The skills shortages that bedevil many parts of industry are also felt in Britain’s offshore oil and gas sector. It’s a sign of the times that trade body Oil and Gas UK recently held its first ever skills summit in the offshore hub of Aberdeen. A PricewaterhouseCoopers report recently suggested some 120,000 new recruits to the industry will be needed by 2022. With this is mind, the demand on the pool of engineers already being sucked up by growing sectors such as automotive is likely to be even greater.
According to Oil and Gas UK the North Sea labour market is increasing in demand with the supply of suitably qualified personnel becoming “much more difficult”. Investment intentions in the North Sea are likely to exacerbate the problem. Supply, says the trade body, is “only becoming more difficult due to shortages of suitably qualified persons”. The rates of contractors working in the industry have increased substantially over the past year. Oil and Gas UK says: “We expect these to continue to rise over the coming months, not only due to the increase in investment but also the shortage in skilled personnel.
“Retention with some companies is becoming as important, if not more so than recruitment of new staff and contractors due to the shortages.” Meanwhile some contractors are looking to overseas markets where they can make more money and be taxed less, the trade association claims.
One firm attempting to address looming skills shortages is oil giant BP. Emma Judge, head of graduate recruitment, is reviving the company’s scholarship system, which is likely to prove popular given the increased financial demands on today’s youngsters. Students at a select group of universities including Imperial College London and Oxford and Cambridge studying STEM subjects will be eligible for £5,000 in funds from BP. The scholarship programme, worth £450,000 over the first year, will be open to nine universities to support ten scholars each. “BP has offered scholarships to hundreds of students over the years and this is actually the second iteration of a scholarship programme that we launched in 2007,” Judge says. “Given the changing student market and the challenges students are facing, we’ve restructured it and are launching it again this year in a slightly different way.
“I think what we’re trying to do is acknowledge that times are tougher and young people have some tough decisions to make. For some students there may be a genuine concern: ‘should I go to university or not?’. We’re hoping this scholarship fund will alleviate some of those concerns.”
Students applying to be BP scholars will have to complete an online application and attend an interview, in a manner similar to those applying for a graduate position or internship. The hope is that taking part in the scholarship scheme will interest the students in ultimately working for BP. Upon completion of the scheme, students are eligible to be fast-tracked onto the graduate programme or as interns. There is no obligation for scholars to do so, but Judge is candid about the desired outcome. “How many scholars would we like to see become BP staff? All of them. I’d love all of them to join if I’m honest.
“We’re talking to these students at quite an early stage in their careers, and they’ve just made the decision to study STEM. It’s a win in itself that they are studying the sciences and maths. But the ultimate is for them to work for us as a scientist or engineer, or even as a trader on our commercial programme. There are commercial opportunities.”
In March, BP will bring the scholars together to “bond as a group”, Judge says, and “talk to them a little about the energy industry and the importance of their degree to our industry”. BP’s graduate programmes are generally oversubscribed many times. Judge says: “We do attract a lot of applications. There are some quite niche areas that you have to have a very specific degree to go into, such as marine engineering or naval architecture, but we’re fortunate in that we build relationships and engage with lots and lots of students.” Interns prove to be a great source of new talent, with some 80% being offered permanent positions. “They’ve had the chance to see us and we’ve had the chance to see them, so it’s a good fit.”
She adds: “Students make a decision on the industry they want to work in, and STEM students are often very passionate about what they do and how they want to apply that knowledge. That’s more important than the salaries different companies offer, although ours are very competitive across the industry.”
One of the attractions of oil and gas may be the salaries, which are higher than the average for engineering, but more broadly the energy sector provides a key challenge for the future. “It’s an area where we can make a difference, and students recognise that. What students love is applying their knowledge to solving practical problems and students who want to work for us want to apply what they know to solving energy challenges.” BP organises field trips for youngsters to, for example, its North Sea operations. “When they see the richness of that experience and what they could end up doing with North Sea assets, it’s just fantastic. And by having the scholarship programme, we’re creating a sort of talent pipeline for the future.”
Aquaterra Energy, which engineers riser systems and offshore structures for oil and gas, cannot match the lure of an oil major such as BP but successfully runs a graduate programme and recently opened an office in Aberdeen. It takes on students for summer placements. Giving students work experience effectively acts as an extended interviewing process, says managing director Patrick Phelan. “We generally offer a number of them a permanent position when they finish their degree. We’re looking for engineers who have a good academic record, but also have a very practical nature for the application of those skills. They also need strong communication skills and to be able to present their ideas from the start and to be willing to travel, because we work for a lot of customers overseas. It can be difficult to get all these qualities.”
It also can be the case that the oil majors skim off the cream of the talent and have a wider pool to choose from in the first place. “As an SME our challenges are different to the large companies. Some of them might say there is a huge pool of graduates to choose from but when it trickles down the line the small to medium-sized enterprises are left with a smaller pool.
“But there are real benefits to working in smaller organisations: graduates can get a greater level of responsibility and more practical opportunities at an earlier stage. That isn’t always recognised.”
Part of the problem is there are simply not enough engineering graduates coming through the system, Phelan believes. He is sitting on a government advisory body chaired jointly by business secretary Vince Cable and energy secretary John Hayes which includes some of the major oil companies and service providers, all of which recruit large numbers of graduates.
Phelan says: “I’m sitting on that government roundtable specifically representing small and medium-sized enterprises in the oil and gas industry in order to get their voice across, not just for Aquaterra’s sake, but for all the smaller firms – because the situation is very different for us than it is for a company like BP.”
Part of the problem in attracting graduates may not be down just to the numbers game but perceptions of the North Sea industry as being in decline. “That’s not the case at all, the technology involved is very advanced and oil and gas has a very healthy future.
“I think that message needs to be spread more than it is.”
BP staying put
BP insists that it is still a major investor in the North Sea, despite drawing up plans to sell more of its oil and gas fields in the region to an overseas firm.
The oil and gas giant has agreed to sell its interests to Abu Dhabi’s Taqa for $1.058 billion plus future payments which, dependent on oil price and production, BP currently expects will exceed $250 million. The assets included in the sale are BP’s interests in the BP-operated Maclure, Harding and Devenick fields and non-operated interests in the Brae complex of fields and the Braemar field.
BP said the transaction was in line with its strategy to focus on a smaller number of higher-value fields with long-term growth potential and to continue the simplification of its activities with a reduction of operated infrastructure and wells.
Trevor Garlick, regional president, North Sea, said the deal made strategic sense, but that it didn’t indicate any wider plan to exit the North Sea. “BP continues with a focused investment programme in the UK and Norway, which includes planned capital spending of $10 billion over five years.”
With the Taqa announcement, BP has now entered into agreements to sell assets with a value of around $37 billion since the beginning of 2010.
However, it does remain a big player in the North Sea, with production in the region averaging around 200,000 barrels of oil equivalent per day. BP also has more than three billion barrels of estimated proven and contingent resource available in the region.
The company employs over 3,000 staff in its North Sea business and operates 30 oil and gas fields. BP-operated producing assets include Clair, Schiehallion, Foinaven and Magnus in the Shetland area; Andrew, ETAP and Bruce in the UK’s central North Sea; and Valhall, Ula, and Hod in Norway.
Clean-up continues
The fallout from the Deepwater Horizon disaster in the Gulf of Mexico continues to challenge BP’s engineers. The latest activity in the region saw BP carry out a subsea survey of the Macondo well and its associated relief wells to identify potential sources of a surface sheen near Mississippi Canyon block 252 in the Gulf of Mexico. The survey marked the third time since the Macondo well was permanently sealed in September 2010 that it has been visually inspected at the sea floor and confirmed not to be leaking.
The inspection identified the cofferdam, containment equipment used during the Deepwater Horizon response, as the probable source of the surface sheen. The cofferdam is a 86-ton steel container that was lowered over a leaking drill pipe at the Macondo well site in May 2010 in an attempt to capture the oil and funnel it to the surface. A mixture of oil and slushy methane hydrates was trapped inside the cofferdam.
A video inspection observed small, intermittent drops of oil coming from an opening at the top and another on one side of the cofferdam. Samples of the droplets have been collected from the opening at the top, known as the stovepipe, and will be analysed to confirm a match with the sheen. Droplets were also observed coming out of a small connection port on one side of the cofferdam.
The survey confirmed that no oil was leaking from the Macondo well, nor from the relief well that intercepted and sealed it. A back-up relief well that never intercepted Macondo was also surveyed and confirmed to have integrity. In addition, the entire length of the 4,500ft riser was inspected, with separate passes made for the top and two sides, and no oil was seen leaking.