What Lasting Oil and Gas Workforce Changes are Underway?
From the “great crew change” to “the great compression,” some experts say the ripple effect of the industry’s cyclical upswings and downturns has played a part in keeping the latest technology out of the hands of some of the most crucial workforce – until now.
“Usually one of the catalytic casualties of the downcycle is technology-related progress, but I do think it’s changing,” said Travis Parigi, chief executive officer of privately held mobile field operations management solutions company LiquidFrameworks, which specializes in the energy industry.
The ‘great compression’
According to Deloitte’s 2021 Oil and Gas Industry Outlook, U.S. oil and gas companies laid off about 14% of permanent employees in 2020. More than 70% of jobs lost during the COVID-19 pandemic may not come back by the end of 2021, according to the report.
Deloitte calls the downturn of the past year “the great compression of the oil and gas industry,” noting that “the next decade could look very different for the entire oil and gas value chain.”
“The pandemic has significantly exacerbated the effects of the tremendous layoffs,” Parigi said. “But it’s also accelerated companies’ recognition and desire for a need to move out of a world that is a lot less inefficient at doing some things into one with more digitally oriented tools for its workforce – like moving away from using clipboards, paper, computer spreadsheets, or wall-hanging white boards for data development.”
He pointed to the fields of financial services, logistics, and distribution as models for adopting this kind of workforce change. “They empower all the way down to the end user to be able to get what they want and do what they want on demand,” Parigi said.
Skillsets over industry training
From horizontal drilling to subsea engineering and hydraulic fracturing, the oil and gas industry has long been one of innovation. It’s also been an industry a seasoned veteran workforce (median age over 44) calls home away from home until retirement.
Those jobs and their longevity are harder to come by, said Mukul Bhatia, executive professor and director of the Berg-Hughes Center for Petroleum & Sedimentary Systems at Texas A&M University in College Station. Bhatia, who spent the majority of his 35 years in the industry working for BHP (NYSE: BHP) and Total (NYSE: TOT), noted that “you need to be the best of the best to work for companies like BP (NYSE: BP), ExxonMobil (NYSE: XOM), and the large independents,” which he said causes concern for students about whether they will be able to get jobs in the oil and gas industry.
Enrollment is declining in petroleum engineering and geoscience courses at Texas A&M with fewer graduate students as well, he said.
One positive change Bhatia said he sees brought about by the pandemic is society, investors, and oil companies placing perhaps a greater focus on climate, economic growth, and the well-being of people. This change is reflected in part in A&M’s curriculum.
“We are trying to focus students more on skillsets, rather than saying oil and gas is the only possibility of employment,” he said. “That’s helped, especially since the world is moving toward carbon capture, carbon storage, carbon neutralization, enhanced oil recovery, and geothermal energy.”
A catalyst for change
The oil and gas industry has been on the cusp of transformational change for a number of years, with the pandemic becoming a significant catalyst to accelerate a pivot and implement new ways of working.
Layoffs, younger workforce demographics (Deloitte reports one-fourth now between the ages of 24 and 34), as well as telecommunication and workstyle changes have motivated many companies to embrace digital transformation, Parigi said, noting that “companies are having to do more with less.”
“A lot of employees are a lot savvier now than they were decades ago,” Bhatia said. “They know how to look for information. So in some ways we are better to look outside our own corporations, but certainly lack of in-house expertise in some ways could be a negative as a result of this compression. This isn’t the first time we’ve gone through this downcycle, we’re kind of used to it. In the 1980s, as an example, we didn’t have a digital world; now we have the digital world.”
Digital transformation is trending
”The new workforce demographics expect digital technology and tend to interact with apps differently than the veteran workforce,” Parigi said. “The way they run their life – from managing their social life to their personal finances – is all done very quickly with quite a bit of information at their fingertips on apps and from their phone, tablet, whatever digital device they have.”
Digitization is one of the five trends outlined in Deloitte’s report that may challenge ways of operating, increasing the distance between innovators and traditionalists.
“My own feeling is that as our processes become simpler, as our technology improves, there might not be quite as much experience in the company, but technology adoption of machine learning and data analytics tools, as well as digital availability of information more globally, would help make up part of that loss,” Bhatia said.
Monique Jozwiakowski is the president and CEO of Houston-based MOJOZ Consulting, LLC. This article references information from two Deloitte reports; the firm's 2021 Oil and Gas Industry Outlook and The future of work in oil, gas and chemicals.
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