Aug 01, 2016

Industry Highlight: Oil and Gas

According to a recent statement by Goldman Sachs, the United States oil and gas industry will need to hire tens of thousands of workers over the next two and a half years, as oil prices recover.

The most recent employment data from the Department of Labor is causing some economists to believe that the U.S. might reach full employment. If this happens, oil companies might face a shortage of workers. According to Airswift, since the start of the oil price downturn in 2014, over 291,500 energy jobs have been lost globally.

Largest Layoff Events in 2015 for U.S. Energy Sector Companies

Largest Layoff Events in 2015 for U.S

Source: Challenger, Gray & Christmas

Recruiting Talent

There are signs that the layoffs have peaked. According to outplacement firm Challenger, Gray & Christmas, U.S.-based energy sector employers cut 42 percent less jobs in the second quarter of 2016 than in the first quarter. Goldman Sachs believes that the high pay in the oil and gas industry will enable U.S. oilfield companies to attract the 80,000 to 100,000 employees the firm believes the industry needs. According to Goldman, the industry’s staffing needs would absorb about 8 to 11 percent of the unemployed population in energy-producing states.

Job Cuts in the U.S. Energy Sector, by Quarter

Job Cuts in the U.S. Energy Sector

Source: Challenger, Gray & Christmas

However, financial services company Raymond James believes that pay will not be enough to attract workers back to work in remote oil fields. While non-oilfield jobs pay less, they offer stable employment and less harsh work conditions that might offset the lower compensation.

And while energy-producing states might theoretically have a large enough pool of workers to meet the industry’s demands, there is no way of knowing how many of these workers are qualified and willing to work in the sector. The industry has not done any net new hiring in two years, and at the same time, enrollment in petroleum engineering degree programs across the country is declining. Also, a number of experienced, high-income workers have now retired or been bought out, leaving mid-level workers to fill the skills gap. Finally, some early career professionals who did not have the experience to work as consultants over the past couple of years have embarked on other career paths.

Enrollment in U.S. Petroleum Engineering Programs

Enrollment in U.S. Petroleum Engineering Programs

Source: U.S. Association of Petroleum Department Heads

“I don’t see how the industry comes back to any level of activity that is busy without a breakneck amount of chasing bodies, and there just aren’t going to be enough to go around.” ~Jason Bush, President of CSI Recruiting

Oil and Gas Hiring for Contract Workers

While the industry might struggle to hire enough employees, in the meantime, contract and temp-to-hire jobs in the sector are growing. Many of these contract jobs include technicians, maintenance, quality control, assembly, disassembly, welding, shipping and receiving, and engineering.

“Temp-to-hire and contract jobs are the first to come back when the industry starts recovering. Plus, the rig count is going up.” ~Rich Burnett, Vice President at Burnett Specialists

According to some recruitment specialists, many people were expecting employment in the oil and gas industry to pick up in 2018. This then shifted to mid-2017. Now, they’re expecting things will pick up by end of 2016 and into the first quarter of 2017.

“Job seekers continue to turn to other, related industries that offer more stability. It’s too soon to tell if this talent will exit the oil and gas industry permanently, but if it does, it could result in a long-term, more pronounced talent shortage when the oil price recovers.” ~Janette Marx, COO at Airswift