Human resources

Are You Ready for the Oilfield Recovery?

Companies need effective talent acquisition and retention programs to succeed in the pending economic recovery.

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According to some oilfield service experts, a shortage of interested and qualified workers is actually slowing the recovery of US drilling activity.
Source: Getty Images.

Through the past 2-plus years, the petroleum industry has experienced its deepest downturn since the late 1980s. It feels like, in the words of baseball legend Yogi Berra, “It’s déjà vu all over again.” Like other market cycle downturns, a dramatic drop in the price of oil leading to sharp cuts in investment in exploration and production has affected the entire industry and the people who work in it. Also, as in past downturns, company after company laid off high percentages of their employees across the board and, in many cases, also enacted hiring freezes.

Since the steep drop in oil prices, an estimated 250,000 workers directly involved in the petroleum industry have lost their jobs. From field personnel to executives, the toll has been high. Many of these laid off workers have moved on to find employment in other industries, often with more comfortable and predictable working conditions than is the norm in the oil field. It will be difficult for our industry to attract a large percentage of these workers to return. Add to this scenario “the great crew change” created by the retirement of many senior level people who joined the industry in the boom of the late 1970s and early 1980s, and it is conceivable that the industry may be headed for an all-time low in the availability of qualified personnel. Midcareer professionals are in short supply, and few qualified candidates are left to replace the retiring senior management. For the industry, this loss of expertise will be difficult to replace when the next boom comes. At the same time, enrollment in petroleum engineering degree programs across the US is falling, making the talent shortage even more acute.

After Bust Comes Recovery

If history is any guide, after every oil bust comes a recovery. Currently, there is rising confidence in the industry that crude oil could strengthen and stabilize at higher levels later this year. While the recovery has been slow, the industry is seeing encouraging signs that the rebound has begun. Two indicators are the increase in oil and natural gas drilling and production activity in Oklahoma and in the Permian Basin of west Texas and southeast New Mexico. With activity picking up, the US oil industry will need to hire tens of thousands of new workers as oil prices recover and drillers stand up rigs.

So the question is, with the difficulty in rehiring laid off employees and the lack of qualified new personnel, how can companies be ready to take advantage of the turnaround?

Only by employing qualified personnel can the oilfield services sector ensure high productivity, minimal safety and service quality incidents, and increased efficiencies for oil and gas producers. A lack of skilled staff could mean project delays, costly errors, and even safety issues for companies. According to some oilfield service experts, a shortage of interested and qualified workers is actually slowing the recovery of US drilling activity.

When enduring season slumps, professional baseball teams look for ways to improve their team roster. For oil and gas companies, it should be the same. Making sure you have the best, highly motivated people on your team is critical to winning out in the field. C&J Energy Services, along with much of the industry, had to trim our workforce significantly during the recent downturn. But, even while doing so, we focused on retaining key contributors and, in some cases, even hired talented specialists as they became available to position our company for future growth.

Alongside the investment in personnel, we must invest in modernizing the systems and processes we use to run our businesses. We cannot afford to handicap our organizations with outdated and inefficient business systems. Our people must have the tools in place and the training to utilize them effectively for our businesses to successfully compete in today’s marketplace.

Be Prepared

Companies are now competing for the best and brightest already in the industry and vying for the highest potential newcomers. What can you do to be best prepared during the upcoming growth cycle with qualified employees in sufficient numbers? A robust recruiting and training process and, in many cases, a retraining process to onboard future employees quickly and prepare them for the field is an absolute necessity. Re-examine current training programs and identify how you can adjust and update them to ensure your people are equipped with the right knowledge and skills.

Some regulatory changes have been made during the downturn, and safety programs must get in line with the latest requirements. To that point, as a company rapidly brings new people onboard, it is vital that no matter the position, all training is done with an eye to safety at every level. History has shown that a large influx of new employees can bring safety issues unless great care is taken during the training process. We also need to recognize that today’s labor force is no longer motivated solely by a paycheck. Our wage compensation packages must be competitive in each specific geographic market, but other parts of the total compensation package are just as important to today’s potential new hire. “Quality of life” initiatives, such as reliably scheduled time off, 9-80 work schedules, and recognition programs for exceptional performance are a higher priority for younger workers today than in the past. In short, we must hire and train quickly and effectively while appealing to the priorities of a new generation of oilfield workers.

After the big downturn of 1986, companies had adequate time to staff up as the market gradually recovered. This time around, it is currently feeling like time is of the essence. In Texas alone, close to 99,000 direct and indirect oilfield jobs have been eliminated since the collapse of oil prices. Notably, this is also the place where the recovery is expected the soonest. The first companies to get back in the field with the right people possessing the required skill sets will be the big winners.

As an industry, we must focus on immediately addressing the skill shortages that so obviously exist if we are going to ensure a quick and successful recovery. Only by making the right moves today regarding talent acquisition and retention can we ensure a smooth, safe, and financially rewarding recovery.

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Don Gawick is president and chief executive officer (CEO) of C&J Energy Services, a position he has held since June 2016. He also served on the company’s Board of Directors since July 2016. Gawick joined C&J in 2012 with the company’s acquisition of its wireline business, Casedhole Solutions, and served as C&J’s chief operating officer from 2012 until his appointment to CEO. He served as president and CEO of Casedhole Solutions from 2010 to 2012. He began his career at Schlumberger and between 1979 and 2010 held numerous senior management positions, including oversight of all of Schlumberger’s oilfield business segments. Gawick holds a BS degree in electrical engineering from the University of Manitoba.