Big Oil's Talent Hunt
Business is booming, but the workforce is graying. That has oil companies seeking help in unusual places.
ConocoPhillips (COP) has grand plans. With demand for oil soaring, the company announced on Dec. 7 that it will boost its exploration and production budget by 8%, to $11 billion, a war chest intended to fund massive projects from Canada to China to the Caspian Sea.
But there's a potential obstacle to the company's vision: not enough people to get the work done. Half of Conoco's employees are eligible for retirement within five years. Unless older workers can be replaced, Conoco's expansion could be costlier and slower than planned. In an interview with BusinessWeek, CEO James J. Mulva said that the lack of talent is one of the most dangerous threats to his company's long-term health. "People are a big concern," he said.
Mulva is not the only oil industry CEO who is worried. Increased worldwide exploration and drilling means a greater need for workers at every level, from construction laborers and project managers to petroleum engineers to geoscientists. Nearly all are in short supply. So Conoco and other companies have started looking for help in some novel places, including the auto industry and academia.
But at the moment, supply does not equal demand. And things may stay that way for a while. A study released in October by Cambridge Energy Research Associates (CERA), a Cambridge (Mass.)-based energy consulting firm, concluded there could be a 10% to 15% "people deficit" in the oil industry globally by 2010.
If that prediction turns out to be correct, it could lead to widespread delays on big projects, supply shortages, and potentially even higher prices. One mega-project currently suffering because of worker scarcity is the Kashagan oil field in Kazakhstan, jointly owned by a consortium including ENI, ExxonMobil (XOM), Total, and Royal Dutch/Shell (RDSA). It is one of the largest oil fields in the world, with an estimated 13 billion recoverable barrels. But in part because of worker shortages, its completion date has been extended from 2008 to 2010 or 2011.
For the rest of this insightful story from BusinessWeek Magazine (www.businessweek.com) , click here: http://www.businessweek.com/magazine/content/07_52/b4064062948731.htm?chan=search.
This Energy story, which was written by BusinessWeek's Moira Herbst, came from the December 24, 2007 issue of the magazine and from their web site.