The oil and gas industry is facing a tidal wave of retirements as the Great Crew Change occurs, but the challenges of replacing technical professionals might not be as difficult as you think.
On the other hand, they might be considerably worse.
AAPG Member Jim Handschy wrestled with the problems of the Crew Change before retiring as global chief geologist for ConocoPhillips. The pertinent questions included:
- Will the geoscience skills needed for the unconventional resources revolution be the same as those needed before?
- In a competitive market, how will the industry find enough high-quality geoscientists with the necessary education and skills?
- If the graduates hired don’t have the necessary skills, what is the most effective mix of training – classroom versus on the job – to get them up to speed as quickly as possible?
- How can the industry effectively capture knowledge before it leaves with retirees?
- What are the differences in the behavior, needs and desires of Millennials compared to previous generations of geoscientists?
And what about the characteristics of Generation Z (or whatever you want to call the group of people born in the year 2000 or later)? They will become the industry’s technical leaders later this century.
Today, Handschy is an adjunct professor of geology for Indiana University and teaches at the school’s famed Judson Mead Geologic Field Station in Montana. He’s already seen a shift in the nature of geology graduates.
“In 2011 and 2012, and even in 2013, it was very much an entitlement mentality. They wanted jobs that met their interests. Since 2013, that’s changed,” he said.
Maybe because students were seeing a tough job market as the effects of the post-2008 recession took hold, they developed a new outlook, he noted.
“I think you’re starting to see attitudes shift back to what kids were like when I was in college,” he said.
Handschy sees the unconventional resources revolution and the effects of the anti-fossil fuel movement as the two big forces at work in the industry as the Crew Change unfolds.
“The big issue today is, ‘How has the unconventional revolution in North America changed the need to go out and get geoscience professionals?’” he explained.
“If you do the unconventional plays efficiently, they don’t require as many geologists,” Handschy said. “You have a large area with a large number of drill sites which are basically de-risked with very little further work.”
So a major consideration for the industry’s post-Crew Change reality is whether or not we will live mainly in a world of unconventional resource plays.
“As long as we believe nonconventional North American plays are cost-competitive, I don’t think we need to swap out 100 percent of the retirements,” Handschy said.
A second important factor for the post-Crew Change world is possible expansion of non-carbon/climate change sentiment. Lighter demand for geoscientists might not be a bad thing if the anti-fossil fuels movement continues to grow.
“The other thing that argues against full replacement is the Green Revolution – the social pressure to replace fossil fuels with energy sources that do not put carbon into the atmosphere,” Handschy noted.
“The majority of university programs are quite anti-fossil fuel right now. I would say the biggest impediment to getting students into our programs is the non-geology education they’re getting in college,” he said.
Baby Boomer Brain Drain
Recent industry layoffs have magnified the effects of an aging professional workforce, according to Robert Ryan, AAPG Member and vice president of global exploration for Chevron Upstream.
“We do see retirements under way, as predicted for years now, and they have probably been accelerated by last year’s industry downsizings and the recent increase in interest rates that impact employees’ retirement plans,” he said.
Ryan has no doubt that the oil and gas industry will require capable technical experts into the next century, and will struggle with retaining and developing expertise.
“Energy companies will need technical professionals for decades to come, and the challenge will be maintaining senior staff for both experience and mentoring while developing technical staff members that are earlier in their careers,” he observed.
“Hiring of experienced personnel will continue as well, though at a lower level, as it will be focused on subject matter experts and unique skill sets that may have been lost by retirements,” he said.
The Great Crew Change resulted from a confluence of three realities. First came the skyrocketing birth rate following World War II, known in the United States as the Baby Boom. That put a very large cohort of future workers into the employment picture.
Next came a surge of college students studying petroleum-related disciplines, especially petroleum geology and petroleum engineering, in the 1970s and early ‘80s. Stable growth and good salaries in the oil and gas business were magnets for enrollment.
Third, the industry entered a prolonged period of layoffs and mergers after the 1980s collapse, and essentially stopped hiring technical professionals for more than a decade.
The result was a significant age gap between senior employees and the next generation of hires. The oil and gas industry had become stocked with Baby Boom technical graduates of the 1970s, and that large group of senior professionals will go on retiring for the next 10 years.
A wealth of experience and knowledge will be leaving with them.
“At ConocoPhillips we put a huge amount of effort into getting our impending retirees into teaching and mentoring,” Handschy recalled.
“We were trying to do a lot to get one-on-one transfer of knowledge, as well as an intentional effort to capture that knowledge. And I can tell you, that was one of the first things that got shut down when prices collapsed,” he said.
Handschy thinks the industry is missing an important opportunity by not doing enough to acquire and retain knowledge from those retiring geoscientists.
“It’s one of the big challenges for the industry and I think in 10 years or 20 years, the industry will look back at this big Crew Change and say, ‘One of the things we did the worst was capturing this knowledge,’” he said.
Another key consideration for the oil and gas industry after the Crew Change will be the availability of graduates with technical degrees and the ability to attract them as employees. Competition with other industries for technical professionals could be intense.
“Ensuring that there are enough students in technical fields will be critical as hiring will continue from college campuses, although at a lower level for the near-term, to maintain a steady flow of technical experts into companies as the demographics change,” Ryan said.
Because the current and oncoming generations of college students are sharply different from each other and from previous graduates, Handschy believes the industry will have to make “much more progress in compensation and benefits.”
He contrasted today’s graduates with his own generation.
At one time, “people actually took pride in not using their sick leave. Millennials see all their time off as something they should use,” he said. “Even if all the skills and experience are there, I’m not sure the willingness to work overtime is there.”
But Handschy doesn’t see the latest rounds of layoffs deterring graduates from entering the industry.
It’s always been a cyclical business, he noted, and the industry needs professionals who labor more for love than for money.
In the 1970s, “you got a lot of people who had no passion for the science – they were just in it for a job,” he said. “The best petroleum geoscientists have always been people who are outstanding geologists, geoscientists (and) geophysicists, because they have true passion for the science.”