Friday, August 12, 2011
Rigzone Staff
by Barbara Saunders
For more than a decade, the Great Crew Change has generated deep concern among many – and skepticism among some – in the oil and natural gas industry.
Much like the old story about the boy who cried "wolf" so many times that nobody would listen when the wolf finally was at the door, statistics confirm that the post-World War II "baby boom" generation is at the retirement door.
What remains to be seen is how well the industry on the whole heeded the "wolf cries" to usher in a well-trained new generation of both technical professionals and rig labor, the two areas of greatest perceived need.
Are We There Yet?
Although there is some controversy about whether the Great Crew Change will be all that sweeping, the age statistics are indeed alarming. According to Pete Stark, VP of industry relations for IHS, the peak age for oil and gas technical personnel has risen from 43 in the year 2000 to 50 in 2006. The peak age is expected to be 60 in 2012.
Another way of looking at the situation is about half of the industry will be retiring within the next 10 years.
Retirements in progress mean that "the big crew change is happening now and will be mostly over in five years," according to a 2011 study by Schlumberger Business Consulting. The study projects that by 2014, the inflow of younger petro-technical professionals (PTPs) will be only about 17,000, compared with roughly 22,000 experienced PTPs who are expected to leave by then, for a net shortfall of 5,000.
Other key findings of the study included:
- Demand for graduates is recovering and outpacing the pessimistic forecasts of a year ago. Recruitment targets for technical staff in 2011 are 15 percent higher than levels planned in 2009. National oil companies (NOCs), independents and majors all plan to intensify recruitment efforts from 2011 onwards.
- Universities appear to be on track to provide the oil and gas industry with sufficient graduates in geosciences and petroleum engineering, but supply from "quality universities will remain tight."
- Recruitment targets for PTPs in mid-career are soaring, with NOCs and majors reporting the highest rates of increase. "The labor market for experienced PTPs will be tight over the next three years, resulting in the poaching of staff, salary escalation and higher attrition rates," the study said, continuing: "These staffing issues will have serious consequences on projects and production capacity. Companies contributing to the 2010 survey reported that staffing issues will delay projects and may drive decision makers to take more risk."
Mentoring Key
Meanwhile, the American Association of Petroleum Geologists (AAPG) teamed with the recruiting firm Working Smart in a survey this past May of technical oil company professionals age 55 and over. Of those who responded, the average intended retirement age was 65, with only 23 percent seeking to work beyond retirement age.
Many respondents felt that mentoring younger staff is a key factor in reducing adverse effects of the great crew change. The survey showed that 77 percent of respondents were currently mentoring younger staff.
Mario Carminatti, exploration manager for Brazil's national oil company Petrobras, told an industry conference that 42 percent of the company's geologists and geophysicists have less than five years of experience. "We are countering this by increasing the number of senior geoscientists and even retired professionals who operate as mentors to the younger generation," Carminatti said.
J. Ford Brett, managing director of PetroSkills, says that the price tag could be in the tens of billions for having less experienced technical personnel. If the looming demographics result in approximately 20 percent of the industry's personnel having fewer than five years' experience, Brett calculates that it's reasonable to expect a 20 percent reduction in performance across the board. "To put this into focus, in 2006 the industry spent about U.S. $170 billion on E&P. A 20 percent reduction in performance correlates with an economic cost of approximately U.S. $35 billion," Brett stated in an article for the Society of Petroleum Engineers' Talent & Technology
publication.
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