The Great Crew Change: A Challenge for Oil Company Profitability

Abstract

Talent & Technology We have all heard about the “great crew change,” the coming decade in which 50% of experienced and managerial personnel of international oil companies industrywide are expected to retire. While this will not all happen on a single day, it will create simultaneous gaps of unprecedented proportions in the staffs of many international and national oil companies. As bleak a picture as such a summary suggests, the great crew change is only part of the personnel problem that will be common to oil companies over the next decade. The same period will be marked by many foreseeable challenges in virtually all producing areas of the world. Take two examples: Iraq and Brazil. Iraq has already stated a goal of increasing oil production from the present 2.5 million b/d to 12 million b/d. Its infrastructure is outdated and war-torn. Needed power plants are yet to be built. Increased production will require three barrels of water for every barrel of oil produced, or a virtual river of 10 million BWPD flowing into the desert of northern Iraq. Material and logistics issues will be unprecedented. Iraqi projects alone could employ a large percent-age of the decade’s new engineers in all specialties. Brazil has recently committed USD 200 billion to its five-year development plans. Their projections for these ambitious and well-funded goals show an estimated shortfall of 40,000 engineers stretching into the distant future. But the competition for skilled and creative people does not stop: Some of the biggest oil and gas finds in the world are waiting development under the crushing Arctic ice of northern Siberia. Ultradeep subsea projects are getting deeper and farther from land by the year. National companies are also looking for the same kind of talent. Graduating engineers receive competitive offers from nuclear power and renewable projects proclaiming the careers of tomorrow. All of these factors are converging in the same decade. Yet, even while facing such issues, international oil companies are questioning two of their traditional employment models: heavy reliance on expatriate workers abroad and heavy reliance on long-term career hires at home. Both practices will make workforces increasingly expensive in coming years. The use of expatriate workers is already problematic both for host countries and foreign companies. Some countries now defensively ration expat positions by taking three to five months to process applications for work permits and visas. Additionally, a company wishing to employ an expatriate may have to satisfy protracted requirements to prove a negative, i.e., that there is no qualified national of that country available to do a given job. On the home front, outside of core employee job tracks, the old model of long-term career hires will be incredibly expensive for international and fast-growing national companies. It will also be hard to implement in any worldwide operations where expat employees are increasingly restricted by host governments.