The Australian Mining Review - - DRILLING CONTRACTOR­S - RAY CHAN

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.”

Im­age: Fo­raco

Drilling ac­tiv­ity lev­els have been high with the ma­jor min­ing com­pa­nies, and to a lesser de­gree with the mid-tiers.

Im­age: Fo­raco

Drilling con­trac­tors are known for their adapt­abil­ity and re­silience and will no doubt find ways of get­ting through the cur­rent cri­sis.

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