Over the next 10 years, the North American oil and gas industry will have some significant gaps to fill when it comes to skilled labor. With about half of the industry’s experts expected to retire within 10 years, what will the future of the petroleum industry look like, and what can be done to ease the transition? In part 1, we’ll look at some of the reasons why the industry will be experiencing shortages.

Why the skills shortage?

It is no secret that the “baby boom” generation is aging. With the oldest baby boomers already in their mid-60s, and the younger ones nearing their 50s, most of these people will be closing in on the end of their working lives in the next decade, if they aren’t already retired.

Unfortunately for the petroleum industry, as they leave, so does their valuable knowledge and experience. This is not something that can be replaced simply by hiring.

The following graph, taken from this National Petroleum Council paper, paints a pretty clear picture of the problem, as is pertains to American petroleum engineers.

The situation is no better in Canada. The following graphs, created using data from this Petroleum HR Council of Canada study, show that even to keep pace with low-to-moderate industry growth in the next 10 years, significant hiring will have to take place to replace retiring workers.

Projected Hiring requirements for: Engineering & Geoscience (left graph), Production Accountants (right graph). Source: Petroleum HR Council of Canada

This mass retirement would not be a problem if there were enough replacement workers in the pipeline, but currently there are not. This Engineers Canada study predicts that there will be “significant supply pressures” in key engineering disciplines, including industrial/manufacturing engineering, mechanical and civil engineering, and petroleum engineering, starting as early as 2012. The PHRC study also predicts a shortage of production accountants as early as 2013, depending on industry growth.

Many of the predicted shortages in key Canadian engineering disciplines are due to declining immigration rates into the industry, which are not being sufficiently offset by increasing Canadian graduation rates.

Biggest Problems the Industry will face

Three major problems that we foresee going forward are:

1. Difficulty replacing lost knowledge/experience of baby boomers

The knowledge gained by a professional over 35 or more years in an industry cannot be replaced easily. For example, it can take 10 years or more to develop a new engineering graduate into a full-fledged engineer who can be relied upon to execute complex projects and tasks with minimal supervision. This will put a premium on workers in the “10+ years of experience” bracket, and will likely lead to wage inflation.

2. Increased workload/stress for experienced professionals

Though the supply vs. demand gap will be favorable for experienced professionals from a wage standpoint, they will likely become more and more overworked as the boomers retire.

3. Training incoming graduates

Although a large influx of younger knowledge workers will be required to sustain the industry going forward, the time of experienced professionals will be at such a premium that it will be difficult for companies to dedicate adequate resources to the development of entry-level staff.

What can be done?

We’ve painted a pretty dire picture thus far, but the situation is not all doom and gloom. There are many things that companies can do right now to help mitigate looming staff shortages.

Next week, we’ll discuss some things that your company can do to help ease the transition.

We want to hear from you!

What problems do you foresee for the energy  industry in the next 10 years? Tell us in the comments.

Commercial internet and data integration technology holds promise of delivering economical solutions for facility operators looking to improve the quality of their daily sales allocations reported to the pipelines. There has been successful experience documented by a few plant operators that have:

• standardized the collection and validation of measurement data to simplify the capture process for field and plant operators
• made strides in helping to streamline the producer’s task of delivering reliable daily volumes to the CSO
• utilized a subset of the monthly production accounting data structure to drive the daily process
• tailored the daily processes at each facility to meet the unique requirements of the facility
• provided the plant administrators with the tools to analyze and verify allocation data before reporting to the pipeline
• made daily production history available as a guide to forecast what to expect from producers, and provided analytical tools to operations staff to monitor shrinkage, fuel, flare, vent and production loss.

These improvements are available to any facility operator having a reliable internet connection and willing to invest in the implementation of the updated processes. System integration tools are available to take advantage of the production configuration data already being maintained, so that the daily allocation update incurs little overhead.  Fortunately, most people are familiar with current internet capability, resulting in a solution that is easily implemented and accepted by plant and field operators.

Contact us if you would like to obtain a case study on the Southern Union experience.

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