Overcoming the Oil and Gas Talent Void By Focusing on the Core Business

Abstract

Playing to its core strengths is generally a sound strategy for any company, in any industry. But it is especially important now for oil and gas companies, when technical and scientific talent in the oil patch is so hard to come by. The oil and gas work force has been declining steadily for almost 20 years. During that time, many companies that should have been competing vigorously for the dwindling resource of human capital instead found themselves staffing up in noncore functions. Supply and Demand Leads to…Bust? Other industries have had their slumps, but the bust that hit the oil and gas industry in 1986 was unusually severe and has left long-lasting marks. When commodity prices collapsed, technical, professional, and field workers were forced to leave the industry by the hundreds of thousands. Hundreds of companies disappeared, and in many cases they were acquired by larger competitors. The most striking way in which the oil and gas slump of 1986 was quite different from that which affected other industries is that when the recovery came, workers who had been forced to leave did not return. More alarmingly, they were not replaced with new talent either. The reasons were numerous. Chief among them was the intensely cyclical nature of the industry and the depth of the downside. People were no longer willing to weather the cyclical nature of oil prices. Also responsible were the explosion of information technology, the advent of the Internet, and the subsequent boom in high-tech, high-paying jobs in this hot new industry. The best and brightest technical and professional workers now had more options than ever before. Of course, one also needs to be honest about the image problem. Negative portrayals of the oil and gas industry in the media and political circles undoubtedly caused many qualified young workers to take their talents elsewhere. According to the U.S. Bureau of Labor Statistics, there were approximately 33,000 petroleum engineers in the United States in 1983. By 2002, that number had dropped 45% to 18,000. The numbers for geologists and geophysicists are similar—from 65,000 in 1983 to 48,000 in 2002, a drop of 26%. Conversely, the number of computer systems analysts exploded from 276,000 in 1983 to 1.7 million in 2002—a growth of 531%. While young people were choosing different career paths, the oil and gas workers who entered the work force in the 1960s and 1970s—and survived the 1980s—continued to shepherd the industry through turbulent times. They are now either retired or nearing retirement age, leaving the industry with a serious lack of manpower.