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The Great Crew Change: 'Wolf Cries' or Reality?

by Barbara Saunders
|
Rigzone Staff
|
Friday, August 12, 2011
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For more than a decade, the Great Crew Change has generated deep concern among many – and skepticism among some – in the oil and natural gas industry.

Much like the old story about the boy who cried "wolf" so many times that nobody would listen when the wolf finally was at the door, statistics confirm that the post-World War II "baby boom" generation is at the retirement door.

What remains to be seen is how well the industry on the whole heeded the "wolf cries" to usher in a well-trained new generation of both technical professionals and rig labor, the two areas of greatest perceived need.

Are We There Yet?

Although there is some controversy about whether the Great Crew Change will be all that sweeping, the age statistics are indeed alarming. According to Pete Stark, VP of industry relations for IHS, the peak age for oil and gas technical personnel has risen from 43 in the year 2000 to 50 in 2006. The peak age is expected to be 60 in 2012.

Another way of looking at the situation is about half of the industry will be retiring within the next 10 years.

Retirements in progress mean that "the big crew change is happening now and will be mostly over in five years," according to a 2011 study by Schlumberger Business Consulting. The study projects that by 2014, the inflow of younger petro-technical professionals (PTPs) will be only about 17,000, compared with roughly 22,000 experienced PTPs who are expected to leave by then, for a net shortfall of 5,000.

 

Other key findings of the study included:

  • Demand for graduates is recovering and outpacing the pessimistic forecasts of a year ago. Recruitment targets for technical staff in 2011 are 15 percent higher than levels planned in 2009. National oil companies (NOCs), independents and majors all plan to intensify recruitment efforts from 2011 onwards.
  • Universities appear to be on track to provide the oil and gas industry with sufficient graduates in geosciences and petroleum engineering, but supply from "quality universities will remain tight."
  • Recruitment targets for PTPs in mid-career are soaring, with NOCs and majors reporting the highest rates of increase. "The labor market for experienced PTPs will be tight over the next three years, resulting in the poaching of staff, salary escalation and higher attrition rates," the study said, continuing: "These staffing issues will have serious consequences on projects and production capacity. Companies contributing to the 2010 survey reported that staffing issues will delay projects and may drive decision makers to take more risk."

Mentoring Key

Meanwhile, the American Association of Petroleum Geologists (AAPG) teamed with the recruiting firm Working Smart in a survey this past May of technical oil company professionals age 55 and over. Of those who responded, the average intended retirement age was 65, with only 23 percent seeking to work beyond retirement age.

Many respondents felt that mentoring younger staff is a key factor in reducing adverse effects of the great crew change. The survey showed that 77 percent of respondents were currently mentoring younger staff.

Mario Carminatti, exploration manager for Brazil's national oil company Petrobras, told an industry conference that 42 percent of the company's geologists and geophysicists have less than five years of experience. "We are countering this by increasing the number of senior geoscientists and even retired professionals who operate as mentors to the younger generation," Carminatti said.

J. Ford Brett, managing director of PetroSkills, says that the price tag could be in the tens of billions for having less experienced technical personnel. If the looming demographics result in approximately 20 percent of the industry's personnel having fewer than five years' experience, Brett calculates that it's reasonable to expect a 20 percent reduction in performance across the board. "To put this into focus, in 2006 the industry spent about U.S. $170 billion on E&P. A 20 percent reduction in performance correlates with an economic cost of approximately U.S. $35 billion," Brett stated in an article for the Society of Petroleum Engineers' Talent & Technology
publication.

 

The Great Crew Change | RIgzone.com

 


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WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Reginald Vilo  |  August 15, 2011
I think that the Oil and Gas Industry is overlooking the Experience and Qualified personnel because of who we don't know in the front office... It's sad, but that's the way it is in most cases.
Ken Hemmerich  |  August 15, 2011
I think that most of the baby boomers will retire later in life than historical averages. Most people I know are planning to work until 70 or longer. I have just hired a couple of people in their 60s. They are both planning for another 10 years at least.
Tony Spratt  |  August 15, 2011
The issues are much more severe than perceived in my opinion. The turnover has dramatically outpaced the ability for vendors to mentor the new hires. Producers have hired many of the most capable and people with only a couple of years experience, who didn't have mentors themselves, are now overseeing new hires throughout the industry. It truly is the blind leading the blind. This at a time where the producers are putting more and more of the work/responsibility onto the vendors.
John G Davies  |  August 15, 2011
Depends where the statisticians are looking at. The drilling industry is desperately short of personnel. All the new builds are increasingly dragging the best from the rest of the sectors; but still the industry has the response to potential newcomers "Sorry, you have no experience on drilling rigs". You could be the highest qualified person and most experienced in the world in your skill but the answer is still the same, no rig experience. A 16 year old apprentice has no experience so how does he get a job!!!!!!!!
G. Henry Pennings  |  August 13, 2011
I have some simple observations from a simple tool hand: - we have more higher eduction level personal in all fields - we have lower field experienced personnel in all fields - common sense is not quite so common anymore - many of the majors tell me that they will not pay my day rate for a simple fishin' hand. - I have worked more days than I really want since 2005... - times are a changin'.....
Iain Percival  |  August 13, 2011
The actual situation is somewhere in between. I speak from the perspective of being a former Chief Petroleum Engineer for one of the Global Oil Majors and since retirement several years ago active in Petroleum Engineering (PE) education and consulting on individual & organizational capability issues for a wide range of oil companies - NOC, IOC and Independents. Firstly, let us not forget that the term "great crew change" was coined by Landmark as a way to push its software and work flow products in the early 2000s. It was a very successful marketing wheeze and the term has stuck. Secondly, the situation analysis is biased towards the US where supply of / demand for PE graduates at any one time is taken as the bell weather for industry as a whole. Overlooked or ignored in the statistics is the fact that a large proportion of PEs recruited and developed by organizations outside of the US are graduates from many engineering and physical science disciplines and who become some of the best engineering talent in the business. Thirdly, there is a myth (certainly in Europe and Asia) that our young engineering & geoscience students do not want to join our industry. This is nonsense proved by the numbers of those students (both male & female) applying for internships and jobs in the industry. Fourthly, industry as a whole despite generating massive cash flow can be rather miserly in terms of allocating funds to such activities as supporting students or providing project work (either individually or through university programs). This applies equally well to paying for and providing effective mentorship capability. I have experienced the inflexibility of organizations attempting to retain or attract experienced and willing mentoring capability. Often there is the attitude of "Its the HR way or the highway". The result is many potential mentors leave the industry taking their insights and experience with them. In addition, many professionals working in the business do not appear to regard the issue as "their problem". A case in point is comparing attendance at two events held at the SPE ACTE in Florence last year. The session on Reservoir Management was standing room only with +/- 200 attendees crammed into the room. The next day in the same room the session on Talent Management attracted..........15 attendees! Fifthly, universities are not exactly falling over themselves to accommodate the views and insights of highly experienced technical professionals wishing to "give something back" in terms of updating geoscience & engineering curriculum content, occasional teaching, project supervision, mentoring, etc. With a number of honorable exceptions, academics give the impression of being reluctant to accommodate the (potential) disruption of bringing in industry experience used to a different pace and sense of urgency. This is unfortunate as even before joining our industry the next generation of (potential) technical / business professionals are denied the mentoring opportunity which may be in short supply once they join it. I am sure exception will be taken to some of the points I have made. I am comfortable with that and am the first to admit that (as I noted above) there are honorable exceptions in terms of approach to mentoring, support for students and universities, retention and application of available experience & expertise. However, I have experienced at first hand and heard from many recently retired peers, young professionals and university students that there is significant room for improvement. I would be more than happy to engage with anyone who holds a view opposite to mine. I would be even happier to engage more with company and university representatives to improve the current situation of saying one thing and doing another.
Alan Fortune  |  August 12, 2011
I believe too many are thinking ONLY of the technically trained staff. What about the people who actually do the work, they are not even getting mentioned. I travel a lot now as an auditor/surveyor. (I have over 35 years experience in all areas of the industry). I see so much inexperience and complacency that are the root cause of the majority of incidents and accidents today. The experienced hands-on mentors who could improve the situation (if they were listened to) are being kicked out because they are not young and pliable and too expensive. These (QBE) qualified by experience people should be retained, the cost is minimal to the cost of lives lost due to inexperience and complacency. I see it and hear it every day. Get out of my way you old fart, I only need to watch my gauges, they will tell me what is happening. WRONG, the old fart can feel what is happening before it does. He does not need a committee meeting to assess a situation and make a decision that is correct. Most of the QBE people are NOT looking for greener pastures, they wish to pass on what they have learnt over years, this knowledge and experience cannot be taught in a classroom. These QBE people will be needed for years to come, do not dump them or put them in an office, keep them in the field where they can use that hard gained experience to observe and advise the younger generation (if they will listen).
Doug Williams  |  August 12, 2011
We had better stock up on Squirrel feed & pacifiers.
Barbara Saunders  |  August 12, 2011
Thats a good observation, John. Anecdotally as well, I hear that the pace of hiring slowed in the wake of the financial crisis, but has picked up due to sustained higher oil prices and the shale drilling boom. One question on my mind is: Can the industry afford boom/bust hiring right now, and doesn't that repeal some young people who might otherwise be interested?
John Moore  |  August 12, 2011
I'd like to understand how the recent financial crisis and resulting stock market crash affected the Big Crew Change. Anecdotally, I hear that many boomers are sticking around because of it, and thus it would seem have compounded the brain drain problem through a "piling up" of the exodus which I think is upon us.


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