HR Constraint Contributes to High Oil, Gas Development Cost

Article title
Human resource constraint contributes to higher cost in developing oil and gas projects, a senior company official from Halliburton says.

Human resource constraint is one factor contributing to higher cost structure in developing oil and gas projects globally, a senior company official from Halliburton said Wednesday at the Offshore Technology Conference Asia 2014 in Kuala Lumpur, Malaysia.

"One of the thing that the [oil and gas] industry need to focus on is we are all resource constraint ... The number of students studying traditional subjects [like] geology, petroleum engineering, basic engineering ... they have other opportunities in the world today," according to President and CEO of Halliburton David Lesar, who spoke at a plenary session on "Game Changing Technologies in Offshore Exploration & Production."

"Some of the cost is being driven by the fact that there is a limited resource pool out there. We all compete for them (and) we have to pay higher compensation. [So] we have to get rewarded for paying that compensation in terms of higher rates and I think that is ... driving the [project] cost."

However when the cost of hiring staff gets too high, contractors and operators are going to invest more on technology to try reducing their dependence on human resource, Lesar added.


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Russ Moores | Mar. 26, 2014
Technology will always have a perpetual and increasing role to play however, as implied by Mr. Lesar, it will never totally replace the need for human resources as suggested in this article. Companies would not be facing these escalating project costs had they maintained their recruitment and training programs so common in the early eighties. Sadly, closing the gap now is a daunting task with a significant cost associated. A classic catch 22, no doubt. It would be a bold move for one company to implement a program only to see their "graduates" recruited by their competitors for what would be a very insignificant premium. It will take the larger companies acting similarly with like type programs to tackle the problem and overcome this, however if project costs are an issue now then sadly there is no hope for a budget to address the solution.

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