The U.S. oil and gas industry has arrived at an employment crossroads. In one direction, one sees a significant number of employment opportunities as companies begin trying to replace their most experienced workers, who are just beginning to move into retirement. In the other direction, however, one sees the industry struggling to find enough engineers and other technical workers to replace the workers it will be losing in the coming years.
That was the message that Paul Caplan, Rigzone president, gave to attendees at the 2014 NAPE Business Conference in Houston last week. And how the industry responds to the challenges ahead will determine in part how vibrant and economically healthy the industry will be.
While challenging times lay just ahead, there is no argument that the industry is currently enjoying a renaissance that began with the shale revolution. During the first six months of 2014, there were more than 20,000 new jobs created in the industry, according to U. S. Bureau of Labor (BLS) statistics, and the industry is on pace to hire another 20,000 by the end of the year, Caplan said.
In fact, going back to 2004, when shale plays really began to take hold, more than half a million oil and gas workers have been hired in extraction and support activities, Caplan said.
“And those are just the direct hires in oil and gas, and don’t reflect the hiring outside the industry that was prompted by the new oil and gas jobs,” Caplan said, referring to the multiplier effect that oil and gas jobs have on the economy as a whole.
A clear indication of the influence of the industry on the job picture can be seen in state unemployment rates, which are typically significantly lower than the national average in nearly every state with significant oil and gas activity, Caplan said.
The need for new talent is critical if the oil and gas industry is to maintain the growth it has been experiencing. Beginning in 2009, ten months after the start of the economic recovery, the oil and gas industry started on a path of unparalleled growth, with substantially more energy jobs created than during previous economic recoveries, Caplan noted.
Rig counts and crude oil production have made strong gains between January 2009 and May 2014, with production increasing by 63 percent, and rig counts more than quadrupling. During this period, there has been unprecedented hiring by the oil and gas industry, driven not only by shale plays, but also by deepwater activity that reached a level not seen at any time in the past. Deepwater is projected to be as much as 18 percent of U.S. production by 2020.
Because of the continued demand for new technical workers, this should be an ideal time for women to play a large role in the employment picture for the energy industry, Caplan noted. However, the figures tell a different story.
“There has been a significant amount of activity by most of the players in the industry to attract and retain women, and you would think that with all that, there would be an increase in the number of women who work in the industry. But as a matter of fact, what we find is that the percent of women in the industry has actually gone down. In 2004, the percentage of women in the industry was 19 percent, and it’s now down to 16 percent,” Caplan noted.
That needs to change. The industry must be more inclusive if it is serious about filling all the openings that will be created by retiring Baby Boomers, Caplan said.
“I make this point because there is a real shortage of talent in this industry. Companies are doing a lot to attract more people, but the reality is that the industry needs to do an even better job in bringing people into the industry,” Caplan said.
The industry also needs to recognize that most of the new hires will be coming from the Millennial generation. These Gen Y workers make up about 36 percent of the workforce today, but they are expected to make up about 75 percent of the workforce by 2025, Caplan said. To attract and retain Gen Y workers, companies must move faster.
The average length of time that workers stay in a job before quitting is getting shorter, according to BLS data, Caplan said. Those in the Baby Boom generation stayed in a job is about seven years. That is in stark contrast to the Gen Y workers, who moves on after about two years, according to estimates.
“I don’t think there are a whole lot of them who are going to hang around for 30 years and get their gold watch,” Caplan said, adding that retaining these workers will be of paramount importance.
As the industry thinks about how to adapt to Gen Y workers, it can start with the hiring process, which needs to be swifter, Caplan noted.
“Hiring can be a long, drawn-out process, and in that time, the person who was recruited may have found two or three other opportunities. It’s going to be the companies that can get them on board the quickest who get the talent.”
Despite the challenges, there is light at the end of the tunnel, Caplan said.
“There is a very bright future for this industry, and it doesn’t look like it’s going to slow down any time soon. We have a bright future ahead, but companies have to be ready, and they need to know exactly how they are going to find and retain their new workers.”