Observers say technology gains can't nullify industry's personnel gap

Steven Poruban
Oil and Gas Journal

HOUSTON, Sept. 24 -- The shortage of skilled technical personnel again looms over the oil and gas industry.

Many observers perceive industry�s labor dilemma as having reached a flashpoint of sorts. Although the situation would not appear to lend itself too easily to any immediate or obvious solutions, those grappling with the crisis appear cautiously optimistic about solving it -- or at least doing their best to adapt to it.

There is no denying the shrinkage of industry�s work force. In the US, the number of employees working in oil and gas extraction dropped from 393,000 in 1991 to 304,000 in 2000, according to the US Bureau of Labor Statistics.

Meanwhile, advancing technology has emerged as a "bandaid" to improve the efficiency and productivity of workers at oil and gas companies. Many industry sources, however, doubt how long these newly gained efficiencies will last without industry addressing the underlying problem: its shortage of skilled technical workers owing to a "generation gap" spawned by the boom-and-bust cycles of recent decades.

Myriad obstacles work against the disarming of the demographic time bomb:

-- An increasingly global marketplace that makes competing for, as well as retaining, technically skilled workers more challenging for oil and gas companies.

-- A continuing upward creep in the average age of industry�s talent, with a sizable percentage of experienced technical personnel expected to reach retirement age within 10-15 years.

-- Industry�s poor reputation -- marred by images of environmentally damaging oil spills, volatile energy prices, and sweeping layoffs during down cycles -- continues to thwart efforts to recruit technical newcomers.

-- The strain being placed on the existing workforce to maintain productivity, or even raise it, with less human capital.

For many, the shrinking of industry�s technical workforce has reached a critical point. Others would argue that the situation�s inflection point has long since crested.

"The 'pivotal point' has already passed," regarding industry�s shortage of technical personnel, said Ron Hinn, benchmarking director, Occidental Permian Ltd., Houston. "If the exploration and production business were a professional sports team our 'roster depth' would be slim, and our 'farm system' would be struggling," he added.

Thomas Knudson, Conoco Inc.'s human resources president, said industry has experienced one pivotal point after another and that the oil and gas industry is not the only one dealing with a personnel shortage: "I think if you look at what�s happening demographically in society today, it's an issue for every industry, not just the oil industry.

"The thing that distinguishes today from other periods in our history," Knudson added, "is not so much just pure demographics but whether or not we can make a really compelling case for our business as a career.

"If you have a really compelling future, and you allow the people that work for you to really have a role in creating that future, you will never lack for talent," Knudson said.

Craig Van Kirk, professor and petroleum engineering department head at the Colorado School of Mines, Golden, Colo., said that although this latest workforce crunch is not a new problem, it could potentially be one of the biggest in industry�s history. "The gap in manpower available right now and the future forecast of the needs within the industry to accomplish what it needs to accomplish has far outstripped today�s enrollments in petroleum engineering, geology, and geophysics [disciplines]," Van Kirk observed.

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