Skill Shortages in the Oilfield

May 13, 2016

An intensifying shortage in skills is soon to become one of the greatest challenges facing the oil industry. The current downturn—the longest one in recent history—has forced many seasoned experts to change their careers. This came as a result of the massive and sometimes ill-advised layoffs that most companies had to undertake because of the weight of personnel costs on their P&Ls.

What’s going to happen when the business rebounds, though? There’s no doubt that, while lengthy, this remains a temporary setback (see: The Oil Comeback). Recovery is expected to start gradually in 2016 with faster growth in 2017. However, finding the right people to lead and execute this recovery takes a long time, which is why action must begin now.

 As a result of the current uncertainty in the business, a large portion of experts have decided to leave the industry for good.

Reductions in personnel started towards the end of 2014, and reached a historical high in 2015—with more than 250,000 layoffs that year—according to Graves & Co, a specialized consulting firm. The great majority of those laid off were experts. Their expertise was acquired through years (or decades!) of focus on specialized jobs, or through long, complex and costly training. Many, about 20% of them, can claim both.  And as a result of the current uncertainty in the business, a large portion of them have decided to leave the industry for good.

It is well known that oil is becoming more difficult to extract for several reasons: increasing reservoir complexity, new technology requirements, environmental controls and demand for improved production efficiency are but a few of them. And companies are letting their expertise go!

Recruiting and training have virtually stopped in the last 18 months, a decision that will have serious impact on the mid and long-term for most operating and service companies. The consequence of recruiting gaps will be evident a few years later, when experienced executives retire and there is a dearth of properly groomed younger executives ready to take their jobs. This applies to all areas: management, operations, technology, finance, etc.

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