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12:22 am
Fri April 20, 2012

As Workers Age, Oil Industry Braces For Skills Gap

Originally published on Tue May 8, 2012 6:11 am

Two years after the Deepwater Horizon accident killed 11 men and sent oil spewing into the Gulf of Mexico, the oil industry says it has learned valuable lessons from the disaster that are making drilling safer today.

But there's still a pressing issue looming for the oil industry: Oil field workers are retiring in huge numbers, leaving a workforce that's younger and — more importantly — less experienced.

Dubbed "the great crew change," the staffing challenge comes even as crews venture into places where drilling is more difficult, like the Arctic and below the world's oceans.

More Drilling, Less Experience

Investigations into the 2010 Deepwater Horizon disaster point to a series of mistakes, including a failed blow-out preventer and results of a key test that managers ignored.

But investigations by the U.S. Department of the Interior and a presidential commission also point to an issue that has received much less attention: there was a reorganization of personnel on the rig just before the accident. While the new crew leaders had years of experience, they were new to their positions.

"When the Deepwater Horizon exploded, no one in the BP engineering team had been on the job for more than six months," says John Konrad, a former drill ship captain and co-author of Fire on the Horizon: The Untold Story of the Gulf Oil Disaster.

Konrad says such staffing reorganizations are becoming more common. Around the globe, as more huge drill ships like the Deepwater Horizon are built to take advantage of high oil prices, companies have had difficulty finding enough experienced workers.

"It only takes a year to build a billion-dollar ship," Konrad says. "But it takes 10, 20, 30 years to build a billion-dollar captain who's going to navigate and command the ship."

And just as demand for more experienced workers is rising, their numbers are declining. A survey by Schlumberger Business Consulting finds that 22,000 experienced geoscientists and engineers will leave the field by 2015.

While workers currently rising through the ranks will replace many retirees, the survey shows a quarter of those positions will be filled by much younger workers with less experience.

An 80s Bust, Reverberating Today

The oil bust of the 1980s helps explain the demographic shift in the industry. As crude prices plummeted from $35 a barrel to $10, companies laid off workers and, in many cases, stopped hiring.

Three decades later, those staffing changes have left an age gap in the industry's workforce.

A growing number of training programs are attracting new potential workers who hope to fill that gap. Marvin Harris, a student at Lone Star Corporate College outside of Houston, hopes to transition from a warehouse job to a position in the oil industry.

"There's always opportunities in the oil field to move up, move around, see different countries and travel," Harris says. "I love to travel, and in the oil industry you get to travel quite a bit."

George King, an instructor at Lone Star, spent a career as a mechanical engineer in the oil and gas industry before turning to teaching.

"A significant amount of technology, expertise and knowledge — know-how — is leaving the industry," King says. "So those of us that are ending our careers in industry are coming back into education, because we have a story to tell — and we have skills and experiences that can be relayed through teaching."

The question for the industry now is whether expertise, once developed over a decade or more on the job, can be taught in classrooms in a matter of months.

Concerns Over Safety

Another concern for many industry observers: if transitioning from a workforce with decades of experience to one that's just getting its bearings will compromise safety.

"We haven't seen that," says Jim Noe, senior vice president at the drilling company Hercules Offshore.

Noe points to federal Bureau of Labor Statistics data showing the trend for injury accidents in the oil business has been heading down. He says there are incentives to make sure that continues.

"I think we've all seen what happens when you have a big incident — and how much of a business interruption and how much business impact that can have — by looking at BP," Noe says.

BP estimates the disaster will cost the company more than $40 billion, and is selling assets to help pay those costs.

Today, BP wants to demonstrate that it will operate safely. Even quarterly earnings calls begin with Chief Executive Bob Dudley issuing a safety message about what to do if the fire alarm goes off.

More Stringent Training Guidelines

Mark Denkowski, vice president of accreditation and certification at the International Association of Drilling Contractors, says extensive safety briefings and long training programs are quite a change from his experiences early in his career.

"Thirty years ago ... when I saw my first rig ... there was little or no training," Denkowski says. "It was literally, 'Here's your hard hat, here's some safety equipment, and go to work,'"

Even before the Deepwater Horizon accident, companies had voluntary guidelines to make sure all their workers were adequately trained. Now federal regulators have made some of those voluntary guidelines mandatory.

"No longer would you have a person that's just hired and literally put on a boat or on a helicopter and flown out to a rig with little or no orientation or training," Denkowski says. "Companies are going to be required to prove that that individual has been through that orientation."

Two years after the Deepwater Horizon disaster, the industry says it's doubling down on safety. The real test — as a generation of experienced workers retires and a new generation takes over — is ahead.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

LYNN NEARY, HOST:

Two years ago today, the Deepwater Horizon was drilling for oil in the Gulf of Mexico. That evening, explosions erupted, and fire broke out. Eleven men were killed. For three months, oil gushed into the Gulf, fouling coastlines as crews struggled to bring the well under control. BP and the rest of the oil industry says valuable lessons are making drilling safer now. But there's one issue the industry still must contend with: It's been dubbed the great crew change. Oilfield workers are retiring in huge numbers, leaving a workforce that's younger and, more importantly, less experienced. NPR's Jeff Brady reports.

JEFF BRADY, BYLINE: Among the crew aboard the Deepwater Horizon that night was Christopher Choy. He was off-duty and asleep. He told his story to NPR just weeks after the accident.

(SOUNDBITE OF ARCHIVED AUDIO)

CHRISTOPHER CHOY: I started setting off the fire alarms, and I made an announcement that we had a fire. They were just - they were screaming, you know, fire, fire, fire. This is not a drill. Go to your stations. This is not a drill.

BRADY: Choy saw people hurt, and described chaos.

CHOY: People were going crazy. There was people jumping off the rig, people holding people back from jumping off the rig, people scrambling to get into lifeboats.

BRADY: Investigations from a variety of organizations point to a series of mistakes leading to the disaster, including a blowout preventer that failed, and results of a key test that managers ignored. Investigations by the Department of the Interior and a presidential commission also point to one issue that hasn't received much attention: Just before the accident, there was a staffing reorganization. The new crew leaders still had years of experience, but they were new to their positions aboard the drilling rig.

JOHN KONRAD: When the Deepwater Horizon exploded, no one in the BP engineering team had been on the job for more than six months.

BRADY: John Konrad is a former drill ship captain. He co-wrote a book about the Deepwater Horizon disaster. Konrad says such reorganizations like this are becoming more common. Around the globe, as more huge drill ships like the Deepwater Horizon are built to take advantage of high oil prices, companies have a tough time finding enough experienced workers.

KONRAD: It only takes a year to build a billion-dollar ship, but it takes 10, 20, 30 years to build a billion-dollar captain who's going to navigate and command the ship.

BRADY: Just as the demand for experienced workers is rising, their numbers are declining. Twenty-two thousand experienced geoscientists and engineers will leave the field by 2015. That's according to a survey by oil field services company Schlumberger. While current workers rising through the ranks will replace many retirees, the survey shows a quarter of those positions will be filled by much younger workers with less experience. To understand why this is happening, we'll take a quick trip back to the 1980s.

(SOUNDBITE OF MUSIC)

BRADY: The primetime soap opera "Dallas" and oil man J.R. Ewing were reaching their peak in the early 1980s. Right around that time, the oil industry went through a difficult period. Crude prices dropped from $35 a barrel down to 10. Oil companies laid off workers and pretty much stopped hiring. Three decades on, that's left an age gap in the industry's workforce. You can see it out in the field and even at a community college training program outside Houston.

GEORGE KING: I'll fire the servo on this, and we'll make sure that...

(SOUNDBITE OF MACHINE)

KING: ...as you can see...

BRADY: Lone Star College Instructor George King is standing next to one of his students, Marvin Harris.

KING: I'm twice his age. I'll be 65 years old this August. Marvin is 30 years old. And that division is throughout the industry.

BRADY: King is a mechanical engineer and spent a career in the oil and gas industry before accepting this teaching position.

KING: What's taking place is a significant amount of technology, expertise and knowledge, know-how, is leaving the industry.

BRADY: While that's a problem for industry leaders, student Marvin Harris sees a bright future.

MARVIN HARRIS: There's always opportunities in the oil field to move up, move around, see different countries and travel. I mean, I love to travel, and in the oil industry, you get to travel quite a bit.

BRADY: Training programs like this are growing quickly, as companies search for the workers they'll need. But we're still left with the question of whether this transition from a workforce with decades of experience to one that's just getting its bearings will compromise safety. That's something oil industry executives are thinking about. From an office 23 floors up with the Houston skyline out his window, Jim Noe is senior vice president at drilling company Hercules Offshore.

JIM NOE: We've been struggling with this great crew change. It doesn't happen overnight. It's been a gradual pressure that we've had, and we haven't seen our safety be compromised by this.

BRADY: Noe points to federal data showing the trend for injury accidents in the oil business has been heading down. He says there are incentives to make sure that continues.

NOE: I think we've all seen what happens when you have a big incident and how much of a business interruption and how much business impact that can have by looking at BP. This is a business necessity.

BRADY: BP estimates the disaster will cost more than $40 billion. The oil giant is selling assets to pay spill costs. BP wants to demonstrate that it will operate safely. Now, even quarterly earnings calls from BP's London headquarters begin with Chief Executive Bob Dudley issuing a safety message.

(SOUNDBITE OF SPEECH)

BOB DUDLEY: There are more details on the safety briefing card handed to you at reception. We are not planning to test the alarms today. So if you hear it, please proceed as advised by the instructions.

BRADY: Extensive safety briefings and long training programs: this is quite a change from what Mark Denkowski experienced early in his career. He's vice president of accreditation and certification at the International Association of Drilling Contractors.

MARK DENKOWSKI: Thirty years ago, when I did first go offshore, it was overseas - actually, it was in southeast Asia when I saw my first rig and there was little or no training. It was, literally, here's your hard hat, here's, you know, some safety equipment, and go to work

BRADY: Denkowski says before the Deepwater Horizon accident, companies already had voluntary guidelines to make sure all their workers were adequately trained. Now, federal regulators have made some of those voluntary guidelines mandatory. Two years after the Deepwater Horizon disaster, the industry says it's doubling down on safety. The real test is ahead, as a generation of experienced workers retires and a new generation takes over. Jeff Brady, NPR News.

NEARY: This afternoon on ALL THINGS CONSIDERED, BP has spent billions to clean up oiled beaches and waterways, but problems linger. We'll look at how the Gulf ecosystem is recovering. Transcript provided by NPR, Copyright NPR.