Oil and gas contractors should hold their nerve and keep on contracting despite the apparent implosion of the industry. If you have the right skills, your future and a lucrative income are as secure as they have always been, as long as you are prepared to be flexible. And learn the lessons of the past, as oil firms seem unable to do.
Until only last year, the oil and gas sector has experienced acute skills shortages. These shortages have resulted in costs spiralling, as both employees and contractors have become more expensive to retain or poach from other oil and gas organisations. The acute shortages have mainly been professional white collar, predominantly in the engineering and geosciences disciplines, and blue collar trades across the board.
Most sectors experience skills shortages on a cyclical basis, but the ones to hit oil and gas have hit particularly hard. The reason why goes back decades to two events similar to the one we are currently experiencing. Although the oil and gas sector seemed largely immune to the global recession of the late noughties due it its highly globalised nature, it was hit very badly during the recessions of the early 1980s and early/mid-1990s.
Job cuts during both events were savage and, crucially, entry level recruitment virtually halted. There were far fewer oil and gas provinces to soak up surplus workers when compared to today, so many workers left the industry, some for good. During each recession, the recent-graduate professional white collar population shrank to a fraction of its former size.
The impact of the early eighties recession started to have a significant impact in the early noughties, twenty years on. But that was just about manageable, as there was a good crop of more senior professionals to plug the gaps.
However as the decade progressed, we saw an increasing shortage of thirty/forty/fifty somethings - these are the years when professionals make their biggest impact and, because they have been doing the job for long enough and have meaningful experience, are of greatest value. Older workers were retiring and there were not enough replacements.
The early 2010s then suffered from a lack of professionals with both 20ish and 30ish years of experience, a double whammy of a gap that is incredibly difficult to fill. We all know the result. Hopefully, you have profited well from it.
Sadly, the oil and gas sector’s employers have reacted to the most recent price crash without any thought to what lessons might be learned from those lost decades. Both oil majors and services business are not only slashing thousands of jobs and contracts, they are halting graduate recruitment.
In just one example, reported by the Engineer, BP alone is reducing graduate recruitment from 250 in 2012 to 80 in 2015. That represents a 68% reduction in hiring. Extrapolate that across the industry and down the next two decades and what do we have? Only about a third of the oil and gas professionals we need for an industry that is forecast to continue growing at least until 2035. Although bad news for the industry, this is clearly good news for contractors.
So, if you are an oil and gas contractor now, the skills shortages have not disappeared. In many cases, they have been shunted to oil and gas provinces where it is still profitable to extract oil at $50 a barrel. If you are facing poor prospects in the North Sea, consider relocating for a few years.
Some of the more canny oil and gas operators are skills hoarding and trying to tempt those contractors with hard to source skills to go on the payroll. If this is you, think about making your limited company dormant for a couple of years and take that permie job. You can always return to contracting.
Finally, whatever you do, don’t retire or change industry. If you are a younger contractor, you will fund your entire retirement in about 15-20 years when the next skills shortages arise.
If you are older, consider semi-retirement to keep those skills sharp and then when the skills famine hits, make some really serious cash. Oil and gas contractor prospects look just as positive as they did five years ago, as long as you have the right skills and are prepared to be flexible.