SUPPORT WILL CARRY DRILLERS THROUGH
With 2020 being a challenging year to say the least, the Australian drilling industry is coping by adapting to conditions and ensuring it is in a strong position to move forward in the aftermath of the pandemic crisis.
Indeed, 2020 started well enough, with many contractors having most of their rigs committed well into the year.
It’s no secret that the main issue faced by drilling contractors over recent times has been the lack of skilled workers at both the driller and offsider levels. So having full order books gave confidence in committing funds to upgrade equipment and to invest in the skills base, which is a key component in retaining the workforce.
According to Australian Drilling Industry Association chief executive officer Peter Hall, activity levels have been high with the major mining companies and to a bit of a lesser degree with the mid-tiers. The junior sector has seen less opportunity for drilling work, a consequence of the difficulty for those explorers for the raising of funds.
“Drilling contractors do tend to target the company types that they want to work for and structure their business practices around this approach,” Mr Hall said.
“This does provide the overall market with a good level of adaptability and associated price points to choose from.” In normal times, drilling contractors are usually rotating a portion of their fleet through a rebuild facility to bring rigs up to the latest operating standards.
The major minors usually have high level expectations on what is required for site compliance and these goal posts do change at periodic intervals.
These rebuilds and upgrades can be expensive and also mean that a rig is not making money whilst it is being worked on.
Then came the summer bushfires, which were a catastrophic event for much of Australia and affected many of the areas where ADIA members are based.
“One of the expected outcomes from this was to be a stronger push from the Australian public for the Federal Government to act stronger on climate change,” Mr Hall said.
“Whilst any impact from this is not expected to be immediate, it is obvious that both mining companies and the drilling companies who work for them will have to work harder on their green credentials going forward.”
And as if that wasn’t enough, in the short space of two months since the end of the bushfires, the world changed dramatically due to the outbreak of COVID-19.
Mr Hall said that correctly, mining has been made exempt from many of the restrictions being placed on other businesses due to its importance to the Australian economy. So far, the impact on drilling operations has been relatively minimal, although there has been some necessary restructuring going on which has resulted in some temporary rig stand-downs.
“There have also been disruptions to drilling operations in areas of central Australia close to indigenous communities which have caused rig shutdowns,” Mr Hall said.
“What we don’t want to see is a lot of the hard work and investment that drilling contractors have committed to over the last couple of years being wasted.
“The last thing that the drilling industry needs now is to lose talent and experience due to rigs being shut.
“If these displaced drillers and offsiders cannot locate drilling work elsewhere, there is a likelihood that they will exit the industry and go and work somewhere else and never return.”
Mr Hall said that this had been a familiar scenario based on past experience, and if it does eventuate that any COVID-19 downturn is short-lived, it could then seriously harm the ability of contractors to ramp back up to meet demand.
“It is therefore in the best interest of mining and exploration companies that any rig standdowns are accompanied by sensible discussion around potential restart dates and as a minimum, compensation to cover crew wages to keep them on-boarded,” Mr Hall said.
Drilling contractors are complying to the fullest with all new COVID – 19 policies to help minimise the risk of introducing and spreading the virus at the jobsite.
Many have already incorporated their own pandemic plans and are educating their workers on behavioural needs.
So far this has been working well and there have been no significant site issues.
Due to government requirement, Mr Hall said the main hurdle to cross has been the relocating of FIFO staff due to the closing of State borders in a short space of time.
He said this had resulted in a portion of the workforce needing to transition to longer rosters and extended periods away from home.
“It is still too early to predict how this is all going to end, but drilling contractors are known for their adaptability and resilience and will no doubt find ways to work through it,” he said.
“They will need support from their clients to do so, which will ensure a healthy drilling industry going forward.”
Drilling activity levels have been high with the major mining companies, and to a lesser degree with the mid-tiers.
Drilling contractors are known for their adaptability and resilience and will no doubt find ways of getting through the current crisis.