How Oil and Gas Employers Can Navigate an Applicant’s Economy

How Oil and Gas Employers Can Navigate an Applicant’s Economy

Fox Thermal

Few industries understand supply and demand dynamics as well as oil and gas—and few places in the world are seeing those dynamics play out as dramatically as in the Permian Basin, where a crippling talent shortage looms large. Midland’s July unemployment rate sat at a razor-thin 2.1 percent, and 15,000 jobs are open on any given day. At the same time, takeaway capacity in Permian pipelines is expected to surge in the second half of 2019 and into 2020,1 and IHS Markit forecasts oil production in the West Texas field to reach 5.4 million barrels per day by 2023, accelerating an already dire dynamic.

It’s a shortage that’s being felt across Texas—and across oil and gas globally—as Boomers retire, younger workers shun the industry, and technology redefines roles at a rapid clip. Nearly half of respondents in the latest Global Energy Talent Index are worried about an impending talent crisis; 40 percent say the oil and gas skills crisis is already here. After drastic cuts to staffing levels and apprenticeship programs in the last oil and gas downturn, companies now struggle to win back talent that has moved on to other industries.

High pay isn’t enough to change the equation. Oilfield salaries in the Permian start near $100,000, while experienced truck drivers can make $300,000 with overtime—and still, the talent shortage rages on. Downstream, skilled trades shortages in the Gulf Coast are leaving oil and gas companies struggling to find craft labor. Oilfield services struggle to staff for drilling and production, and all sectors are competing for engineers and IT talent. The impending “great crew change” further complicates the picture. Although Houston is home to one of the youngest workforces in the country with a median age of 34, more than half of oil and gas workers are over 45.

Technology may offer long-term relief, but it presents short-term challenges. Digital oilfield spending is expected to reach $17.8 billion by 2022, and 40 percent of field operations jobs could be eliminated by technology. Yet in order to reap the improved efficiency and cost savings of digitized rigs, companies must first have a workforce capable of designing, building, and working those rigs. The same holds true of AI, machine learning, and RPA advances throughout the industry that rely on an influx of elusive STEM talent. Competition for that talent is especially fierce in Southeast Texas, where oil and gas companies find themselves recruiting against each other, Silicon Valley, and a new surge of start-ups in their own backyard. Boasting a 2.7 percent unemployment rate, Austin has earned the nickname Silicon Hills for its saturation of high-tech companies that offer a “cool factor” unmatched by oil and gas. When STEM talent does opt into oil and gas, they’re increasingly doing so via a burgeoning start-up scene, where small firms are tackling big challenges for the industry—leveraging AI and new technologies to evaluate well locations, improve production forecasting, and predict equipment failures. Houston alone is home to more than 500 technology start-ups and ranks ninth on Inc. magazine’s new list of hottest start-up cities, as well as being home to large oil and gas incubators that attract local entrepreneurs.

Amidst all the chaos, it’s clear the talent shortage is too big for HR departments to solve alone: a cross-discipline approach is needed. One deceptively simple task to support more effective recruiting is ensuring that job descriptions and postings are up-to-date and accurate. As technology transforms how work is done, HR will need to partner more closely with operations and IT to keep abreast of how roles are changing, map out new job descriptions, and craft job postings that use relevant keywords and target in-demand talent. It’s an ongoing effort as technology continues to define new ways of working—from truck drivers receiving training in high-tech simulators, to finance teams using RPA to deliver real-time analyses, to data scientists applying AI to predict output and loads. But job accuracy is just a baseline. Making oil and gas jobs attractive may prove an even larger challenge.

In a recent survey, more than 70 percent of U.S. respondents said they were more likely to choose to work at a company with a strong environmental agenda—dampening Texas oil and gas company’s ability to source talent from across the country. Millennials in particular are linking ethics and environmentalism, with three out of four saying they would accept a smaller salary to work for an “environmentally responsible” company, and 40 percent reporting they have chosen one company over another because of its sustainability record. Again, oil and gas companies can benefit from a multi-pronged approach, with HR, PR, and marketing banding together to craft an employer brand that resonates with younger workers. Some oil and gas players have taken the innovative step of moving technology pros out of IT and into talent acquisition roles, enabling them to connect with younger prospects and share first-hand experiences of a fulfilling high-tech career in oil and gas. Alumni pools can also be effective at closing specific skill gaps; bringing back older workers as consultants on special projects can help meet short-term needs with proven (albeit pricey) skill sets.

New partnerships outside of the oil and gas industry appear to hold real promise as well. Community colleges and trade schools in Houston are working with oil and gas leaders to design specialized training that reskills workers and equips new talent to succeed in the field. Lone Star College’s floorhand/roustabout certificate program—which uses a life-size drilling rig as the students’ learning environment—is so popular that Houston’s oil and gas employers often offer students jobs before they’ve completed the IADC-accredited program. Taking a faster-track approach, a new breed of education firms is offering “boot camps” to upskill oil and gas workers: daytum recently hosted workshops at the University of Houston to teach oil and gas technicians and engineers how to use simple coding packages so they can better analyze and visualize data they work with in the field. Given the worsening talent crisis, investments in the future workforce are equally critical. Some companies are thinking beyond typical high school curriculum to reach kids in Texas middle schools and drum up interest in the skilled trades, planting the seeds for well-paying oil and gas careers that don’t require a four-year degree or student debt burden.

Outsourcing providers are evolving along with oil and gas and playing an increasingly vital role in addressing workforce challenges. Workforce solutions partners like KellyOCG are helping oil and gas companies—from global industry leaders to local Houston firms—with everything from payroll services to HR consulting to total talent supply chain programs. Solutions are as robust and diverse as the challenges they address. For example, the right outsourcing partner can help determine the optimal mix of talent (full-time, contract, etc.) and technology, an area of tremendous opportunity in oil and gas, where digital solutions have the potential to cut upstream production costs by as much as 20 percent. Attracting talent in an environment where talent clearly has the upper hand also requires looking beyond typical demographics and traditional talent pools. Progressive companies are creating bespoke talent agendas that incorporate best practices traditionally reserved for customers, including segmenting candidates based on internal attitudes and motivations in order to map out more effective recruiting and retention strategies.

Supply and demand will always be a deciding factor in the oil and gas industry’s success. Companies that embrace innovative partnerships can build talent pipelines that yield a competitive edge today and in the years ahead.

1 https://www.dallasfed.org/research/energy/indicators/2019/en1907.aspx

Author Profile
Vice President - KellyOCG

Ron Hudik, Vice President, Global Solutions with KellyOCG, has been providing strategic guidance and recommendations around custom-designed, client-specific workforce solutions to companies in all sectors of the energy industry for more than two decades. He specializes in the design and implementation of solutions related to Managed Service Provider (MSP) programs, Recruitment Process Outsourcing (RPO) solutions, and many others.

Author Profile
Vice President - Kelly Services

John Romanow, vice president - South Central region at Kelly Services, has been connecting talented people to companies for more than two decades with a focus on O&G and several other industries. An experienced workforce solutions executive, John leads the staffing and business solutions operations for Kelly throughout Texas, and several other neighboring states.

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