Comments: Help Wanted
Authors: Donnelly John 
Published: February 2015

From Canada to Scotland to west Texas, there are reports of labor shortages when oil prices and demand forecasts suggest the need for an acceleration of E&P activity. This may be just short-term fluctuations in the job market, or it may be that the predictions of a dwindling supply of skilled professionals in the oil and gas industry are finally coming true.

Of all the challenges the industry faces—geopolitical tension limiting opportunities, lack of decent prospects, poor public opinion, outdated rigs and equipment—some find forecasts of a skilled worker shortage the most foreboding. No matter how technologically savvy the industry has become, you cannot produce a sufficient amount of oil and gas, or at least not as much as the Intl. Energy Agency believes the world will need over the next several decades, without good workers. And human resources take time to develop, so companies may be fighting over the pool of available workers in the meantime. And in some regions, there are just fewer workers than there used to be, which is affecting numerous professions. The U.K. has 1 million fewer people in their twenties than a decade ago. That means the competition for skilled workers across all industry sectors will be fierce.

The worker shortage in the oil industry goes back to the mid-1980s’ oil price crash. Layoffs were widespread, and people were discouraged from joining the industry. The consolidation of the workforce continued through the 1990s amid the wave of mergers and acquisitions, and younger people looked elsewhere for careers. The industry’s poor public image in some countries and the boom-and-bust nature of the business has not helped.

Neither have predictions about whether global oil production has peaked or plateaued and has nowhere to go but down, regardless of whether those predictions are true. Even in regions where the industry is held in high esteem, who wants to join an industry that may be on its way out, particularly when so many other professions look so promising?

There have been more than 1.1 million layoffs in the oil and gas industry since 1981, according to oil consultancy John S. Herold, and a severe personnel crunch will occur unless the industry takes drastic steps to reverse the “brain drain” occurring as older workers retire. Employment at 25 of the largest companies, including majors and independents, fell 4% last year, the 20th annual decline in the past 23 years, the consultancy says. Since 1999, the industry has eliminated 120,000 positions. Some of this represents efficiency. Private oil firms have been paying more attention to Wall Street, which favors lean companies.

Last month at the biennial Offshore Europe conference, the Aberdeen and Grampian Chamber of Commerce issued a report that contends that a shortage of key skills is the most important strategic threat to the industry’s future. “As an industry, we are beginning to feel the skills constraint,” Kieron McFadyen, Shell Exploration and Production Technical Vice President, said at the report’s release. “Industry costs are increasing and our workforce is being asked to cope with an ever demanding workload driven by increased activity levels.” The Chamber reported earlier this year that 80% of producers said they recently have attempted to hire staff, with two-thirds reporting difficulties in finding the right workers. Shortages are occurring across the industry, including managerial and technical positions, and specifically in the drilling, subsea, and reservoir sectors.

But progress in meeting this obstacle is being made. SPE has embarked on programs to encourage young professionals and educate the public about energy, which will only improve the industry’s image. Several companies are generously supporting initiatives to strengthen ties with universities and enhance worker competency and knowledge. With global demand for hydrocarbons showing no signs of slowing down, the human resource challenge may rival any technical challenge the industry faces in the years ahead.