To address the workforce needed to support the coal seam gas (CSG) boom in Queensland, Energy Skills Queensland released a report, "Queensland CSG to LNG Industry Workforce Plan", that states that over the next 20 years the number of skilled workers needed could be as high as 17,000, with the workforce peak occurring around 2024.
The scenarios are based on having six LNG trains operating and variance in the number of wells ranging from 39,000-59,000. A train is the plant facility where the gas is purified then liquefied by a freezing process, making it easier to transport.
According to the report, 85% of the projected jobs will be located in the Surat Basin, an area 200-400 km northwest of Brisbane. The major companies operating in the region are Santos (ASX: STO), Origin Energy (ASX: ORG), Queensland Gas Company, a subsidiary of BG Group (FTSE: BG), Arrow Energy (ASX: AOE) and ConocoPhillips (NYSE: COP).
These companies will be using many support service companies to take care of drilling, logistics and even such things as catering and accommodation.
Two companies that can fill these jobs are Titan Energy Services (ASX: TTN) and WDS (ASX: WDS).
WDS provides development, design, fabrication and maintenance services. This micro-cap has just received two contracts totalling $50 million, which includes work for Santos. Other contracts for Arrow Energy and QGC were awarded previously.
In 2013, earnings were down from $10.6 million to $8.25 million on revenue of $351 million. Currently its $0.69 share price is just one cent above the net tangible assets per share. Its return on equity is about 4.6%, so we can hope that the growing CSG development will give more work to improve its earning power.
On the other hand, Titan Energy Services has had an impressive year, raising its net profit after tax up from $2.2 million to $9.1 million in 2013. It provides logistics, drilling and transport and can set up camp accommodations, which include catering.
It has only been listed on the ASX in 2011, yet it has already achieved 17.5% return on equity and 12.3% net profit. As more wells are drilled and sites are established, it will have more opportunities to expand. It is also planning to work in other areas like the Cooper Basin rich with CSG potential.
Foolish takeaway
These major project areas will be in development for a number of years, and other regions in the neighbouring states will be doing the same, so both of these support service companies have a lot to look forward to. Of the two, I would be going with Titan Energy Services based on the stronger earning potential and growth.
