Tackling the Oil and Gas industry skills gap (page 1 of 2)

There are four major factors that are contributing to the skills crisis, the study found including the ageing workforce, the need for specialized skills, an increasing workload and escalating costs.

"From the study, we concluded that capability building is a long term approach achievable by pursuing demand side and supply side strategies," said Dr. Raed Kombargi, Booz Allen Hamilton. "Oil and gas organizations that proactively manage their capability will enjoy a significant advantage in the industry. There are clear signs that those with a strong response to the capability challenge will have a far higher probability of being able to deliver on the potential of their asset portfolio," he added.

A summary of the study's findings follows below.

Ageing Workforce: The study found that around 50% of professional staff in the industry are between 40 and 50 years old, while barely 15% are junior recruits. This is compounded by the fact that up to half of the current workforce is likely to retire within the next ten years.

"Within the industry, it takes up to 3 years for staff to develop basic industry operating competence and up to 10 years plus for many professional disciplines. Therefore, the gap is easily noticeable," commented Dr. Kombargi.

Specialized skills needed: Of the companies that were reviewed during the study, it was found that in 22 leading US oil and gas companies, there are significant shortages in sub-surface engineering as well as in other technical disciplines. In addition, an estimated 40% of industry employers worldwide report difficulties in filling skilled-worker positions.

Increased workload: The nature of the oil industry has changed, with 'more difficult oil' needing to be extracted, requiring customized technology and project management expertise. The geology of reservoirs is also an issue, with more complex formations and physical access more challenging than ever (e.g. deep water), requiring different technology applications.

Escalating Costs: The costs to organizations for skilled workers are increasing. The salary of a geologist with 10 years experience increased more than 25% between 2003 -2006. Salaries for oil drilling rig jobs increased by 60% during the same period. Companies have also been driven to hire retirees as contractors - at twice the price.

Regional Impacts

The impact of the skills gap is already being felt across organizations around the world and particularly within the GCC and MENA region, where skilled labor is limited. The study found that there are too few experienced people across the industry to support existing operations, or to support the future growth plans and the execution of major projects that are currently in the pipeline.

"What the industry is in fact witnessing is a huge decline in job capability coupled with a lack of proper remuneration for the skilled workforce. The ageing workforce combines with the lack of job-ready skills among undergraduate recruits, where rising salary costs also play a role. We are also seeing increased competition for skilled workers, meaning workers are quick to resign for a position with greater remuneration," Dr. Kombargi said.

The study additionally highlighted that effective management of 'People Issues' is now a strategic business challenge, and that short term gains will not deliver long term solutions to the problem.