It’s a problem that started way back in the 1980s during the oil bust and is now catching up with big energy companies that say a lack of qualified employees could begin to affect their bottom lines. As Houston Public Radio’s Jack Williams reports, closing the so-called “people deficit” is a top priority over the next few years.
Janie Wagner sees the impending crisis up close. She’s manager of HR operations for Devon Energy Corporation, an Oklahoma City-based independent oil and gas exploration and production company. Devon’s workforce is getting older, with nowhere near enough young talent ready to step-in.
“We have 11-percent of our workforce that’s currently eligible for retirement today. Over the next 10 years, 57-percent will become eligible. So, it’s an issue.”
And it’s an issue that isn’t unique to Devon, which employs around 900 workers here in Houston. Throughout the industry, oil and gas companies are scrambling to replace workers ready to retire, many of them petroleum engineers and geo-scientists. In 1982, there were 12,000 petroleum engineering students. Compare that to 4600 today and it’s easy to see why the competition to hire new graduates is brutal.
“Our competitors began offering sign-on bonuses to these students and we’ve followed-suit as well. We’ve put have together a fairly lucrative package for them because they’re walking out of school with three to four offers each. There’s a much higher demand for these students then there are actually students.”
Devon and other companies are also doing what they can to keep their current employees, offering higher salaries, flexible hours and enhanced 401-K programs as incentives to stay around. Greg Kelleher is vice president and general manager of Devon’s southern division and says the worker shortage slows the entire process.
“It’s execution. That’s the term that we use and what we’re having to do is bring our highest, most experienced people to our top-priority projects, so we’re not able to do necessarily all the projects that we would like in the time frame that we’d like to have them done.”
Recent studies of the worker shortage for Cambridge Energy Research Associates by the Capital Cost Analysis Forum predicted a 5-10 percent industry-wide employee deficit by 2010. Analysis Forum associate director Pritesh Patel says the oil industry is faced with a huge challenge.
“Over the years less and less people have been coming into the engineering field with more people moving on to the IT and social sciences subjects and we’ve been carrying on with the projects and stuff that we have at the moment. It’s just suddenly that with high oil prices, with huge amounts of projects that have been planned to go ahead that we’re going to face this crisis now.”
Patel says the oil industry hasn’t been attractive to new graduates over the past decade, but with new incentives and the intense competition for their services, he says that could change.