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By Robert Rapier on Oct 21, 2007 with no responses

Peak Manpower

Last week I got 4 e-mails and 3 phone calls from headhunters trying to fill engineering positions in the oil and gas industry. They have a tough job right now, and it only looks to get tougher. I know, because as part of my current role, I have to recruit and hire process engineers. It has been a challenge. There just isn’t enough manpower to go around, and it is shaping up to be a big problem. An article published today explains:

‘Peak oil’ Just how long will it last?

We may not be at peak oil, but we are at peak manpower in the industry. Within the next 10 years or so, there is a huge number of people who will retire from the industry. The real problem is where are they are going to get scientists, petroleum engineers, drillers and everyone else it’s going to take to do the work when we haven’t been replacing people in the industry? Ten years ago, the average age of scientists was probably 45. Today, 10 years later, it’s 55. That says we haven’t been bringing new people into the industry.

You can argue “peak oil,” but the one thing you can’t argue about is that the industry is struggling with peak manpower problems.

Robert Bryce also weighed in on this during the summer in Energy Tribune:

Energy’s Manpower Peak? – Why the biggest problem might not be oil.

Of all those in the oil and gas sector, “half are now between the ages of 50 and 60, while only 15 percent are in their early 20s to mid-30s. The average age in the industry is 48, with some major and supermajor companies reporting an average age in the mid-50s.” The report cites a Devon Energy official who in 2005 predicted that within five years, one-third of that company’s geotechnical staff would be eligible for retirement.

Bryce shows a table in that article that estimates by 2020 the industry will need 140,800 employees, but of the current workforce, only 73,800 will still be working. And it doesn’t look like we will be able to close that gap. We just don’t have enough people coming into the industry. I understand the reasoning, having passed on the oil industry when I graduated from college. It wasn’t sexy enough for me. I had the image of an old and stodgy industry, so I spent my first 7 years after college in the chemical industry.

What does the manpower shortage mean? Two things. First, if you want to work in an area where your skills will be highly sought after – which therefore implies excellent wages and job security – this is it. Second, it means that projects are being delayed because people simply aren’t available to complete them. This means that supplies will not come on line as soon as they may be needed- just another above-ground factor that will keep supply from ramping up fast enough to meet demand. Which will of course help maintain the pressure on energy prices.