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Published: November 21, 2006

 
 

Crisis in the Oil and Gas Industry

Companies must also develop retention strategies. These include helping workers develop specialized skill sets and focusing on the work–life balance. Such planning requires that leaders ask themselves and their colleagues the right questions to get a sense of organizational advantages and shortcomings. Are line managers and team leaders encouraged to actively develop staff? Do human resources and technical and operations teams work together effectively? Are we seen by potential workers as the employer of choice? Each of these questions needs to be addressed within the organization. These talent-retention questions have the potential to reshape the market and even drive consolidation if companies can’t find the skills to embark on critical projects.

Although it may be difficult to get there, the goal is simple: find a better way to manage the industry’s most valuable asset — its talent. If companies can continue to build partnerships with universities, invest in new recruits via company-funded training programs, and overhaul current human resources practices, it will be possible to avert another labor crisis before it begins. Although it may take time, abandoning the reactionary labor practices of years past and focusing instead on realistic hiring goals for the next decade could eventually correct the current labor shortage and strengthen the industry for years to come.

Author Profiles:


Peter Parry (parry_peter@bah.com) is a vice president with Booz Allen Hamilton in London. He specializes in global energy and has 25 years experience in corporate strategy development, technology management, and commercial negotiations. He has worked extensively with governments, national and international oil companies, and independent oil and service companies.

Varya Davidson (davidson_varya@bah.com) is a principal with Booz Allen Hamilton in London, where she specializes in the energy industry. She advises clients on strategic transformation and organizational capability, with a focus on the upstream oil and gas sector.

Andrew Clark (clark_andrew@bah.com) is a senior associate with Booz Allen Hamilton, based in London. Andrew has worked on a range of assignments, from supply chain improvement strategies to organizational design and restructure. 
 
 
 
 
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Resources

  1. "Global Upstream Performance Review," John S. Herold Inc. and Harrison Lovegrove & Company, 2006: Source of statistics on and forecasts of exploration and production investment and performance. Click here.
  2. "Interstate Oil and Gas Commission Bylaws": Multistate government research agency that promotes the responsible use of domestic oil and gas resources. Click here.
  3. Douglas C. Nester, “So Kid, They Tell Me You Have Talent?” World Oil, December 2004: Industry veteran outlines coming talent shortage affecting the ability to discover and produce new sources of oil. Click here.
  4. Peter Parry, Otto Waterlander, and Varya Davidson, “Resourcing the Challenges of Maturity: An Oil Industry View,” Booz Allen Hamilton white paper, 2005: Lays out the challenge of an aging workforce (and declining expertise base) in the oil and gas industries. PDF download.
  5. Peter Parry, Varya Davidson, Andrew Clark, and Zoë Guilford, “Labor and Skills Crisis Could Stall Oil and Gas Boom,” Booz Allen Hamilton white paper, 2006: The piece on which this article was based goes into more detail for industry leaders. PDF download.
  6. “Peak Oil Resolution in U.S. House of Representatives,” Energy Bulletin, November 20, 2005: Resolved that the U.S. create an energy project with the magnitude, creativity, and urgency of the “Man on the Moon” project. Click here.
  7. “Shell Opens World Class Facility for Technical Learning,” September 7, 2005: Overview of Shell’s training center for technical staff in the oil and gas industry. Click here.
  8. “Upstream University,” The Lamp, vol. 86, no. 2, 2004: Overview of ExxonMobil’s training center for oil and gas industry employees. Click here.
  9. Herve Wilczynski, Matthew McKenna, and David VanderSchee, “Unprecedented and Unseen: The Next Great Energy Challenge,” s+b Leading Ideas, November 9, 2006: How to manage a growing number of capital projects in the oil and gas industry. Click here.
  10. Oil Career Web site: For professionals seeking careers and for those trying to understand the industry’s greatest points of activity. Click here.
 
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