Contractors Feast on Australian Projects

Australia's major resources services contractors targeting the local oil and gas sector are taking advantage of the rapid growth being experienced in the industry.

Major new developments around the country continue to provide a wide range of opportunities for contractors such as Monadelphous, Leighton Contractors, Clough Ltd. and Laing O'Rourke.

Chevron's Gorgon and Wheatstone LNG projects, the Woodside Petroleum Ltd.-operated North West Shelf project, the Browse LNG project joint venture and Royal Dutch Shell plc's Floating LNG project have created a surge in demand in Western Australia for high-scale contracting services.

In Queensland, developments include QGC Pty. Ltd.'s Curtis LNG project, Arrow Energy Ltd.'s LNG plant project, the Australian Pacific LNG joint venture and Santos Ltd.'s Gladstone LNG project, while in the Northern Territory, Inpex Corp. has started development on the Ichthys project.

Monadelphous has experienced a strong run of contract wins on both sides of Australia around these developments, helping the company deliver record revenue and profits.

The Perth-based company has already won almost $1.04 billion (AUD 1 billion) in new contracts or contract extensions this Australian financial year, with a large percentage of those awards in the oil and gas sector.

In particular, Monadelphous has added strength to its positioning as a leading maintenance services provider in the oil and gas market, where it has recently secured two significant LNG contracts.

"With the award of these new contracts Monadelphous is providing long-term maintenance services to all of Australia's existing on-shore LNG plants," Rob Velletri, Monadelphous managing director, said in a conference call.

"The new long-term maintenance and shut-down services contract with Woodside at the Karratha gas plant in WA, the largest onshore LNG plant in Australia, is a strategic milestone for the company.

"Monadelphous also entered into its first long-term LNG maintenance services contract with QGC for its new LNG plant."

In October 2012, the company was awarded the maintenance contract, worth about $156 million (AUD 150 million), at the Karratha gas plant.

The contract, which started in January for an initial term of three years with the option of two one-year extensions, involves the provision of maintenance and shutdown services.

Monadelphous's contract with coal seam gas company QGC at the Curtis LNG plant, worth $83 million (AUD 80 million), started in January for an initial 6.5-year term.

The company will provide multidisciplinary core maintenance and shutdown services to support the operations phase of the plant, currently under construction at Curtis Island.

Monadelphous has also consolidated its relationship with Chevron Australia after signing a one-year extension to its facilities management services contract at the Gorgon project.

Worth about $135 million (AUD 130 million), the contract is for the operation and maintenance of construction facilities and utilities on Barrow Island.

Leighton Contractors' involvement with Australia's major developments has grown through a series of related contracts won at INPEX's Ichthys project.

In January, Leighton, which holds an oil and gas contract portfolio worth in excess of $4.68 billion (AUD 4.5 billion), was awarded a $960 million (AUD 923 million) contract to undertake Ichthys' onshore LNG facilities main civil works.

The project involves delivering the main civil infrastructure required for the LNG facilities, including piling, foundations, trenching for pipes, cable, sewers and drainage, roads, paving, electrical and instrumentation cabling.

This win added to Leighton Contractors' services division being awarded a four-year, $291 million (AUD 280 million) operations and maintenance contract by JKC Australia for the Ichthys temporary site facilities.

In October 2012, Leighton Contractors was also awarded a $131-million (AUD 126-million) engineering, procurement and construction (EPC) contract by JKC for one of the building packages at Ichthys.

At the Chevron Corp.-operated Gorgon project, the value of Leighton Contractors' contract to deliver the civil and underground works package was increased by $1 billion (AUD 975 million) to an estimated value of $1.86 billion (AUD 1.789 billion).

Leighton said the new estimated value reflected an increased and amended scope of works to provide better flexibility to deliver the package in a more efficient and timely way.

Perth-based Clough has grown its portfolio of oil and gas contracts to more than 20 this financial year.

Clough's energy portfolio across Australia features Chevron's Gorgon and Wheatstone projects, INPEX's Ichthys, Santos' Gladstone and QGC's Curtis.

The company's contract wins include an extension worth more than $20.8 million (AUD 20 million) for its Clough AMEC joint venture for the provision of engineering services to Chevron's oil facilities off the north-west of Australia, and a contract for its joint venture with Transfield Services for construction work as part of QGC's Curtis project.

Kevin Gallagher, Clough chief executive officer and managing director, said the company's outlook had never been stronger with a record order book and strong tender pipeline.

He explained that Clough's oil and gas clients were searching for contractors that could provide enhanced productivity.

"Clough is responding with a number of productivity initiatives," Gallagher said in a conference call.

"Our aim is to set the benchmark for productivity - we aim to do this by establishing the metrics and systems to provide real-time reporting on productivity performance and enable early detection and intervention where we have productivity issues."

Laing O'Rourke, a Perth-based privately-own engineering company, secured a major structural engineering and civil works contract with Bechtel Corp. on the Chevron-operated Wheatstone project.

The company said it would provide more than $520 million (AUD 500 million) in civil structural engineering and construction with the contract.

Wheatstone, situated 7.5 miles (12 kilometers) west of Onslow in the Pilbara region, will consist of two LNG trains with a combined capacity of 8.9 million tonnes per annum and a domestic gas plant.

David Stewart, Laing O'Rourke chief executive officer, said the company was "engaged on almost every one of Australia's major oil and gas projects – and can provide self delivered, construction and engineering services at each link of the gas export chain".

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Sound to Spud Nervesa Well Within Weeks

Italy-focused Sound Oil expects to spud its first appraisal well on its onshore Nervesa discovery within weeks, after it announced Thursday that a land rig currently being used in the Netherlands is about to be released to the company.

LP Drilling, the owner of the contracted TB2100S drilling rig, has informed Sound that its operations in the Netherlands are being finalized, with mobilization to Italy expected to begin within the next fortnight. The estimated time taken to transport the rig to Italy is up to six days, while rigging up the rig will take another six days after which the well will be spud. Preparations at the Nervesa sites are now "materially complete", Sound said.

Drilling and logging is expected to take up to 30 days, while six days has been set aside for completion and clean up. Well testing should then take an additional five days.

Sound CEO James Parsons commented in a company statement:

"Nervesa is a 21 billion standard cubic feet gas discovery which was discovered by ENI in 1985, flowed for a couple of years and has an independently assessed base case value of circa $60 million.

"Following the decision to drill a second Nervesa well in 2013, the company estimates initial annual cash flows in a success case scenario of circa $21 million per annum, after tax and after the CSTI funding.

"The successful drilling of this flagship asset will be the first step in unlocking the significant value inherent in the Sound Oil portfolio. April and May will be critical months for the company."

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Oil Futures Finish Higher as S&P 500 Aims for Record

Oil futures finished higher Thursday, setting a six-week high as the Standard & Poor's 500 was poised to finish at a record.

Light, sweet crude for May delivery settled 65 cents, or 0.7%, higher, at $97.23 a barrel on the New York Mercantile Exchange. That's the highest settlement since Feb. 14.

Brent crude on the ICE futures exchange settled 33 cents, or 0.3% higher, at $110.02 a barrel.

Futures rallied as the benchmark S&P 500 pushed higher and was set to surpass its previous record set in October 2007. The index recently rose 0.3%, to 1567.08.

"The stock-market record for the S&P is chipping in here," said John Kilduff, founding partner at Again Capital in New York. "It's a risk-on day."

Oil futures and equities often trade in tandem since both are considered risky assets that investors use as a bet on economic growth. In addition, crude traders often turn to equities as a barometer of broader economic sentiment.

Despite Thursday's strong stock market performance, several reports put a damper on the crude market earlier in the session, keeping it in negative territory for much of the morning.

Jobless claims rose by a bigger-than-expected 16,000 to a seasonally adjusted 357,000 last week. The figure was the second straight weekly increase in the filing of unemployment benefits, underscoring the weak pace of hiring in the U.S.

Meanwhile, the U.S. government released its final revision on fourth-quarter economic growth, saying the U.S. grew at an annualized rate of 0.4%, below the 0.5% rate forecast by economists.

"The jobs numbers today were not very inspiring and GDP was kind of in line," said Phil Flynn, analyst at Price Futures Group, a brokerage in Chicago.

Nymex crude prices have notched gains of roughly 6% so far in March. But analysts have attributed the rally to expectations that the supply glut in the central U.S. had begun to ease, lifting prices there.

The price of Brent crude, regarded as a more reliable global benchmark, is down about 1.2% in March.

Front-month April reformulated gasoline blendstock, or RBOB, settled 1.01 cent, or 0.3%, lower, at $3.1054 a gallon. April heating oil settled 0.02 cent lower at $2.9152 a gallon.

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ConocoPhillips to Shut 3 North Sea Gas Fields

LONDON - ConocoPhillips will close its J-Block natural-gas operations in the U.K. North Sea for 10 days from April 8, the company said Thursday.

In a notice on its website, ConocoPhillips said the shut-down, which is weather dependent, will involve the Judy/Joanne, Jade and Jasmine fields, which together supply between 4.5 million and 5 million cubic meters of gas a day.

Last week, the U.K. government issued a statement to reassure consumers that the country's supply of natural gas would be sustained, despite the closure of a crucial pipeline connected to mainland Europe, during an ongoing period of unseasonably cold weather, and the low volume of gas in storage.

Also Thursday, Houston, Tx.-based ConocoPhillips said its onshore Teesside Oil Terminal, in northeast England, will close from July 3 to July 27. Crude oil and natural gas liquids from J-Block and the Greater Ekofisk Area fields are delivered to Teesside, at a rate of between 9.5 million and 10.7 million cubic meters a day.

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Japan Public, Private Sectors to Create LNG Futures

Japan is planning to launch the world's first futures contract for liquefied natural gas, marking the latest step toward creating a global market for the fuel.

The market for LNG--the chilled and exportable form of natural gas--is poised to expand rapidly in the coming years, analysts say, as the U.S. ramps up exports and global demand rises. The price of gas varies widely across different regions. Japan, the world's biggest importer of LNG, pays about $18 per British thermal units, versus $4 for the product in gaseous form in the U.S.

Japan's LNG imports rose after the March 2011 Fukushima disaster sidelined most of the country's nuclear reactors. The cost of those imports is linked to crude oil, reflecting historic ties between prices in the two energy markets. But many users say U.S. production unleashed by the shale boom has weakened the connection between LNG and the oil market. A futures contract would allow LNG producers and consumers to determine gas prices independently from oil, and provide a way to protect themselves against price swings.

While oil is a global market, the price of natural gas varies among regions because consumers tend to buy from suppliers within their own region. In the U.S., abundant supplies have caused gas prices to plunge from as high as $15 per million Btus in 2005. Japan pays a premium because it has little domestic output and transporting LNG is expensive.

"Japan definitely has an interest in something more in line with a global price of LNG to offset their price with regions that have weaker demand," said Eric Bickel, commodity analyst with Schneider Electric, an energy-consulting firm. "They're sort of spreading that load."

The parties behind the push for the new contract--which include electricity and gas utilities, trading houses, traders and government officials--will aim to list the dollar-denominated futures on the Tokyo Commodity Exchange by March 2015.

Certain details of the contract still have to be worked out, said Takashi Ishizaki, who oversees futures-trading regulations in Japan as the commerce director for the Ministry of Economy, Trade and Industry.

LNG prices could fall if U.S. exports rise, analysts say. The U.S. Energy Department is reviewing more than a dozen applications for liquefied natural-gas export terminals and may begin to make decisions as soon as early this year. However, U.S. manufacturers, utilities and others that benefit from cheap domestic gas have spoken out against exports.

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New UK Oil, Gas Strategy to Secure Thousands of Jobs

The UK government unveiled Thursday a new oil and gas strategy aimed at securing billions of pounds of future investment and thousands of jobs in the sector.

The government said that it has pledged to maintain the fiscal regime it has put in place to encourage investment and innovation. This will include guarantees on tax relief for decommissioning activities as announced in the recent UK Budget.

Plans include specific measures to address the skills gaps in the UK oil and gas sector. The government plans to help the industry find the additional 15,000 staff it will need over the next five years by establishing a national program to retrain ex-military personnel so they can be redeployed in the oil and gas industry. As part of this plan, $10.6 million (GBP 7 million) has been awarded to Newcastle University to establish a training establishment called the Neptune Centre that will carry out subsea and offshore engineering programs.

The government will also put measures in place to boost supply chains. The aim is to develop the oil and gas supply chain so that the sector's suppliers can build further on the $40.8 billion (GBP 27 billion) of revenues that they already generate in the UK. The government said that fabrication has been identified as one particular subsector that will be targeted to ensure the UK remains competitive in both domestic and international markets.

In addition, provision will be made for specialist support from government body UK Trade and Investment to look at how the UK supply chain can increase exports, building on the increased funding of $211 million (GBP 140 million) announced in the Treasury's Autumn Statement to help small and medium-sized businesses export abroad and exploit high-value opportunities in markets such as Brazil, Mexico, Saudi Arabia and Australia.

Ahead of the strategy launch Thursday, UK Business Secretary Vince Cable commented in a statement:

"The oil and gas industrial strategy is the start of a real plan of action owned by industry and government. It is a strategy that all sides are committed to, so that future decades of investment and growth can be maintained in the North Sea.

"An important part of this strategy is how we can develop the UK supply chain. I want us to consider what barriers are stopping British companies bidding for and winning work in the North Sea.

"This is an expanding industry. We can either help create more jobs and opportunities across the UK if we get this right. Or see work going overseas if not."

UK Energy Secretary Ed Davey added:

"The UK’s oil and gas industry is a vital strategic resource that helps fulfill our energy needs and insulates us from volatile global markets. By partnering with industry to support oil and gas investment offshore and onshore, the Coalition government aims to boost growth and enhance the UK’s energy security."

Meanwhile, trade body Oil & Gas UK welcomed the new strategy, describing it as "one more step in the right direction". Oil & Gas UK Chief Executive Malcolm Webb released a statement in which he said:

"Close engagement with the UK government and the resulting tax changes introduced last year to promote investment in the oil and gas sector are now bearing fruit. Record investment is forecast this year to search for and produce UK oil and gas reserves. This will be followed by an upturn in production from 2014, sustaining growth across the supply chain and reinforcing the industry's already significant contribution to the UK economy.

"The launch of the government’s strategy for the sector is one more step in the right direction and brings deserved recognition to the capabilities of our world class supply chain."

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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ConocoPhillips: Natural Gas Prices Too Low for New San Juan Basin Wells

ConocoPhillips said it is temporarily suspending new drilling in the San Juan Basin in New Mexico and Colorado, citing low natural gas prices that make it uneconomical to drill new wells in the area.

"Natural gas prices have continued to be rather low," Conoco spokesman Jim Lowry said, adding that the company would be watching natural gas prices and resume drilling "as soon as it becomes economical," though he declined to set a specific target price.

Natural gas futures have rallied in recent weeks as cold weather has prompted demand for fuel. Natural gas for May delivery settled at $4.02 Thursday.

The company had three drilling rigs working in the area. Mr. Lowry said the suspension will only affect new wells. ConocoPhillips continues to produce more than 1 billion cubic feet of natural gas per day in the San Juan basin.

The company told its employees of the decision Tuesday, Mr. Lowry said Thursday

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Lightning Eliminators Seeks to Reduce Lightning Strikes

Boulder, Colo.-based Lightning Eliminators & Consultants (LEC) offers technology that can protect oil and gas assets from the threat of lightning strikes.

Lightning strikes have become a growing problem as the rate, frequency and strength of lightning strikes are increasing, LEC CEO Avram Saunders told Rigzone in an interview. Lightning strikes are also occurring more often in areas that historically have not experienced a large number of lightning strikes, noted Saunders, who attributed the upswing in lighting strikes to changes in global weather patterns.

In 2009, the National Lightning Safety Institute reported that lightning damage and related losses exceeded $5 billion. According to reports from Lloyds and the Insurance Information Institute, lightning-related losses rose 15 percent from 2009 to 2010.

Tank explosion at Magellan Midstream Partners distribution terminal, Kansas City, Kansas – June 3, 2008

"Lightning is beautiful, dangerous and more complex than we think," Saunders commented.

This process can include cloud to ground – the most studied and understood form of lightning – as well as intracloud and cloud to cloud.

For over two centuries, the lightning rod has served as the primary means of protecting assets from lightning after Benjamin Franklin invented it as a solution to preventing house fires in the 18th century. Lightning became more of a threat as the heights of buildings rose. However, attracting lightning is not something that owners of multi-billion dollar oil and gas facilities want. Instead, LEC uses charge transfer technology to prevent direct strikes by lightning to protect energy assets, whose electronic components can be knocked out by lightning in the blink of an eye, said Saunders.

Former Rockwall and NASA engineer Roy B. Carpenter founded the predecessor company to LEC over 40 years ago to study and apply engineering principles to lightning strike problems and design a lightning strike prevention system based on physics. This system would also take into account the scientific study of point-discharge rather than observation or guesswork, which had guided the lightning protection community for over two centuries.

Point discharge is the process in which a sharp point immersed in an electrostatic field transfers charge from the ionizer into the air. Ionized air molecules form a mixture of charged and uncharged molecules known as space charge, which forms a shield between the storm cell and the site. The difference in the electrical power between the protected site and the storm clouds is reduced, delaying the formation of an upward streamer from the protected site and preventing direct strikes.

Carpenter, who worked as chief engineer for NASA's Apollo Moon Landing Missions and the Space Shuttle design engineering teams, decided to pursue technology to protect against lightning strikes because of the large and frequent problems he had seen with lightning strikes at Cape Canaveral.

The result of this research is the charge transfer system (CTS) – which LEC calls the Dissipation Array System (DAS) – which is intended to prevent a lightning strike from occurring within a protected zone or area. The system prevents lightning strikes by collecting the induced charge developed by thunderstorm clouds from a protected area of the earth and transfers this charge through the ionizer into the surrounding air.

LEC's solution utilizes basic principles of physics in which a zone of protection is created from the highest point of a facility down to the earth. For example, a facility that stands 50 feet in height would have a protection zone 200 feet wide around the facility, Saunders commented.

Protection against lightning involves three parts – direct strike protection, surge protection and grounding. LEC prides itself on being able to provide consulting, design and implementation services for lightning protection, said Saunders. The company offers custom solutions, based on a clients' need and risk tolerance, as lightning protection involves more than a cookie cutter approach. Maximum ionization is achieved through point spacing, length and the number and geometry of points.

The CTS involves one or more ionizers, down conductor, and charge collector. The latter is an interconnected system of grounding electrodes and conductor designed to collect and funnel electrical charge to the ionizers. The down provides the electrical connection between the charge collection and the ionizers, which provide a means for point discharge to take place.

The charges transferred to the air can act in one of two modes – collection, which establishes a preferred conductive path for the lightning leader, and prevention mode, which reduces the electric field intensity to the level that delays the formation of an upward streamer from the protected area.

LEC's Spline Ball Ionizers (SBI) are multi-point ionizers that can be deployed with the DAS to function in prevention mode. SBIs can be deployed without DAS in multiple units to function in collection mode, and are normally mounted in groups on elevated structures. Splint Ball Terminals are multi-point ionizers that that can be deployed with a DAS for use in collection mode, and are designed for placement on roofs and roof projections subject to a direct lightning strike.

Lightning strikes at the Luxor and Excalibur in Las Vegas, September 2011

The company's technology has been used to protect assets in the upstream and downstream oil and gas industry, as well as across multiple industries – petrochemical, power generation, biochemical, chemical manufacturing, information technologies, nuclear energy, mining, utilities, and manufacturing. LEC has provided services for onshore and offshore facilities in Nigeria, Thailand, Singapore, southern Africa and Australia.

The company has had a 20-year business relationship with U.S.-based FedEx. However, LEC has had more success connecting with oil and gas companies overseas compared with the United States, perhaps because oil and gas companies prefer a traditional approach to managing lightning risk.

The company is working on cracking the offshore market and changing its status from a "best-kept secret" in the U.S. offshore oil and gas industry. The company's business has grown over the past several years, but business outside the United States has represented the lion's share of LEC's business growth. From 2010 to 2012, LEC experienced 183 percent export growth, and increased the number of countries in which it is doing business to 70.

The company has seen its business grow in countries such as Qatar. While lightning strikes are not as much of an issue in the Middle East, companies in Qatar are investing in technology to protect against lightning, not only meeting standards but exceeding them. In Qatar, the challenge for LEC has been installing the equipment on offshore facilities without disturbing the patterns of helicopter flights.

Offshore rigs and platforms are thought of as "grounded" to the ocean. However, the environment and even the facility's design could lead to a compromise in bonding with rust and oil deposits that impeded the energy's path to the ground. This leaves the advanced electrical and electronic systems and personnel vulnerable to damage not only on from direct strikes but surges as well.

However, lightning does present an issue for the Gulf of Mexico, and the growing emphasis on safety following the 2010 Macondo incident has created a new openness in the industry to new ideas, Saunders noted. To address the risk of lightning to offshore oil and gas facilities, LEC has been working with drilling rig contractor Transocean Ltd., with whom LEC connected through Transocean's operations in Aberdeen. Chevron Corp., Exxon Mobil Corp. and BP plc have also turned to LEC to address the issue.

Last year, solutions for nearly a dozen companies' offshore platforms and rigs were produced following vulnerability studies conducted by LEC that were based on International Electrotechnical Commission and National Fire Protection Association guidelines and standards. Many of these solutions included LEC's DAS system, according to a February 2013 report by LEC.

From the standpoint of electronics, the secondary effects of lightning -- earth current transients and atmospheric transients, ground potential rise and electromagnetic pulse -- are a greater problem than the direct lightning strike. And in some cases, the damage caused by lightning may not show up immediately after a storm, but some time later, Saunders commented.

"With every upgrade in technology, sensitive systems like dynamic positioning, drilling instrumentation and control and other rig management systems essential to staying online are becoming more vulnerable," LEC said in a February 2013 report.

Calculating the mean-time-between-failure for sensitive systems is more difficult than determining the dollars lost through obvious damage and downtime. Costs could range between $20,000 and $60,000 per hour or more when a system is down; these costs do not include the replacement costs of the equipment affected.

Protecting assets from lightning strikes has become even more critical in a weak economy, when companies may have mothballed some plants and are not operating at full efficiency. Operating with fewer assets means the protection of having redundant facilities goes away, Saunders commented, leaving assets that are operating more vulnerable to damage from lightning strikes. In the case of Transocean, the company's sale of its jackup fleet and shift towards ultra-deepwater drilling means the company's need to protect its ultra-deepwater drilling fleet is greater.

LEC's lightning protection program is also being utilized in the U.S. onshore feature. Ashley Automation, which specializes in onsite electrical, measurement, control, and telemetry installation and maintenance, offers construction services for hydraulic fracturing salt water disposal facilities, and also provides pump and motor controls, tank levels and grounding systems and communications systems installation. These facilities can suffer lightning damage or burn down completely due to lightning strikes, as the fiberoptic tanks used to store waste saltwater that comes from hydraulic fracturing attract lightning.

Ashley works hand in hand with LEC to install LEC's lightning protection equipment. LEC's products are the only product that Ashley installs as far as lightning protection, said Matt Jones, project manager with Ashley. Back when Barnett shale activity first started, lightning storms would blow through and strike facilities. Given that saltwater waste facilities cost $5 million, oil and gas companies can't afford to take a lightning strike.

Fire at Greensboro No. 2 Tank Farm, Greensboro, N.C., June 13, 2010

LEC's confidence in its product prompted the company to extend a full no-strike warranty to each and every client who buys a system and recertifies it each year. The charge transfer system's reliability stands at 99.87 percent, with more than 60,000 systems of data on approximately 3,500 systems. Additionally, Hitachi is in the process of testing LEC's technology and effectiveness at a facility in Singapore.

Saunders cites the case of the Browns Ferry Nuclear Power plant, the first nuclear power plant constructed by the Tennessee Valley Authority (TVA), as evidence that LEC's technology works. While the nuclear facility in 2006 helped TVA achieve a 99.99 percent operational reliability for the fifth year in a row, lightning strikes to the facility's off-gas stack were hampering reliability. As a result, no known lightning strikes to the off-gas stack have been reported in nearly a decade.

A comparison of data on lightning activity around the off-gas stack in three years before and after the implementation of the DAS system – including the number and location within 1,640 feet (500 meters), 3, 6and 10 mile radius circles around the off-gas stack. The review found the implementation of DAS reduced by 80 percent the lightning strikes that occurred within 1,640 feet (500 meters) of the off-gas stack. The weighted data for strikes in the wider areas showed no change of statistical significance, though lightning frequency grew by nearly 63 percent in the 10 miles radius around the stack in the time after the DAS was implemented.

Saunders believes the results indicate the company "knows what it is doing".

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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Women Respond to Genuine Commitment in the Resources Workforce

The traditionally male dominated resources sector is a tough nut to crack in terms of gender diversity, according to those at the forefront of changing the industry. It takes a lot more than just a policy of employing more women or token gestures to get lasting results.

"At the root of gender diversity is inclusion - and a genuine desire to provide a safe and caring workplace" says Milano Pellegrini, who heads up Human Resources at Caltex Australia's Refining & Supply business.

"By providing this type of safe and caring environment, employees have further incentive to stay with the organization and contribute to its long term success."

Mr. Pellegrini will give industry peers the inside track on how to turn talk into results in the workforce at the upcoming HR Leaders Resources Summit. He will draw on the successful experience of Caltex Australia, which is one of the few resources sector organizations to have a female chair in Elizabeth Bryan.

Caltex Australia, which employs about 3,500 people around Australia, is making progress in its efforts to improve workforce diversity. About 34 percent of Caltex's employees are women, up from 30 percent the previous year. It sets regular goals to bridge the gender gap. Last year its aim was to increase the number of women managers in its "pipeline critical successor talent pool" from 16 percent to a minimum of 20 percent - they achieved 25 percent. The company also achieved an ongoing reduction in voluntary turnover rates for women - as opposed to a decade ago when women were twice as likely to leave Caltex than their male counterparts.

Its success is the result of a comprehensive package of measures to achieve change. Caltex has provided external mentoring to most of its female "middle managers" to support career development. The company also holds regular networking events. All senior staff has undertaken training to recognize unconscious bias.

Caltex has also introduced more family friendly work practices. The company's paid parental leave scheme is amongst the most generous in Australia, and last year Caltex introduced bonuses for parents returning to work after having children. Under its "BabyCare" scheme, Caltex is paying primary care-giver employees a quarterly bonus amounting to 3 percent of their base salary until the child's second birthday, as well as offering up to $1,500 of emergency child care. It will also introduce nursing mothers' facilities at major Caltex workplaces this year.

Mr Pellegrini said Caltex had recognized a need for a multi-faceted approach, providing employees with the support and flexibility that they needed as well as career advancement opportunities.

"The results to date are very encouraging - managers have shifted their attitudes and employees feel more engaged." he said.
But Caltex's efforts to bring about change weren't without complications.

"People see through token or non-genuine attempts to satisfy perceptions in this space.

Our endeavors have not gone without questions from our employees - both men and women - but our diversity strategy is gaining momentum and we are starting to derive the benefits."

The need to recruit more women in the sector has been flagged by the Minerals Council of Australia and the Federal government's recent Women in Leadership Census. Additional analysis by PWC last year found that, of the top 50 ASX-listed mining and minerals companies:

only 6.3 percent of key management positions were occupied by womenonly 32 directors were femalenearly half of those companies (48 percent) did not have a woman on the board.

The lack of diversity isn't just seen in management. Women represented only 15.5 percent of the mining industry's total workforce compared with 45.5 percent across all industries according to Australian Workforce and Productivity Agency's 2012 report.

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