Wednesday, February 15, 2006

Oil and Gas Industry Being Hit by Aging Workforce

In an article for Dow Jones Newswires, Angel Gonzalez reports that oil and gas companies planning to boost output are nearing a wall: "Nearly half of the aging workforce engaged in exploration and production activities will retire in less than a decade." Thus, their current ambitious projects could come in late and over budget "unless they can hire, and retain, enough people to staff them."
Since oil prices peaked in real terms in 1981, major oil and gas companies have laid off nearly 1.1 million employees, according to energy consultancy John S. Herold. This drove a whole generation of technicians and managers into other industries and discouraged students from entering the field.

Now hard-pressed to increase production and replace dwindling reserves, companies are paying for their old sins. A "very small pool" of talent is "being spread really thin," said Claire Markwardt, a Houston-based partner with Accenture, a consultancy. The amount of talent in the pipeline is paltry, she added. Enrollment in U.S. petroleum engineering programs in 2004 was 2,500, down from 12,000 in 1982.

Also, as many as 40% of U.S. petroleum engineers currently employed will retire before 2014, [Alex} Preston [, head of The Energists, a Houston-based energy recruiting firm] said. The average age of a petroleum engineer, who advises on the best way to develop hydrocarbon reservoirs, is 49 years.
Source: "Experienced Oil And Gas Hands Become A Scarce Commodity" Cattle Network (February 14, 2006)

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