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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