could therefore easily lead to a tightening of regional skilled labour markets. Workforce Diversity There is also a significant opportunity to engage key target groups into training in for employment in the CSG to LNG industry. As the availability of skilled labour tightens, workforce diversity will be a key means by which to boost the supply of productive skilled labour. Engaging women and Indigenous persons throughout the duration of the construction phase is an effective way to engage underutilised labour supply. Similarly, there is a tremendous opportunity to increase the supply of skilled labour to Queensland through the employment of apprentices and trainees. In direct response to economic downturn, the 2008/2009 financial year saw a major contraction of 31% in the numbers of commencements in the electrotechnology trades and a considerable 39% drop in the numbers of new construction apprentices and trainees compared with the previous financial year. However, this steep decline in overall construction and electrotechnology commencements began to reverse in 2009/10 with a modest but significant increase in construction apprentices and trainees of 10% compared with the previous year. The 2010/11 commencements to date are even more encouraging with significant increases in commencements of both construction and eletrotechnology apprentices and trainees compared with the same period last financial year. This is a clear indication that the trend in new commencements is now moving in a positive direction for the sector. There is a significant opportunity, by engaging apprentices and trainees in the construction phase of CSG to LNG, to support the recovery of commencement rates for this vital industry skills pathway. By leveraging the unprecedented levels of investment represented by the CSG to LNG industry, future supply of skilled construction professionals will be ensured. Downstream Priority Skill Areas The following list represents those occupations that present critical skill needs during the peak labour demand period of downstream construction. Those marked with a *indicate potentially high skill needs throughout the entire construction period. Boilermaker Carpenter Concrete Finisher Electrical Trade Assistant Electrician I&C Tradesman * Insulator* Mobile Crane Operator Painter Pipefitter* Rigger* Scaffolder Sheet Metal Worker* Special Class Welder Steel Fixer* Upstream Priority Skill Areas Upstream subcomponent constructors indicated that skills shortages were likely to occur in the following occupations: Welders (including electrofusion) Mechanical and electrical trades workers Diesel mechanics Mechanical fitters Pipe fitters Specialist machinery operators (side boom and trenching machine) Specialist project personnel (supervisor, safety and environment specialists) However, as many constructors were still tendering for work packages, participants in the study felt that they would be better placed to review their workforce requirements once they had secured contracts. 1 Source: Data supplied from Queensland Department of Education and Training database, October Data subject to change due to lags in reporting commencements, completions and cancellations. Total based on the Department of Education and Training Industry Training Groups. 6

7 Recommendations The recommendations and actions emerging from this research will require continued monitoring and updating, as the CSG to LNG industry and its construction are refined. These refinements will continue to influence the skills requirements of the construction workforce. Recommendation 1: Produce Workforce Impact Statements Recommendation 2: Support Skill Development Recommendation 3: Enhance Apprenticeship Training & Development Recommendation 4: Enhance Industry Workforce Planning Alignment Recommendation 5: Maximise Future Workforce Planning Research Recommendation 6: Promote Recruitment and Retention Best Practice Recommendation 7: Establish Industry Entry Pathways for Under-represented Groups Recommendation 8: Global Business Global Impacts Recommendation 9: Continue To Develop A Truly Demand Driven Training System Recommendation 10: Up-skill the Existing Workforce 7

8 Labour Demand Analysis The demand for quality skilled craft [trade] professionals is critical. While we have made significant workforce development progress in the last 20 years, we must elevate our commitment, enlisting new and innovative approaches. Einstein defined insanity as doing the same thing over and over again and expecting different results. The wait and see strategy must stop; instead, we must unite and work aggressively to improve our image and address our workforce crisis. Investing in the development of our workforce is no longer a luxury. It is an urgent, critical need that we can only solve with immediate action and industry-wide cooperation (Whyte D Green S 2005) Increasing world demand for energy has intensified exploration for traditional energy reserves, along with development of alternative sources such as Coal Seam Gas (CSG) and Liquefied Natural Gas (LNG). Interest in the sector has been renewed with the increased demand for cleaner energy sources, strategic diversification activities by businesses, and improvements to the CSG to LNG conversion technology (Lees R 2009). With Australian CSG reserves ranked amongst the best in the world, Queensland is leading the development of conversion from CSG to LNG. Liquefied Natural Gas production in Australia is set to rival that of major international producers. Combined with export volumes from the West Coast, Australia will emerge as one of the largest worldwide exporters of LNG second only to Qatar (Chevron 2010). The key market for this growth will be Asia, where by 2030 energy demand is expected to reach quadrillion Btu, approximately 42% of forecast world marketed energy consumption, and representing significant growth from the estimated 2010 consumption for Asia (156 quadrillion Btu) (Energy Information Administration 2009). By comparison, domestic energy consumption in Australia is expected to increase from 1,000 PJ to 2,500 PJ (2.3 trillion Btu), over this same period. Forecasts indicate a further 6,000 PJ (5.7 trillion) Btu, would be exported. It is within this context that the Queensland CSG to LNG industry is embarking upon its construction phase. Whilst preliminary works have begun, imminent Final Investment Decisions (FID) by major proponent companies will herald the beginning of major construction packages. These packages are forecast to commence early (2011), with the building of an initial four (4) LNG trains over the ensuing four (4) years. To meet projected 2014 commissioning and production schedules these trains will require upstream infrastructure to provide sufficient gas. The four main proponents currently plan for as many as 16 trains in total over the subsequent year period. Table 1: Summary of CSG LNG Projects in Queensland FID Due Total LNG Trains Final LNG Export Capacity (Mtpa) Stage 1 Export Capacity (Mtpa) Initial Project Value First LNG Exports Construction Workforce Origin (APLNG) ~$8.0 b ,000 : 5,000 QGC/BG (QCLNG) $8.0 b ,000 : 5,000 Santos (GLNG) $8.0 b ,000 : 4,000 LNG Ltd (Fisherman s Landing) $1.3 b 2012 ~1,300 Shell (Shell Australia LNG) 2 ~ ~$8.0 b 2014/15 2,500 : 3,000 TOTAL ,800 : 18,300 Note: 1 Heads of Agreement deadline has passed. Arrow had been expected to supply CSG to LNG Limited s LNG processing facilities at Fisherman s Landing. LNG Limited has stated it is seeking alternative CSG supply (LNG Limited 2010). 2 Demerger from Arrow possible late

9 Commercial-in-Confidence Note: 1 Heads of Agreement deadline has passed. Arrow had been expected to supply CSG to LNG Limited s LNG processing facilities at Fisherman s Landing. LNG Limited has stated it is seeking alternative CSG supply (LNG Limited 2010). 2 Demerger from Arrow possible late Workforce Planning Context This research represents the collaborative response by the construction and energy industriesto initiate a workforce Workforce development framework. Planning This framework Context will support the anticipated construction skill demands required to deliver the infrastructure underpin ning the CSG to LNG This research represents the collaborative response This study has been conducted during a period industry. This research examines the challenges faced by the CSG to G LN and construction industries by the construction and energy industries to initiate in which the CSG to LNG proponents are yet to in addressing potential a workforce skills development shortage framework. threats. This framework It provides recommendations make FIDs. Delaying on planning strategic activities workforce until such management to manage will support labour the anticipated risks facing construction the skill emerging demands industry. decisions are finalised would result in increased The objectives of the research, within the construction contex t, were to: 1. determine threats. the It provides expected recommendations demand on for strategic construction the skills resultant required ambiguity that over one surrounds (1) such to six change. (6) years; workforce management to manage labour risks facing The confirmation of FIDs will signal the commencement the emerging industry. of the significant project components such as 2. identify the current workforce and labour market construction profile; of the LNG facilities. At time of writing, 3. determine The objectives workforce of the research, numbers within in the the construction respective FIDs skills are expected areas by which the end will of 2010, be with required construction to context, were to: assumed to commence in The current project deliver industry outcomes; 1. determine the expected demand for construction schedule is illustrated below: 4. identify skilling skills required opportunities over one (1) to to six (6) address years; identified skills gaps; and, 5. evaluate 2. identify the the current capacity workforce and of labour the training sector to respond to the identified training market profile; needs. This study has been conducted during a period in which the CSG to LNG proponents are yet to make industry outcomes; FIDs. Delaying planning activities until such decisions are finalised would result in increased 4. identify skilling opportunities to address identified workforce development skills gaps; risk, and, given the response and development times necessary to advance human capital. 5. Thus, evaluate this the research current capacity ha s been of the training conducted sector within a continuously changing business to respond to the identified training needs. environment, and the resultant ambiguity that surrounds such change. The confirmation of FIDs will signal the commencement of the significant project components such as construction of the LNG facilities. At present, FIDs are expected by the end of 2010, with construction assumed to commence in The current project schedule is illustrated below: Figure 1: CSG to LNG Project Construction Schedule, as at June 2010 Figure 1: CSG to LNG Project Construction Schedule, as at June BG/Q GC, QCLNG Origin, APLNG Santos, GLNG Shell, SALNG LNG Ltd Fishermans L. required to deliver the infrastructure underpinning the CSG to LNG industry. This research examines the challenges faced by the CSG to LNG and construction industries in addressing potential skills shortage 3. determine workforce numbers in the respective skills areas which will be required to deliver T1. T1. T2. T3. 1,500 wells 4,500 wells, and beyond T1. T2. T3. T4. T2. 10,000 wells (300 to 500 wells per year over 30 year life of project) T2. T3. 8,000 wells (~300 wells per year over life of project) T1. T2, 3 & wells 800 wells, and beyond Note: Pipeline construction will likely parallel train construction, taking approximately 18 to 24 months. T1. workforce development risk, given the response and development times necessary to advance human capital. Thus, this research has been conducted within a continuously changing business environment, and 1,500 wells over life of project 9

10 Recognition, that the delivery of the CSG to LNG project components will require the integration of efforts from, and across, all tiers of contracting, is imperative. The construction work packages will be undertaken within a three-tiered contracting structure: top-tier, mid-tier and smaller contractors. At present, with high-level managing contractor relationships being established, many of the lower-tier contractors are yet to be identified and engaged. Figure 2: Construction and Production Workforce Profiles and the Influence on Total Employment ~16,000 Total Employment 2nd Phase Construction The development of these relationships and choice of preferred contractor will influence the skills demanded. Consequently, emerging details from increased understanding of the industry s construction requirements, and hence workforce needs, will necessitate future amendments to this report. Additionally, different skills will be required for the different components. This has the effect of complicating construction skill demand estimates. Not only will there be a number of contractors, but the technologies and construction methodologies have yet to be determined. These technologies and estimates affect the skill mix required, and will influence available construction workforce numbers. In turn, this will affect the workforce development strategies and recommendations. Adding to the complexity of quantifying labour demand is the overlap of the construction, upstream operations, and CSG/LNG production activities. Because these activities will overlap, so too will the demand for skills. These labour demand frameworks are illustrated in Figure 2. Construction Upstream Production 2014 Source: Energy Skills Queensland Construction Schedule This overlap of construction/production phases serves to highlight the importance of programming and scheduling of project delivery timetables and activities. Clearly, some skills shortages could be addressed through effective communication forums and networks to allow co-ordination and sharing of labour workforces. 10

11 Developing a Research Framework This workforce planning research framework, along with selected aspects of earlier ESQ research into the production workforce requirements, were used to direct information gathering and underpin the initial stage of workforce planning However, the diversity of proponents, construction contractors (including their size and experience), the number of packages, associated construction activities and construction methodologies, required the development of a suitable methodology with which to examine these objectives. Related Research Activities A range of activities underpinned the design of the workforce development research framework used in this study, including the following: Definition of the scope of construction activities Development of a succinct framework that accurately reflects CSG to LNG process and a common understanding of the nature of the Industry Identification of planning phases and business activities (segmentation) Business analysis of realistic industry metrics/ drivers (for example; CSG production rates, number of wells, number of trains). Analysis of the current workforce profile Labour market analysis (employment trends inclusive of competitor analysis for workforce supply in regional Queensland) Demand and supply analysis Skills Needs analysis (workforce numbers and skills) Identification of critical workforce issues Identification of critical job roles with a focus on the front line construction activities Identification of priority skills (up-skilling and new skills) Assessment of Queensland s capacity to meet training demand The fundamental difference between the previous research for the production phase of the CSG to LNG sector and the present research is the aggregation of sub-components, and complexity of factors influencing the projects. All have both independent and interdependent dynamics. A schematic of workforce planning and development process used in this research is illustrated in Figure 3. The research divided the construction activities into two main aspects; 1. Upstream: CSG field facilities (exclusive of drilling), and; 2. Downstream: LNG processing facilities (exclusive of shipping and port facilities). The model evolved as it became clear that construction contractors were yet to be engaged, and such decisions would not be taken for some time. Construction will proceed in packages, thus this research has divided labour demand into the general areas of construction work aligned to major CSG to LNG subcomponents. The model was designed to provide a generic framework from which CSG to LNG workforce could be determined for each of the components, and to extrapolate requirements as construction proceeds. Consequently, the skill requirements for each component were mapped separately, and labour requirements were compiled to develop best estimates of on-the-ground skill demand. 11

12 Figure 3: Approach to the Workforce Planning and Development Process for the CSG to LNG Industry CSG to LNG Process Definition LNG Processing Facilities Pipelines Component Labour Demand by/skills /training /qualification Management & Supervision Skills Gaps SKILLS IDENTIFICATION Identity Critical Skills ACTIONS Critical Workplace Issues Water Management Labour Supply by Occupation & Training Outcome CSG Extraction Gathering Systems Compression Stations Industry Context Scenario Development External Drivers/Market Power & Communications Economic Context Upstream CSG Fields & Transmission Water Management Power & Communications CSG Extraction (Drilling/Wellheads) Compression Stations and Dehydration Plant (Field and Central) Pipelines o Field Gas Gathering & Water Distribution Systems o Field to LNG Plant Transmission Downstream LNG Processing Facilities LNG Processing Plant Enabling Works (Materials Offloading Facilities, Site Civils, etc) LNG Processing Plant (Trains & Tanks) Cryogenic Pipeline & Jetty Management & Supervision Field Supervision Project Management Project Support Roles Quality Assurance/Safety Environment Community Liaison Indigenous Heritage Trainer/Assessors A general overview of the major components from the gas field in the Surat basin to export shipping from Gladstone is presented in Figure 4. 12

13 Figure 4: Overview of Key CSG to LNG Process Components Commercial-in-Confidence Figure B: Overview of Key CSG to LNG Process Component SURAT BASIN Field Compression Stations Reverse Osmosis Plant GLADSTONE Drilling Well head Plantations Water Treatment & Collection Ponds Roadways LNG shipping Gathering Pipelines Gas Treatment, Dehydration and Compression Plants Transmission Pipeline LNG plant Well Labour Demand To understand the scope and nature of skilled labour demand in the emerging CSG/ LNG industry, it is necessary to analyse the unique skills requirements for each phase of construction identified above. Any such analysis is predicated on a series of assumptions, which have been outlined below to inform the use of these labour demand estimates. Specific labour demand analysis has been provided for each step of the process, with a final analysis provided at the whole-of-workforce level. 13

14 Water Management To understand the scope and nature of skilled labour demand in the emerging CSG/LNG industry, it is necessary to analyse the unique skills requirements for each phase of construction identified above. Any such analysis is predicated on a series of assumptions, which have been outlined below to inform the use of these labour demand estimates. Specific labour demand analysis has been provided for each step of the process, with a final analysis provided at the wholeof-workforce level. Water Management Process Coal seam (CS) water extracted from the wells is separated from the CSG at the wellhead and transferred for treatment and storage through a water gathering system. Water storage and processing in the CSG fields will occur at both the field compression stations (FCS) and central processing plants (CPP). Each field compression station will require a storage pond of 200 to 300ML. Central processing plants require storage of 20-30ML. The peak yearly water flow could range between Glpa. This represents a challenge to the industry in addressing major water and brine management issues. In some cases, the CS water can be used with minimal treatment in agricultural activities such as plantation irrigation. Other CS water requires varying levels of treatment, with reverse osmosis and/or reinjection currently under serious consideration: A reverse osmosis plant would require three ponds for the different stages of treatment: 1) raw untreated water, 2) processed water, or brine, and 3) fresh processed water. Reinjection of the water would require none of the facilities for reverse osmosis. This process would see wells drilled to return the water to the earth. It would require water storage facilities and well drilling. Assumptions Assumptions for a four LNG train scenario: 1 RO plant /CCP (20ML/day), constructed per annum (4 in total) 1 x ML holding pond/fcs - 40 holding ponds constructed per annum Based on: o One pond = 1000ML or 1000M3 o 20ML per day membrane filtration Water Treatment Plant and include 50km of disposal pipeline Other assumptions include: Plants are usually supplied with significant skid mounted components; If assembled on site mechanical and electrical trades input will increase considerably; Trunk power services assumed available at site boundary; Does not allow for operation and maintenance staff; Training will include some specialist induction and plant ticketing; Length of disposal pipeline will affect civil engineering, supervision and trade staff requirements; Staff allowance do not allow for construction of gas handling assets or pipelines; and Storage lagoons for raw water from the CSG field are not allowed for above, as these usually exist and constructed by the CSG operator as a field start up activity. Water management labour demand is summarised below: Table 2: Water Management Labour Demand OCCUPATION LABOUR QUALIFICATION LEVEL Concreter 5 Certificate III Civil Construction Formworker /carpenter 5 Certificate III Carpentry Steelfixer 5 Certificate III Steel Fixing Pipe layer 5 Certificate III Civil Construction (Pipe Laying) Fitter 5 Certificate III Engineering (Fitting) Electrician 5 Certificate III Electrotechnology Trades assistant 5 Trade experience Machine Operators 30 Ticketed operator Labourer 60 Trade experience Total

15 A COMMENT ON WATER-USE OPTIONS AFTER EXTRACTION IN CSG FIELDS The Environmental Decision Making (EMDs) section within the Environmental Protection Regulation 2008 requires that any environmentally relevant activity would not be permitted to discharge untreated water to any waters which includes river, stream, lake, lagoon, pond, swamp, wetland, unconfined surface water, artificial watercourse, bed and bank of any watercourse, dams that are not fit for purpose, nontidal or tidal waters (including the sea), stormwater channel, stormwater drain, roadside gutter, stormwater run-off, and groundwater and any part-thereof. Although historically within Queensland, evaporation ponds have been permitted on certain resource extraction sites, this approach to treatment of waste effluent is no longer considered acceptable practice. Subject to water/effluent quality, the water may be re-injected into the geothermal process or may be reused for other applications subject to quality and any pre-treatment requirements. For more remote areas, the opportunities for reuse may be limited. Existing beneficial use approvals (BUAs) issued under Section 66 of the Environmental Protection (Waste Management) Regulation 2000 permit the use of wastes, and would apply to waste waters. A BUA may authorise the use of waste water/effluent subject to it meeting specific quality controls such as the water quality criteria prescribed below, and any other approval required under the EP Act, the Water Act 2000 and any other applicable legislation such as the Petroleum Act. Where the resource is used for more than one stated use, it must comply with all water quality criteria prescribed for those uses. Currently, there are several BUAs for associated waters, referring to underground water taken or interfered with, if the taking or interference happens during the course of, or results from, the carrying out of another authorised activity under a petroleum authority, such as a petroleum well, and includes waters also known as produced formation water. The term includes all contaminants suspended or dissolved within the water. Table 2: Water Management Labour Demand Stated Types of Water Uses Irrigation and general use (i.e. for domestic purposes) Livestock drinking water Aquaculture and human consumption of aquatic foods Water Quality Criteria Australian and New Zealand Guidelines for Fresh and Marine Water Quality (ANZECC and ARMCANZ 2000) Volume 1: Chapter 4.2 and Volume 3: Chapter 9.2. Australian and New Zealand Guidelines for Fresh and Marine Water Quality (ANZECC and ARMCANZ 2000) Volume 1: Chapter 4.3 and Volume 3: Chapter 9.3. Australian and New Zealand Guidelines for Fresh and Marine Water Quality (ANZECC and ARMCANZ 2000) Volume 1: Chapter 4.4 and Volume 3: Chapter 9.4. Drinking water Australian Drinking Water Guidelines (NHMRC and ARMCANZ 1996) Dust suppression Landscaping and re-vegetation Total dissolved solids <2000mg/L ph 6-9 Total dissolved solids <1000mg/L ph 6-9 Water must not contain any substances toxic to plant growth 15

16 Power & Communications Facilities Power & Communication Process The construction of both upstream and downstream components of the CSG to LNG production process will require power generation, distribution and communication networks. These systems will be required to operate and monitor CSG wells, compression stations, pipelines, LNG trains, and loading facilities. Power and communications systems labour demand forecasts are particularly influenced by the absence of clear work package scopes. Both areas offer a complex array of options that are still under evaluation. At present, predicting detailed labour demands is difficult while decisions are not defined. These decisions rely on the results of EPC evaluations. Technology decisions for power may involve the use of solar, electricity, or gas as the primary power source for various systems. For example, remote compressor stations may use electric or gas generated power whilst downstream plants may rely on grid electricity or power generated on site. There are a large number of possible combinations of system components, location, and power / communication options. These technical decisions will not only determine specific skills sets but also labour numbers. Further, power and communications systems will be necessary for worker camps and auxiliary facilities supporting construction. However, these labour demands have not been factored in this research. The construction of power and communications systems will require line workers, tradespersons and assistants, technicians, engineers, designers, administrators, and plant operators. The specific skills required will be dependent on the types of technology adopted for upstream and downstream processing and handling. Field workers with a combination of electrical and instrumentation skills, able to install and later monitor and maintain field stations, will be required. Assumptions Despite the above comments, estimates of peak labour demand, based on a 5-year construction period commencing in 2011, have been determined using a model based on construction of traditional power distribution facilities. These estimates have not taken into account the potential impact of: Natural impacts: weather, topography, equipment & material availability, load v supply availability; Resource impacts: staff recruitment and/or experienced staff availability; Accommodation impacts; and Variability in the lengths of power line required. These issues would influence the projected labour demand for power and communications workers. Hence, preliminary labour demand for the construction of power systems is summarised below: Table 4: Estimated Power Labour Demand OCCUPATION LABOUR QUALIFICATION LEVEL Project Manager 10 Diploma of Project Management Site Supervisors 10 Cert IV in Front Line Management Leading Hand Lineworker 10 Cert III in ESI - Distribution Tradespersons (Lineworker) 120 Cert III in ESI - Distribution Trades Assistant (Power 120 OH&S / Regulations Workers) Plant Operators 80 Prescribed occupations Cert III in ESI - Distribution Total 350 The technology options for use in communications systems present a more challenging framework for estimating labour demand, given the rapidly developing technologies available to this sector. These technologies can require completely different skills and workforce sizes. For the purposes of this research, numbers have been based on equivalence to power labour demand; that is 350 workers. Overall, the power and communications systems construction labour demand have been estimated to total 700. This estimate should be used with caution. Clearly, more detailed workforce planning will be required as this workforce is defined. 16

17 CSG Extraction (Drilling & Wellheads) CSG Extraction Process Unlike conventional gas operations, the CSG extraction process will require as much as a 10 to 20-fold increase in the number of wells drilled. Because of the larger number of wells, drilling becomes an integral and ongoing facet of the industry s development. Supporting infrastructure linked to CSG extraction will also continue for the life of the field. The wells will be drilled and well heads fitted. Subsequently, wells are inspected at 6-12 month intervals; that is, work over maintenance. Labour demand for drilling and work over maintenance is a component of the production phase. However, an understanding of the scope of drilling activities and installation of well facilities is critical in appreciating the consequent construction activities. This is an important factor in determining a CSG field s ongoing construction workforce and skill requirements. Drilling activities have two key implications for construction labour demand estimates. Firstly, the scale of drilling activities will directly influence subsequent construction of supporting facilities, therefore required labour force. Secondly, the expanding labour force required for drilling activities, whilst operational, will present a competing labour demand to construction. Previous CSG Extraction Labour Demand Estimates Energy Skills Queensland has previously estimated drilling requirements for the CSG to LNG industry. Drilling Estimates (2009) Priority job roles for professional and vocational technical skills in drilling have been previously analysed by ESQ in its report on the production activities of the CSG to LNG industry (Energy Skills Queensland 2009). The information outlined below is included for completeness, since drilling activities underpin upstream construction. Table 5: Drilling Labour Demand ESQ Workforce Planning Report 2009 Scenario A Scenario B Scenario C Drilling ,484 1, ,820 1,953 Source: (Energy Skills Queensland 2009) However, recent information released by the industry has further defined drilling activity estimates. These are summarised here: Table 6: Well Drilling Estimates by Project Project Estimated Total Wells Wells per annum Project Life (years) Shell (Surat Gas Project) ~10,000 n.a. n.a. Origin (APLNG) 10, QGC (QCLNG) 6, Santos (GLNG) 8, n.a. not available Notes: 1 1,200 wells to 2014~ assume 300 wells p.a. Source: (Arrow Energy 2008) (Origin Energy 2010) (Queensland Gas Corporation 2009) (Santos 2009) A review of the drilling labour demand figures in light of this information would now indicate that well numbers are more likely to reflect Scenario B of the earlier ESQ production report estimates. 17

18 Assumptions For the purposes of determining construction labour demand, the following assumptions have been made in regards to drilling activity base load, which is crucial platform for subsequent assumptions underpinning construction activities. The following parameters were adopted in line with producing sufficient CSG to fuel four LNG Trains: 2 wells drilled/week/rig will produce ~100 production wells completed per annum per rig Each rig requires 4 crews of 5-6 each, that is people Each LNG train requires 500 production wells to operate, that is 2,000 wells/4 trains (~200 PJ is required to produced 3.5 Mtpa) Based on this, CSG extraction labour demand is summarised below: Table 7: CSG Extraction Workforce and Qualifications ROLE Rig manager/ Tool Pusher LABOUR QUALIFICATIONS DEMAND 5 RIGS 10 Diploma of Drilling Driller/Asst Driller 80 Certificate IV Drilling Derrickman 80 Certificate III Drilling Lead Floorman 80 Certificate II Drilling Floorman 160 Certificate II Drilling Leasehand 80 Statement of Attainment (Drilling) Electrician 80 Certificate IV Electrotechnology Mechanic 80 Certificate IV Mechanical Welder 80 Certificate III Welding Truck Driver 80 Operator licences Field Superintendent 40 Advanced Diploma in Drilling Management Safety Advisor 40 Certificate IV OH&S Total

19 Gas Gathering (& Water Distribution) Systems Gas Gathering Process High Density Polyethylene (HDPE) piping is used extensively in gas infrastructure, both in Australia and around the world. It remains the material of choice for these systems due to its fitness for this purpose, competitive cost and inherent corrosion resistance. This material has been used in the construction of CSG gathering pipe networks in Australia, with over 1,000 km of HDPE pipeline having been installed over the last decade in CSG fields in Queensland. The networks gather CSG from wellheads and transfer it to field compressions stations, as well as transfer CS water to and from holding ponds and water treatment facilities. The forecast expansion of the CSG extraction network will require many new contractors and field teams to be engaged in HDPE pipe welding. Both the new contractors and their employees will have limited field experience in handling and welding of HDPE pipe material. Even for those experienced in working with HDPE pipe up-skilling will likely to be required, as increases in pipe dimensions will affect aspects such as handling and safety. Estimates of gas gathering systems required to support the industry are listed in 8: Table 8: Gas Gathering Systems by Project PROJECT Shell (Shell Australia LNG) Origin (APLNG) QGC (QCLNG) Santos (GLNG) GAS GATHERING SYSTEMS (KMS) 1 15,000 km 15,000 km 14,000 km 12,000 km Note: 1 gas and water gathering systems. Source: (Queensland Government 2010), (Queensland Gas Corporation 2009), (Santos 2009), (Arrow Energy 2008) It is estimated that the length of the pipeline network will exceed 50,000 km for the identified four projects, with one kilometre of pipeline having between 50 and 80 weld points. The welding of gathering pipelines and inclusion of additional connections to existing pipelines will be a feature of the CSG industry over the life of the industry, not simply during initial construction. There will be an on-going demand for these skills over the coming 25 years. Butt welding pipes and fittings is the most commonly required skill for this construction work. Additionally, electrofusion welds are required in particular circumstances and offer more challenges in both technique and application. Assumptions Assumptions for gas gathering systems (GGS), sufficient to service the wells and four LNG trains, are as follows: 100 well /CSG field arranged radially in an area of 10x10 kms 100 wells deliver to one FCS therefore 300 km of pipe/fcs All wellheads require water removal thus 300 km x2 for water equates to 600 km/fcs As described in the process assumptions this feeds 40 FCS ~24,000 km (over 4 years) ~ 6,000 km of GGS/year Industry advises that a standard crew of four people would comprise two (2) welders, one (1) trenching machine, and one (1) excavator operator. It is estimated that the daily output of a single crew would be five (5) to nine (9) welds (~ m) depending on the type of machinery used. Gas gathering systems construction labour demand is summarised in 8 below: Table 9: Gas Gathering Systems Labour Demand ROLE Butt Fusion welding Electrofusion welding Machine operators FOUR LNG QUALIFICATION TRAIN 200 PMBWELD301B 100 PMBWELD302B 300 TOTAL

20 Compression Stations Compression Station Process Gas compression stations are utilised throughout the CSG field to increase pressure and dehydrate gas for transportation. This typically requires a two-stage process; field compression stations (FCS) and central compression plants (CCP). Field compression stations are located within gas fields in close proximity to CSG wells. A single FCS, depending on its size and capacity, can process gas from over a hundred CSG wells (Santos 2009). From the FCS, compressed and dehydrated gas is piped to the larger CCP. These plants further compress the gas before transportation by the main transfer, or transmission pipeline, which carries the gas from the gas fields to LNG plants. Transport of the gas may involve additional compression stations at various points along the main transmission pipeline. Figure 5 illustrates a typical compression station. Figure 5: Compressor Station on Epic Energy s Moomba to Adelaide Gas Pipeline Source: (Strike Energy 2007) 20

21 Construction of compression stations requires a range of components. Typical components are listed below. Table 10: Typical Gas Compression Station Components Control centre building Maintenance building Staff accommodation Waste incinerator building Gas compression building Inlet separation Pipeline pig receiver/launcher Utility fuel gas conditioning building PROJECT Shell (Surat Gas Project) Origin (APLNG) QGC (QCLNG) Santos (GLNG) Pipeline & station blowdown systems Power generation building Vehicle storage building Warm storage building Cold storage building Flare system Laydown area FIELD COMPRESSION STATIONS Diesel/ propane storage Source: Monadelphus (personal correspondence) The specific number of compression stations will depend on the quality of CSG extracted. Initial estimates reported by the industry are outlined below: Table 11: Estimated Compression Facilities by Project CENTRALISED COMPRESSION PLANTS Assumptions Consultation with industry stakeholders indicate: Based on 100 production wells feeding one FCS (~40 FCS) A ratio of one (1) CCP for every 10 FCS (~4 CCP) Compression station labour demand is summarised in the table below: Table 12: Compression Station Labour demand Occupation Supervisors Safety/QA Engineers Operators Electricians Boiler makers Welders Pipefitters Instrumentation technicians Labourers Dogging Scaffolding Rigging Qualification Certificate IV/Diploma/Adv. Diploma Building & Construction1 In-house training Experience Bachelor of Engineering (or similar) Crane operator ticket Certificate III Electrotechnology Certificate III Engineering Fabrication Trade (Boilermaking) Certificate III Engineering Fabrication Trade (Welding) Certificate III Plumbing Certificate III Mechanical Engineering Certificate III Engineering (Instrumentation) Worksafe Certificate MNMG207A Dogging Operations Basic (SB)/Intermediate (SI)/ Advanced (SA) Scaffolding Certificate Certificate III Scaffolding MNMG208A Rigging Operations Note: 1 Master Builders recommendation. 21