Aberdeen – The North Sea Needs You!
In an interim report released last November, Sir Ian Wood signalled the need for a new strategy to maximise the economic recovery of oil and gas from the UKCS. He called for the creation of a new regulatory body to ‘oversee and develop this programme of change and growth’. And he suggested that the government and O&G companies commit to working together towards achieving the aims of that programme. However, the nuts and bolts of his strategy will only be revealed in the final part of his report, as yet to be published.
Nevertheless, Sir Ian asserts that the implementation of his recommendations, as set out in the review, would lead to the recovery of 3-4bn barrels of oil equivalent (boe) in addition to the estimated recoverable 20bn boe in the North Sea. With an assessed value of £200bn, the extra oil is seen as a nice prize by the Treasury which has sustained a loss of £6bn in taxes over the last three years due to a 38% fall in production.
Deloitte’s End of Year O&G Review released in January observes that the number of fields starting production in the UK rose in 2013 by 44% from the previous year, hitting its highest level for five years. On the other hand, it noted a fall of 28% in respect of exploration and appraisal drilling in the UKCS with only 47 wells spudded in 2013 compared to 65 in the previous year.
Wood Mackenzie’s annual UK Upstream O&G Review concluded that 2013 was a ‘mixed year for the industry’. Head of Upstream Research for the company, Lindsay Wexelstein explained the key highs and lows.
“Last year capital investment reached the highest level in real terms since the mid-1970s. We anticipate £21.3bn will be spent on capital investment across 2013 and 2014. However, spiralling costs did put pressure on project economics and caused some developments, such as Bressay and Rosebank, to be put on hold.”
Although Wood Mackenzie’s final recommendations have not yet been released, Ms Wexelstein said that the UK’s upstream sector ‘should look to 2014 with cautious optimism’.
“Despite poor exploration success over the last few years, the second tranche of awards associated with the 27th UK Offshore Licensing Round in November 2013 demonstrates that companies are still interested in exploring in the UK … Although some uncertainty remains over the longevity of the sector, 2014 could prove to be a pivotal year for the UK’s North Sea.”
Oil and Gas UK welcomed the announcement of the 28th Licensing Round which it hopes will act as a catalyst for UKCS exploration revival. At the same time, the organisation agreed with the findings of the various reports. Chief Executive Malcolm Webb said that Sir Ian Wood had set out the ‘right prescription’ but looked forward to the final report. In particular, he felt that co-operation between the Treasury, the Department of Energy and Climate Change and the O&G industry was imperative; that they should work together ‘as a matter of urgency to implement the recommendations’.
‘Challenging Climates: the outlook for the oil and gas industry in 2014’ is yet another report, this time published by DNV GL, a leading advisor to the O&G sector. Although it covers similar ground to the others, Challenging Climates takes a broader view of the industry, considering worldwide influences. Where problems are shared, competition may well take a role, affecting the balance of power, investment and progress.
According to DNV GL’s analysis, the top three barriers to growth in Europe are: skills shortages coupled with an ageing workforce, the overall increase in operating costs and tougher competition from international rivals. As North America’s oil and gas production ramps up, companies in the States are also suffering large skills shortages and plenty of other countries are in the market for skilled professionals.
“The sector is increasingly moving into challenging environments which require deep technical expertise to provide solutions, yet companies are faced with an ongoing skills shortage,” said CEO Elisabeth Tørstad. “The need is driving up salaries at a time where there is already pressure to reduce costs. While technology can go some way to plugging the gap, it can’t fully replace human intervention.
“The industry needs to take a longer-term view of building professional skills, rather than putting the brakes on nurturing talent when the oil price weakens. While we cannot fully duplicate and replace the experience of retiring professionals in the sector, we can work smarter through structured approaches to managing industry knowledge and ensuring that the competence built is effectively transferred to younger generations.
“A more diverse approach to recruitment would also help the issue. The skills it takes to manage the construction of a space shuttle or hospital are not necessarily so dissimilar to what’s needed to manage the construction of an oil platform … We will have a talent squeeze if we seek to duplicate the people in the industry today, but not if we are able to utilise the wider talent pool available to us.”
Based in Aberdeen, Brander was recently listed by Recruitment International as a Top 20 UK oil and gas recruitment agency by turnover. With 34 years of experience in the business, founder Ian Brander was ideally placed to comment on the situation in the oil capital of Europe.
“The demand for staff and contractors increases in Aberdeen with each passing year. In part, that’s due to the decades of a boom and bust mentality when people were let go during downturns and never replaced. The lack of attention to the vital asset of manpower has largely created the current shortage of qualified and experienced workers. As they try to rectify the problem, there are gaps between the older hands and the youngsters being trained, coming into the industry for the first time.
“Many more mature workers don’t want to go offshore any longer, perhaps wanting more time to enjoy the fruits of their labours. Nor do they necessarily want all the stress of running teams of workers. Consequently, good mentoring skills are at a premium as they’re in short supply as well. Clients can no longer afford to pay off good workers if they lose a contract or experience a downturn themselves. So the rates of pay to contractors are at an all time high which puts extra pressure on companies.
“In certain sectors, many companies utilise a ratio of approximately 30% staff to 70% contractors. The majority of companies in Aberdeen need more staff or contractors to expand their business and service new contract awards. And most cite shortages of personnel as being the biggest factor restricting growth. It’s often quoted that the average age of engineers is 54 but now we have several contractors working through us who are in their 70s.
“Most organisations are becoming more flexible in their approach to recruitment, expanding their horizons in the search for transferable skills from other industries that they can bring into the oil and gas sector. While this can apply to contractors, in the main it applies to staff requirements as people have to be trained to meet North Sea standards.”
Over 38% of the respondents to DNV GL’s survey cited project managers as the rarest breed of worker while 23% suggested offshore-related engineers for the top spot. But the extent of shortages is far wider. From the world of contracting, Ian adds design North Sea personnel in mainstream disciplines such as structural, piping, electrical and instrumentation, process and technical safety. Offshore drill crew are invariably at a premium, as are drilling and well control engineers. Although Aberdeen may be the hub for the North Sea, it is also a conduit for drilling jobs for international locations as the rigs move around. And while many organisations based in Aberdeen operate in the North Sea, they also have projects much further afield.
“Oil and gas is the most international of industries and the demand for qualified, experienced workers comes from all corners of the globe. Aberdeen is one of the main hubs for that activity. Consequently the demand for talent here seems unlikely to wane in the foreseeable future, barring global catastrophe or recession.
“Contract rates and salaries are at an all time high and it’s probably worth many UK expats weighing the financial benefits of returning to the UK to work. Aberdeen is highly rated as a place to work and bring up families in a largely safe environment. The quality of life is also very high but, of course, that comes at a price. The cost of property and other overheads in the city rival those of the most expensive parts of the country. However, it should be noted that while property values do dip during an economic recession, they never seem to plummet or fall as sharply as the rest of the country. And although I’m not a weather expert, on a daily basis the north east of Scotland tends to get less extreme weather than the rest of Britain. Protected by the Cairngorm mountains, we get a lot less rain than the west coast.”
Most O&G related organisations have a vacancies section on their websites and, given the number of companies in Aberdeen, there’s plenty of choice. Reflecting the shape of the industry, operator sites show less vacancies than those belonging to specialist service suppliers. Despite the clarion call of Kraken, Enquest was only advertising four positions at the time of writing: one process engineer, two wells technical assistants and an operations excellence coach.
At the other end of the spectrum, Aker Solutions had 54 live vacancies, ranging from a requirement for a design engineer to the need for a crane operator. And O&G recruitment agencies like Brander add many more positions to the list.
As mentioned last month, the Offshore Petroleum Industry Training Organisation (OPITO) has undertaken massive research into what the true requirements of O&G will be in the future. To that end, OPITO has targeted over 1,000 organisations within the industry but its findings are unlikely to be revealed before the end of March. However, although there is no doubt that skills shortages and training will be high on the agenda, there is no indication as to what initiatives might be born from the results. Graduate programmes, modern apprenticeships and company training initiatives are in place to a certain extent but need to be expanded. And there is some recognition of transferrable skills from other industries that might be brought to the marketplace.
“A significant number of oil and gas workers are expected to retire over the next 10-15 years, causing a global shortage,” Morven Spalding, OPITO’s Skills Development Director, told Nexus. “The significant loss of experience and expertise will require the industry to recruit and train thousands of people over the next decade to maximize recovery of oil and gas reserves. OPITO is strengthening links between the industry and its potential talent pool to fill this talent gap. In the coming months it will be focusing on delivering industry awareness sessions to 300 personnel.
“Recent headlines have announced that the UK is expected to cut 3,000 armed forces jobs in 2014, and at least 20,000 jobs are expected to be cut by the year 2020. OPITO believes this gives oil and gas firms an opportunity to fill the gaps in their workforce by employing these former military servicemen and women who have a broad range of transferable skills. They are well trained, safety conscious and very dependable. Their work ethic and familiarity with operations allows them to fill jobs in all sectors of the industry, including offshore positions.”
Petty Officer Engineering Technician, Paul Hunter attended OPITO’s awareness programme held at Rosyth.
“It was definitely a huge eye opener into the amount of work involved within the oil and gas industry and gave a very good insight into where I could find employment within the sector. Working with strategic weapons on board submarines my main trade is electrical and electronics. I also have experience with pneumatics and hydraulics, and believe my skills could easily be transferred to working with subsea technologies from operating to maintenance.”
But simply having transferrable skills may not be enough, as Morven Spalding agreed. She reported that some former military workers said that companies had rejected them due to their lack of O&G experience. It’s a problem that’s also been encountered by expats hoping to switch to O&G from other industries. Together with the Oil and Gas Academy for Scotland, OPITO is developing an electronic screening tool which should enable employers to identify competency gaps in the skills offered by future staff from the military and other industries.
“This will give employers the opportunity to address gaps in the early stages of an employee’s career and will prevent unnecessary training,” said Ms Spalding.
Ian Brander came back with his thoughts on what was needed to help those people wishing to get foothold on the O&G ladder. While he naturally supports the training schemes currently available, he’s concerned that they may not go far enough.
“We need to do more at university and college levels to provide more skills-based opportunities. There also needs to be a much more focussed and larger scale marketing initiative to rebrand the oil industry as an exciting environment in which to work, especially for younger people. For those people with any reasonable levels of initiative and energy, the opportunities are huge and the rewards are difficult to match elsewhere. Lastly they need to find innovative ways with a fresh approach to tapping mentoring abilities and the skills of their existing key personnel so that as much knowledge as possible can be recorded and transferred to younger generations. Much of this has to be industry and government led.”
Apart from the oil and supply companies based in Aberdeen, the city has plenty of training organisations offering a wide range of courses. For someone with no O&G experience, the temptation might be to take one or two courses to complement their skills and experience, providing leverage when it comes to applying for jobs. Basic Offshore Safety Induction Emergency Training (BOSIET) and Minimum Industry Safety Training (MIST) would seem to be prerequisites for working offshore.
“Many people look to simply book themselves on a training course to gain offshore survival skills in the belief that this will enable them to get employment more easily. This does often work, depending on their other skills but so often we see personnel struggling to get appropriate work having spent hundreds or thousands of pounds on various training courses with no relevant employment background. Some companies will commit to employing personnel if they have appropriate skills and then either train them directly or encourage them to take training before they start. At all levels, people with relevant experience and/or transferrable skills are likely to be more positively utilised than those with none. Taking basic survival training may help but there is no guarantee of employment.
“There are generally available courses for personnel wanting to understand the basic terminology of the oil industry and to gain an overview of the structure of the industry. For workers who have appropriate transferable skills, having as much communication with employers and with oil and gas specialist engineering recruitment agencies is the best way. Do the research and find the type of sector in which you want to work. Many construction, commissioning, design and maintenance engineers and designers will find they are in demand if they simply market themselves properly. A lot of companies also now hold open days in various major cities in the UK once or twice a year, so look out for those.
“Patience is needed. Do not expect things to happen immediately. You need to persevere and be determined. Companies will still prioritise personnel with oil and gas experience since they can be deployed immediately; so there may be time delays after you apply for work while companies exhaust those options. There are also only so many inexperienced personnel that companies can utilise in any year so you may find you’ll only get interest expressed by specific companies in certain years. Workers from the aeronautical, nuclear, mining and chemical industries and major construction projects are quite likely to have transferable skills which are appropriate to the oil and gas sector. Several individual companies also run their own training centres now which give training pertinent to their particular sector within the industry.
“It should be remembered that the oil industry in the North Sea has been built on transferrable skills. Perhaps some older companies have forgotten their roots but when I started hiring personnel in the late 70s/early 80s, many contractors we hired were taken from the coal mining and shipbuilding industries. Today, many of them are in high-level management positions across the oil industry. Oil and gas has matured but there can be little doubt that government and individual companies both need to be more adventurous with initiatives.”
While Sir Ian Wood talks of maximising the economic recovery and Lindsay Wexelstein anticipates £21.3bn investment in 2014, the concentration is on oil and gas reserves in the North Sea. Local media in Aberdeen speak of an estimated 20,000 jobs that might be created this year as more and more workers are needed by operators, contractors, specialist service suppliers et al who are bent on exploiting subsea reserves.
But as the North Sea matures, dry wells need plugging and redundant rigs, removing. Decommissioning may be a nascent business but industry body Decom North Sea anticipates that approximately £5bn will need to be spent over the next five years on decommissioning offshore installations. By 2040, that bill is likely to run to over £30bn. All those works will substantially boost the demand for skilled professionals, broaden the range of skills required, need new types of expertise, experience and innovation.
Look carefully at your CV, analyse your skills and experience, study the market and listen to what it’s saying. You might hear the words – the North Sea needs you!
Rob Flemming has been a regular writer and photographer for Expat Network since the turn of the millennium. He has reported from numerous countries, including Vietnam, Tajikistan, Malaysia and India, but he has particular knowledge of the Middle East. You can learn more about Rob at www.lensandpen.com