Skills Gap Challenges Energy Majors
The article below by Peter Stewart was published on Interfax’s Gas Daily Briefing on 7 August. Peter is the founder and owner of Resource Economist Ltd, a training company. He worked as chief energy analyst with Interfax since 2012, and is an external consultant at the company.
Skills gap challenges oil and gas majors
As new graduates thumb through job listings after their university graduation ceremonies, fewer of those with advanced digital and engineering skills are looking to the oil and gas sector for employment.
That risks problems ahead. Skills shortages have recurred in the gas and LNG sector in recent years as projects have become more complex. But the need to mesh the use of fossil fuels with intermittent renewables and demand-side management in the power sector will throw up huge technological challenges in the near-future.
In its Energy Barometer 2019 survey, issued in July, the Energy Institute identified that a more flexible energy system would be required to meet future energy needs.
Digitalisation is seen as vital for integrating intermittent renewable energy sources such as solar and wind into a system that has traditionally been powered by coal and gas. Data analytics, big data, and digital connectivity skills were seen as priorities by many of those who responded to the survey.
But Airswift, a recruitment company specialising in the oil and gas sector, points out a growing demand for similar skills in other sectors.
“This isn’t just a problem for oil and gas,” it said in a web post. “Europe alone is going to need 346,000 more data scientists by 2020, according to IBM’s The Quant Crunch report, and 28% of all digital jobs by that point will require specialist data science skills”.
In the UK, the Offshore Petroleum Industry Training Organization (OPITO) – an industry-owned association – issued a report in May outlining the need to upskill the existing oil and gas workforce in key sectors including data science, data analytics, artificial intelligence, machine learning, robotics, material science, remote operations and cyber-security.
Other areas that OPITO says need an injection of talent are change management, control of change, project management and the social aspects of change. The UK Oil & Gas Authority’s plan to sustain oil and gas production on the UK Continental Shelf also emphasises big data and artificial intelligence. The OPITO report, Workforce Dynamics: The Skills Landscape 2019-2025, highlights the need for a more flexible, multi-skilled and technology-enabled workforce.
It is estimated the UK oil and gas industry will have to attract 25,000 new people by 2025 even though – because of staff attrition and retirement – the overall workforce will drop to 155,000 from 170,000 in 2018. Around 4,500 of the new jobs will be in roles that do not yet exist.
With 80% of people currently working in oil and gas still expected to be in their jobs in 2025, OPITO believes that upskilling will be key to meeting the demand. One of the biggest problems faced by the oil and gas majors is that many millennials entering the market see the oil and gas sector as being on the wrong side of the climate debate, with an uncertain future because of Paris agreement commitments.
The recruitment websites of the big oil and gas companies typically feature images of a diverse workforce with an emphasis on renewable energy and alternative-fuel vehicles.
Diversity in the sector is a key challenge. Only 25% of the UK oil and gas workforce is female. Gender balance is seen as crucial to attracting those with the best skills, but progress remains slow. Although the proportion of women in the industry is expected to rise to 30% by 2025, many at the top are unhappy.
Appalling. Absolutely awful
“The oil and gas industry is appalling. Absolutely awful. It’s pretty much the worst sector for diversity in terms of gender and ethnicity,” Steve Holliday, the former head of National Grid, was quoted as saying in Oil & Gas UK’s online magazine, Wireline.
But the problem of skills shortages extends beyond the UK. The Global Energy Talent Index (GETI) – published by Airswift and Energy Jobline in March this year – said cuts to graduate recruitment and apprenticeships when oil and gas prices plunged in 2015 and 2016 had also created engineering skills shortages for the sector, and salaries were rising as a result.
The report cited the Permian Basin, where companies are struggling to fill their workforce needs, as a warning sign for the industry. “Even higher salaries aren’t attracting the professionals needed,” the report said. Nearly half of those who responded to the GETI survey said they were worried about an impending talent crisis, with 40% believing a skills crisis existed already and an additional 28% expecting it within the next five years – particularly in Europe, Asia and South America.