The Crisis Facing Oil and Gas: Finding Skilled Workers in the Face of Growing Demand

Over the past two decades, the oil and gas industry has undergone seismic changes. Fracking, shale, and oil sands extraction were once considered alternative approaches, but are now commonplace methods for meeting US energy demands. For example, the Energy Information Administration predicts production of gas from shale will rise steeply, increasing 44 percent between 2011 and 2040. In addition, a host of new technologies have been developed for exploration, extraction, and refining in the hopes of making the US more energy self-sufficient. As a result, US oil and gas companies cannot find enough highly skilled workers to meet the massive employment needs of today’s diverse and expanding domestic industry.

Some argue the skills gap in the US is actually the result of an education gap in the American school system. The dearth of skilled labor is especially prevalent in science, technology, engineering, and math (STEM) fields, areas where US students have consistently ranked lower than students in other developed countries. The problem of training workers adequately is compounded for oil and gas because it is essentially an emerging industry in the US. Many of the positions that remain vacant didn’t even exist five or ten years ago, so training programs may be tough to find or may even be non-existent. Some of these open jobs are incredibly specialized such as petrophysicists, oil field mechanic, seismic interpreter, hydrocarbon mud logger, geomechanics and subsurface specialist, and subsea engineer, to name a few.

If it’s any consolation, according to PayScale’s 2013 Compensation Best Practices Report, oil and gas companies are not alone in experiencing the skills gap. Across all industries, most companies reported they had difficulty filling job positions in 2012 due to a lack of qualified applicants. However, the oil and gas industry is facing one of the largest skills gaps in any industry with 64% of all companies reporting concern over filling skilled job positions in the coming year. At the same time, this industry was the fastest-growing in 2012, experiencing a whopping 63% growth. These forces are creating an industry where salaries are rising in an attempt to attract and retain the right talent.

Here are some other facts highlighting extreme growth in oil and gas correlated with the deficit of skilled talent from the report:

  • In 2012, 85% of companies gave pay raises in 2012 and the same percentage is planning to give raises in 2013.
  • The number one goal reported for compensation strategies in 2013 was retaining employees.
  • The toughest jobs to fill were engineers and managers, and 63% of oil and gas companies surveyed expect growth in the coming year.
  • When oil and gas companies were asked what government should do to address the skills gap:
    • 56% felt government should offer employers tax incentives to invest in educating their own workers
    • 46% responded the government should increase education spending.

Competition for Talent Crosses Boundaries

Because many of the open positions are very technical, oil and gas companies are no longer competing for talent only with other oil and gas companies. Increasingly, they are competing with the computer and aerospace industries, for example, for highly skilled jobs such as software developers or systems engineers. In addition, the environmental impact associated with increased domestic energy production has created a need for more new skills to address pollution and other environmental concerns. These solutions haven’t been developed yet, so the US faces a skills gap for current open positions, as well as for new jobs that don’t even exist today. The result is a gap as wide as the proposed Keystone Pipeline is long for the oil and gas industry.

Given the backdrop of the skills gap, it becomes easy to see why these companies are extremely competitive in their recruiting practices, searching far and wide across the US, and sometimes beyond, to secure the right talent to grow their business. With the intense competition for talent comes the need to have accurate compensation data to reflect the realities of this volatile economy. To be successful in the new era, companies need to make highly competitive offers, and companies increasingly need to understand where they really compete for talent which is now sometimes with other industries who are trying to attract the same skills and attributes in their workforce. Finding talent to fill open positions is only the tip of the iceberg, companies must also retain skilled employees by staying ahead of an ever-changing market.

In order to meet America’s goal of increased domestic energy production, we need to address the growing skills gap that is having a very real impact oil and gas industry. Companies must develop a talent management plan to secure skilled workers that are essential to fuel future growth.