What seemed like excellent news for the oil and gas jobs outlook turned into something less positive for companies in the first months of 2022. Hiring increased, but a few areas saw more openings than applicants.
Some energy employers met resistance from job seekers who worried about the industry’s cyclical nature or even shunned oil and gas jobs because of a negative image around fossil fuels.
Regional imbalances in the labor market complicated the problem. Probably no one would have been surprised by a shortage of qualified data analysts, but few if any in the industry expected a serious lack of truck drivers with available trucks, or mechanical repair specialists, or commercial electricians.
Operators and other energy companies in several areas found themselves struggling to compete for exactly the same in-short-supply technicians sought by other business sectors.
However, job hunters and even those already employed in oil and gas got some welcome security and relief, as recent cycles of industry layoffs finally turned into a round of rehires and new hires.
Analysts expect this job growth to continue for the foreseeable future.
“We see labor demand from upstream oil and gas continuing to rise through 2023. Increased oil prices and subsequent activity should help to stimulate job growth within the sector,” said Matthew Fitzsimmons, senior vice president, analysis, for energy research and business intelligence company Rystad Energy in Oslo.
While a strong emphasis on boosting existing production to meet demand has improved the overall picture for upstream jobs, that momentum still hasn’t translated to pure exploration efforts.
Fitzsimmons predicted “demand for oil and gas exploration professionals to be relatively flat for the foreseeable future. Spend on exploration activities for both onshore and offshore work shows limited growth through 2030, with a slight but modest uptick from offshore activity.”
Unfortunately for the energy industry, the scarcity of technical and trade workers could also continue into next year, depending on region, sector and specialized needs.
“While personnel shortages can be very regional, we do see some pockets of concern. For example, upstream and midstream construction labor demand in the United States in 2023 will cause a higher strain on overall construction labor supply that exceeds even the recent peak of 2013,” Fitzsimmons said.
Jobs availability in the energy industry began to rebound around 15 months ago and has grown steadily since the pandemic low, according to data from the U.S. Bureau of Labor Statistics.
Consulting firm Deloitte estimated U.S. oil and gas lost a total of 107,000 jobs just during the oil-demand collapse in 2020.
In exploration and production alone, the BLS identified well over 200,000 employees working in U.S. oil and gas extraction in late 2014, before a major industry downturn kicked in. By February 2021, that number had fallen to 113,000. Out of every 20 jobs in upstream oil and gas, about nine disappeared.
Current industry activity and spending projections indicate both a healthier job market and higher compensation levels. Rystad forecasts that total global energy spending in 2022 will reach a record $2.1 trillion, reflecting higher hydrocarbon and power prices, plus the European Union’s goals of becoming less dependent on Russian energy supply.
But one significant reason for that increased spending is the global, post-pandemic inflation of material prices, shipping rates and labor costs, Rystad noted. Put another way, a big reason the oil and gas industry will be spending more money is that so many costs are higher now.
In some cases, former E&P professionals returning to the workforce have taken jobs either not related to petroleum or not in oil and gas production. That led to a concern about upstream staffing in the industry.
“There are many conspiring forces that will challenge the oil and gas industry to attract and retain talent for the foreseeable future,” Fitzsimmons noted.
Tu Nguyen, economist and ESG director for consulting group RSM Canada in Toronto, analyzed the energy industry’s looming labor shortage earlier this year. Her research areas include sustainability, labor markets and infrastructure.
Nguyen noted that oil and gas workers “are a diverse group ranging from rig workers to petroleum engineers to professionals with highly transferable skills in areas such as IT.” A number of them have now made a seemingly natural transition into areas like energy-related services and manufacturing, or renewable energy development.
“But people in the industry are also moving to jobs in spaces that might seem farther from oil and gas. Growth in tech and the digital economy brings high wages – in many instances matching those in oil and gas – and good benefits, making this space an appealing alternative,” Nguyen observed.
“Furthermore, workers can transition to tech by enrolling in short courses as opposed to going back to college for another degree as may have been required in the past. In fact, 52 percent of oil and gas workers need under six months to reskill to work in tech, according to data from the World Economic Forum,” she said.
Data Science Shortage
As oil and gas operations become more high-tech and data-driven, the industry increasingly needs to recruit graduates in data science and related disciplines. But those graduates might expect their careers to advance more rapidly and development to occur more quickly in other sectors.
“The oil and gas industry needs to balance tomorrow’s progress against today’s performance to truly attract top computer scientists. The O&G industry is both a prime position for data scientists to unlock potential and also a dangerous, unforgiving place to do so,” Fitzsimmons observed.
For example, he noted, every producing well now provides huge amounts of data that – when analyzed and utilized properly – could unlock future production efficiencies.
“However, that would require some trial and error in the near term, resulting in short-term lost barrels and inefficiencies. The short-term losses, combined with the massive safety consequences if something were to fail, make it difficult for the rapid adoption that we see most graduate hires looking for,” he said.
Fitzsimmons said getting the right mix of specialists and retaining experienced upstream professionals will be an additional, ongoing challenge for the industry.
“New graduates have been reluctant to join ‘dirty oil’ in light of the current energy transition. Big Tech and other industries are providing fierce competition for people, and formerly laid-off industry professionals are showing skepticism to come back into (the energy) industry in favor of avoiding the industry’s cruel, cyclical nature,” he noted.
“The industry’s cyclical nature was also thrown for a loop due to the global pandemic, which inorganically stopped the last up-cycle before it really had a chance to grow,” he said.