Australian Mining Hits the Pits, but Gas is Ready to Explode…

October 26, 2009Leave a Comment

With the minerals and mining markets grinding to a halt in Australia and the coal seam gas market about to explode, what will be the key factors influencing contact rates over the next few years?


The Queensland engineering market is split into two areas. The Minerals and Mining market is static and expected to remain so in the near future. Indeed a drop in hourly rates is expected due to market pressures.

The most important market at the moment is the Coal Seam Gas market. New technologies have made Coal Seam gas far more attractive and there are currently 11 new LNG extraction and liquefaction projects on the table. It is doubtful whether all will appear in the short term, but I believe we can expect a consolidation of trains between major operators and would therefore see go-ahead for 4 to 6 plants.

Current contract rates are unpredictable and pulled in many directions. The key drivers are:

1. The General Market is pushing rates down.
2. Operators are driving a rate cap.
3. Greater usage of non-expat overseas workers (Asia etc).
4. Overseas rates from Asia are increasing due to greater dependence in the Middle East
5. The gas market has not been hit as hard as the oil market.
6. The recession has created a greater mobility of the work force, so Australia (once a fairly local and remote market) is now comparable to the global hourly rate.


So do rates go up or down? In summary, in the near future we do not expect any rate changes. From Q2 2010 people are talking about an increase of anywhere between 8% and 15% over a 4 quarter period.

Fortunately TRS has recently won a 1st tier PSL agreement with a major gas international with heavy investment in the Queensland area. You can see some of the exciting engineering opportunities or alternatively please comment and leave your thoughts below…

 

Author: John Rowlands, TRS


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