Oil exploration, the need for skilled labour

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There is need for government and private sector players to put in place a common skills development policy and where possible upgrade skills from basic through support to core.

By PATRICK OBATH

Kenya is becoming an increasingly important attraction for companies interested in frontier exploration activities in extractives and more so in the oil and gas sector. Discoveries in the Tullow-operated blocks in northern Kenya led to more companies taking up exploration in all the available blocks. This development opens up opportunities to improve the numbers and quality of skilled labour that will service the sector.

Currently the oil industry has a sufficiently skilled labour pool in the downstream sector. This has been the mainstay of the oil industry since Independence, and the skills have kept up with the development of products and technology over the years.

The mid-stream sector has been present during the time Kenya Petroleum Refineries Limited (KPRL) was operating. Other supporting industries with similar though simpler operations are the lubricant blending plants, various sugar companies and vegetable oil conversion plants. Sadly, with the shutdown of KPRL the likelihood of maintaining skills in this sector will disappear and best place to grow a labour pool to supply operating upstream facilities will diminish.

The upstream sector – exploration and production of crude oil –presents the next opportunity in our economy but will need successful producing facilities with the full value chain to sustain any investment in training skilled labour to service the sector.

An opportunity to explore and produce

Labour uptake in the upstream sector can be divided into three service sections – core, support and basic.

The basic or indirect services include accommodation, camp management, security, transport, IT facilities, construction etc. These are freely available in the country and can be converted to service the oil and gas sector with very little additional investment. This has seen the quickest uptake.

The support or direct services get closer to the technical activities around exploration and production and include field construction, mud supply and management, engineering services, specialist trades, inspection, site management and so forth. These require specialist technical skills and these would not normally be available in an economy like Kenya where the main activities have been agricultural and value addition. The only area where such skills could have been developed from is the midstream or refining sector. The further challenge is that these services would only be required on an intermittent basis during the exploration and appraisal stages of the life of an oil prospect. It is thus more cost effective at this stage for the exploration companies to have all-inclusive contracts where the supplier of the service takes the risk. The supplier would traditionally be a company that has operations in many areas and can bring in the specialised skills for the short period and then deploy them in other areas instead of spending money training up local skills that they would then not use in the immediate future.

The core or specialist services are the ones that are directly used in the exploration, appraisal and production of oil and these include seismic services, Well services, Rig hire and operations and eventually well head services or Floating Production, Storage and Offloading Units (FPSO).

International availability of work

The seismic, well and rig hire services would be very intermittent requirements in Kenya during the early stages of the resource development especially at a time like now when the oil prices are globally depressed. They would be required both on and off shore thus differentiating the skills even more. Because of the way these facilities operate they would require international availability of work and thus precludes them initially being used as an opportunity for local skills development. As far as well head services and FPSOs are concerned, these present an opportunity for long tern skill developments as they would be in place for most of the life of the exploitation of the resource – once there are economically viable proven reserves.

In order to tap into this opportunity, the government and the sector players need to work to put in place a common skills development policy that works through the three service sectors and where possible or prudent, upgrade the skills from basic through support to core. This will mainly be in areas of construction and maintenance as well as general engineering. For these skills, the upgrading training can be given locally and the testing and certification done in conjunction with international industry approved agencies. Over time as the proven resource base expands, the certification agencies can be domiciled in the region to service the wider resource geography across Eastern Africa.

Specialist trades

In as far as the more specialised skills areas, these require longer periods to mature and the industry can partner with the selected local institutions across the East African region to support and design courses that will over time produce the graduate geologists, petroleum engineers and similar specialists as well as specialist trades like tool pushers, rig operators etc who will have the whole region to operate in.

For such a plan to be successful, the Eastern African countries where the resource exploration is currently very active – Kenya, Uganda, Tanzania, Mozambique Ethiopia and Somalia – need to come together to identify where they can work together to produce a common pool of expertise and where they can compete with each other. It is only with such co-operation that a well-structured and optimally funded skill development programme can succeed.

Patrick Obath has been in management positions in Shell and Shell advised companies in Kenya, UK, The Netherlands and Malaysia.

Email: pobath@gmail.com

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