Analysis: Recruiting, Retaining Skilled Workers Still Issue for UKCS E&P

While exploration and production (E&P) activity on the UK Continental Shelf (UKCS) has rebounded from low activity levels seen in 2009, the recruitment and retention of skilled workers, including geologists, project engineers and subsea specialists, has re-emerged as a challenge for the UKCS oil and gas industry, the Aberdeen & Grampian Chamber of Commerce reported in its 13th Oil and Gas Survey.

Stable oil and gas prices, increasing investment in exploration and project activity, and positive expectations about the immediate future are leading to more confidence about the longer term future among operators and contractors. The majority of operators and contractors reported they expected to increase their staff over the next three years, with operators increasing the number of contracted staff, while contractors will add more permanent employees to their rosters.

Companies surveyed indicated seeing signs of increasing demand for staff are evident in the increasing recruitment activity, in the demand for additional staffs, and in the rising trends in working hours being above planned levels. More than half of operators reported increasing direct staff in 2010, with only 29 percent reducing staff. A similar pattern was seen in the recruitment of contract staff, with increased use of contract staff expected in 2011.

"The challenge now is for the industry to build on this confidence and encourage the next generation that our industry has a bright future they would do well to commit to. Industry must sell itself to the next generation and ensure that training and experience are of the highest order," said Bob Ruddiman, partner and head of energy at law firm McGrigors, which sponsored the survey.

However, the survey indicates that acute shortages will exist for managerial and skilled technical grade workers; the shortage will likely peak in 2012. While operators surveyed reported having no difficulties recruiting administrative and clerical staff, managerial and professional workers had become harder to find since 2009. In 2009, one fifth of operators reported difficulties in recruiting staff to particular occupations; this year, two-thirds of operators reported such difficulties.

Contractors had an even more difficulties finding skilled workers. In 2009, 38 percent of contractors reported difficulties in recruiting staff to particular occupations; by 2010, 53 percent were reporting such concerns.

Oil and gas companies' biggest competition in recruiting and retaining staff are other oil and gas companies, with the main reasons cited for loss of staff being workers leaving to work for other oil and gas companies and to work in other oil and gas regions. All operators surveyed cited the oil and gas industry as their main source of staff, while 64 percent of contractors reported other oil and gas related UK companies were their main source of staff. Difficulties in attracting staff due to excessive demand for remuneration poses a challenge, as does recruiting staff to work overseas in 'less desirable' areas.

Confidence for the UKCS outlook among operators is expected to remain level over the next year, despite some concerns as to the possible consequences of the Gulf of Mexico spill in terms of regulatory moves by the European Union and to additional industry taxes being levied as part of the government's attempts to reduce public sector borrowing. Contractors also report a rise in business confidence in comparison with surveys conducted in October 2008 and October 2009.

Both operators and contractors reported rising confidence in the global oil and gas market, with exploration, development and production activity expected to rise through 2011.

The survey found that oil and gas companies are particularly interested in investment in the revival of the UKCS and global petrochemical markets as compared to opportunities for renewable energy projects, which has raised questions about whether the ambitious targets set by the Scottish government to increase the amount of electricity generated by renewable energy can be met.

The current Holyrood administration set targets for 50 percent of electricity consumption and 20 percent of all primary energy use to be met by renewables in 2020. Industry body Scottish Renewables in September called for massive increases in Scotland's renewable energy targets with a report showing Scotland on track to go beyond the 50 percent objective by 2020.

Despite rising interest in renewables and the apparent synergies between the sectors, interest in entering this market was only seen as a medium-term possibility and few respondents reported staff leaving to enter this sector.


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Peter Pomeroy | Nov. 26, 2010
The difficulties being experienced in recruiting and retaining staff in the UK should not be a surprise to anyone with an eye. The pay rates on offer for UK based contracts are pathetic, when compared to other areas of the World. Construction Manager level contracts are frequently offered to me with pay of Stg 55K to 65K per annum, whilst the same level of contract in Asia will pay between Stg 20K and 25K per MONTH, and with a lower taxation burden. In Australia the rates are even higher, and rising, but with a very heavy taxation burden. Offer the rate for the job, and recruitment will become a breeze!

Dion Oldland | Nov. 26, 2010
I have been trying to get into the oil and gas industry for two years now and it seems the recruitment people and companies and the oil and gas companies themselves don't want people that haven't got 5-10 years experience in any field. If there is such a shortage of trades people and skilled workers then why don't they take on more trainees and let people like my self with 15 years experience as a heavy diesel mechanic in and prove we can be of use.

Kevin Henson | Nov. 24, 2010
I have been out of work since July 2009 having spent over 30 years in the oil industry. I have been actively trying to get back to work, I am prepared to accept anything. Problem is I don't see the phenomenon mentioned above. Once you are released from the Oil industry, it is hard to get back in unless you have contacts outside of the recruitment agencies.

CJR | Nov. 24, 2010
The industry has long known of this problem. A while ago Shell advised that 25% of its workforce would retire in the next few years, taking 75% of its experience with it. I recent passed the Petrobras R&D Centre CENPES, in Rio de Janeiro, to discover across the road a large university had been built since my last visit to the area. I doubt if anyone is studying for a degree in advanced needle work there-in. Oil companies have ruthlessly raped their vendors and contractors for new staff, and vendors and contractors are not in the business of paying for the training of new hires for this purpose. The situation is not helped by a UK school population that is too lazy to study what are seen as "not for me" subjects, like engineering. Then one reads the industry wants to import (cheaper) labour from foreign countries where pupils do study for a better life, further reducing the opportunity for UK pupils. That our accountancy ridden industry cant get its act together does not surprise.


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