Herold report

I have some comments regarding OGJ's June 19, 2000, editorial, "The lay-off legacy."

You quote a study by John S. Herold Inc. addressing the short-sighted downsizing programs of the oil companies over the last 18 years, and that according to the Herold report the industry will have trouble playing catch-up in the near-term since there are few experienced people left. Thus, the industry will need to hire non-petroleum engineers and train them.

I believe this reasoning is flawed, based on my almost 30 years in the business. I have been fortunate to maintain a career in this industry over that whole period, but times have definitely changed and are unlikely to return to the way things used to be. In my role as a consultant on corrosion and materials for oil and gas production and transportation, I see a very clear trend away from the oil companies hiring engineers and towards outsourcing many of the technical functions. These technical aspects, many of which are highly experienced based, are assumed by oil company management to be readily available in engineering and construction companies, at service companies, and from manufacturer's. This assumption couldn't be further from the truth, but management doesn't want to be bothered with this detail. In fact, all of these service-sector companies have likewise laid off the experienced pool of people they once employed, again to be cost competitive.

The bottom line then is that there is an implied transfer of responsibility for highly technical-and thus highly risky-design, construction, and operation of projects to service companies that are all considered equivalent (this is called a commodity mentality) but which many are ill-equipped to handle. The net result is not that the industry will scramble to hire non-petroleum engineers and train them, but that service companies eager to maintain business will take on work they are not qualified to handle and no one at the oil company will be the wiser, resulting in an increase in major equipment failures.

The oil companies cannot really relinquish their responsibility for proper design, construction, and operation of their projects. Therefore, until the industry really recognizes that they must have highly qualified people both on the oil company side and on the contractor side of these projects, our industry will suffer greatly in the near term.