Colonial CEO describes workforce recruitment, retention challenges

Nick Snow
Washington Editor

WASHINGTON, DC, Nov. 8 -- The nation's largest oil products pipeline system faces the impending retirement of a quarter of its workforce and competition from other industries for new employees as it prepares a large expansion of operations, its chief executive told a US Senate committee on Nov. 6.

Oil and gas industry consolidation sharply reduced employment by more than 500,000 jobs from 1982 through 2000, Colonial Pipeline Co. President and CEO Norm Szydlowski told the Senate Energy and Natural Resources Committee during a hearing on energy industry employment.

"While Colonial's employment remained relatively stable during those years, we have had to deal with the same shrinking pool of candidates applying for careers within the overall industry. We are competing hard for candidates who may have fewer skills than candidates 10 years ago," he said in his written testimony.

The products pipeline has responded by offering entry-level workers with high school diplomas starting base salaries around $42,000/year with shift differentials, overtime, bonuses and benefits, and geographic differentials in critical markets, Szydlowski said. Nonskilled employees potentially can increase their annual base pay to an average $70,000/year, while those who become lead operators receive $84,000, he indicated. "The competition for engineers and more highly skilled employees is more intense and the pay packages accordingly climb dramatically," he added.

Keeping qualified workers is difficult when the trend is for them to work 2-3 years to master skills before looking for another job elsewhere, Szydlowski said. "But an even larger contributor is the graying of our workforce," he told the committee.

Close to retirement
"Industry-wide, the petroleum sector estimates 27% of its workforce is within 5 years of retirement. That figure is the same for Colonial's workforce. The problem is worse among the people who operate the pipeline, where nearly one in five employees is eligible to retire within 2 years," Szydlowski said.

Among Colonial's 4 most critical positions, he continued, 35% of its senior operators-lead operators and 29% of its inspectors are within 2 years of retiring, while controllers, who monitor pipeline operations, and maintenance technicians each have 15% of their complement eligible to retire within 2 years.

Szydlowski noted that the US Bureau of Labor Statistics puts the average US worker's age at 39 years. Colonial's average employee age is slightly less than 44, and more than half of its workforce is over 40, he said.

"Unfortunately, these workforce issues are striking just as the business demands on and opportunities for pipelines are accelerating. This is especially true for Colonial Pipeline," he said.

Expansions are under way for several Gulf Coast refineries that the system serves, Szydlowski said. As a large-volume pipeline capable of transporting oil products to major population centers in the South and on the East Coast, Colonial is in an excellent position to help the industry grow and increase available fuel supplies, he said.

He said that the company currently is developing a project that would add a third 36-in. pipeline along its existing corridor between Baton Rouge and Atlanta, which could add 800,000 bbl of additional daily capacity. The project still faces significant regulatory and engineering hurdles and awaits final approval of Colonial's owners.

Causes of increase
"When we initially proposed the project, we estimated the cost would be $1 billion for 465 miles of new pipeline. However, we now estimate the project will top $2 billion. Part of that may be our conservative estimates in the beginning, and part of it is the rising cost of steel. But a significant part of our higher estimate is due to the competition for qualified workers to build our project," Szydlowski said.

The refinery expansions which make Colonial's proposed project possible also are draining the labor pool for it, he explained. "Although construction on our proposed project would not begin before 2011, our forecast is that the labor market will be as tight, if not tighter, by that time," he said.

Szydlowski said Colonial also has been conducting research on possibly transporting ethanol and other biofuels. "As you may be aware, we are working with others to determine whether ethanol can be transported in a steel pipeline without inducing stress-cracking. While initial results are encouraging and there is much work to be done and questions to be answered, we hope to make test shipments in 2008," he said.

While such efforts aren't likely to add significantly to Colonial's long-term workforce needs, system modifications to handle these fuels could create additional demand for scarce design and construction expertise, he added.

He recommended that Congress and the administration encourage policies which improve technical schools and skilled trade training, and consider providing federal tax relief to companies offering phased retirement initiatives so employees won't retire solely for access to lump sum post-career benefits.

Also, said Szydlowski, "As Congress works on solutions to the immigration question, please keep in mind that foreign workers represent a potential pool of skilled workers that would address our workforce shortages."

Contact Nick Snow at nicks@pennwell.com

Related Articles

Oil, gas infrastructure investments essential, House panel told

02/04/2015 Investments in oil and gas transportation and storage should move ahead because they are essential in continuing the US economic recovery and North...

EPA suggests DOS reconsider Keystone XL climate impact conclusions

02/03/2015 The US Department of State might want to reconsider its conclusions regarding potential climate impacts from the proposed Keystone XL crude oil pip...

Obama’s proposed fiscal 2016 budget recycles oil tax increases

02/02/2015 US President Barack Obama has proposed his federal budget for fiscal 2016 that he said was designed to help a beleaguered middle class take advanta...

So much for cooperation

02/02/2015 Congressional majority leaders and the Obama administration came into 2015 pledging to at least try to be less combative and more cooperative in ru...

Woodside gets NEB approval for British Columbia LNG exports

02/02/2015 Woodside Energy Holdings Pty. Ltd. has received approval from Canada’s National Energy Board on its application for a 25-year natural gas export li...

Data refute Lew's claims about taxes paid by producers

02/02/2015

On the subject of taxation, administration officials count on the public to believe anything.

Kerry expects to receive other agencies’ Keystone XL reports soon

02/02/2015 US Sec. of State John F. Kerry said he expects to receive other federal agencies and departments’ reports soon on the proposed Keystone XL crude oi...

Iran yields to Russia in talks over Caspian resources

02/02/2015 Iranian acquiescence to Russia, to which the Islamic Repubic increasingly turns in response to pressure from the West, has become a standard featur...

US oil, gas industry eager to build on past successes

02/02/2015 The US oil and gas industry entered 2015 optimistically as a dramatically improved US supply outlook's economic and security benefits became increa...

White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by

Available Webcasts



Global LNG: Adjusting to New Realties

When Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

When Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST



On Demand

The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected