Scarce Skills and Resources Pressure Projects as Oil Industry Moves East

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Researched by Industrial Info Resources (Sugar Land, Texas). Many young people believe that supplies of oil were nearly exhausted and were reluctant to enter an industry that would end before they reached retirement age, said Andrew Gould, chairman and chief executive of Schlumberger (NYSE:SLB) (Sugar Land, Texas), while speaking at the 15th Middle East Oil and Gas Show in Bahrain. “We have to convince them that we are a long, long way from exhausting our oil supplies and that they will have a long life in the industry,” he added. These sentiments will hold the interest of all who are involved in the energy market’s future at a time when the energy efficiency of oil-based fuel products is being increasingly used as a qualification to assess the long-term viability of competing fuel sources and technologies.

At the same event, Abd Alla S Al Saif, Saudi Aramco’s (Riyadh, Saudi Arabia) senior vice president for exploration and production, said that the challenge of the skills shortage facing the petroleum industry would undermine its ability to meet world demands. “As our workforce ages we fall short of young engineers to take their place. Nearly half our workforce is less than 30 years of age. Furthermore, surveys suggest that in the next few years more than 60% of our engineers will have less than ten years of experience,” he said. Overcoming the skills shortfall would take time as it was a problem ignored for decades. In addition to attracting a new generation of talented professionals, the industry had to spend more on research and the development of new technology and become more efficient in executing its strategies and to do so in a more environmentally-friendly way, said Al Saif.

In a week when it was announced that Halliburton (NYSE:HAL) (Houston, Texas) was moving its corporate headquarters to Dubai, while maintaining a corporate office in Houston, Chad Deaton, chairman and chief executive of Baker Hughes (NYSE:BHI) (Houston, Texas) speaking at the Bahrain event, stressed that the industry needed to be faster and smarter in adopting new technology, “The industry also had to be committed to placing its knowledge transfer and training resources closer to the centers of exploration and productivity, which was increasingly focused on the Eastern Hemisphere,” he said, adding that this was why his company had decided to establish a major campus in Dubai.

Deaton’s sentiments had been broadly echoed by Halliburton on the motivation to move its headquarters. Halliburton president and CEO Dave Lesar said in the U.S. that the move was the next step in a strategy announced in 2006 to focus on expanding customer relations with national oil companies while concentrating more of the company’s investments and resources in growing business in the Eastern Hemisphere.

The shortage of people and engineering equipment resources is being felt by project developers all over the world with massive escalation in budget requirements when looking at projects which were first mooted three or four years ago. A case in point is the Al Zour refinery project in Kuwait in which the Kuwait Petroleum Corporation (KPC) announced that it will issue a new tender on the 615,000 barrel-per day (bpd) project after it considered that the first round of bids by international companies was too costly. With the new tender on the $6 billion project expected soon it there will be keen interest among E+P+C companies (engineering, procurement and construction) on how KPC manages to thread project requirements through the eye of the needle of all-round resource scarcities and cost pressures.

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