The Oil Industry Resourcing Challenges - sapc-iadc.org Industry... · The Oil Industry Resourcing...

Prepared by

Steve Taylor

Managing Director

The Oil Industry Resourcing Challenges

Nexus Group/ 2017

Steve Taylor

Started my career with Santa Fe in 1981 and worked with them for 23 years all

in HR and was the European HR Manager for approximately 10 years.

Moved to Dubai in 2004 when GSF sold the land rigs to Precision Drilling as

the Eastern Hemisphere HR Manager and became the Global HR Manager for

Weatherford Drilling International in 2005 when Weatherford acquired

Precision.

Moved to the Manpower side of the industry in 2007 but still providing

support to Drilling Contractors and have been based in Dubai for the majority

of this time.

Nexus Group/ 2017

ABOUT NEXUS PEOPLE GROUP

Nexus Group delivers consistent, end-to-end manpower solutions to the Oil

& Gas industry, enabling asset owners and operators to focus on their core

business.

Launched in 1999 as OCB Oilfield Services, the company pioneered the

‘Integrated Resource Management’ approach and has been providing

seamless manpower solutions to Oil & Gas projects on a global scale.

We provide contract manning, permanent placement, ad hoc cover and

contractor management services to the Oil & Gas Industry, mainly to drilling

and offshore construction clients. We currently have about 1000 drilling crew

personnel deployed mainly Indian nationals but also British, Saudis,

Egyptians, Thais, Malay and Indonesian crew.

Nexus Group/ 2017

WORLDWIDE PRESENCE

Indonesia

India

UAE

Qatar

Saudi Arabia

Vietnam

Thailand

Brunei

OCB in Africa since 2006, JV Partners provide coverage

for 80% of African Countries

In the Middle East since 1999

In South East Asia since 2005

In India since 1999

Expansion through acquisition of Kuiper, who have been

operating in Singapore and Australia since 2010 and 2012

Australia

Singapore

05 IADC South Arabian Peninsula Chapter Meeting September 2017

2014 - 2017


2014

• $100+ oil, we were invincible!

• Huge day rates and almost full utilization.

• New build Programme in full swing.

• Salaries at an all time high as Contractors compete for limited pool of

skilled labour.

• Retention plans put in place to retain skilled labour.

• High salaries for entry level positions to attract candidates from other

industries.


2017 – What a difference 3 years make!

• Oil price hovering around $50 – about a 50% reduction!

• Rig Day rates reduced by 40%, 50%......(I’ll not depress you any further!)

• Over supply of rigs despite retirement/scrapping programme.

• Salaries reduced by 30-60% for staff lucky enough to still be employed.

• Thousands of good, skilled workers have left the industry.

• No cash left in the coffers to use to make problems disappear!


History

• Ours is a boom/bust type of industry with good times invariably

followed by tough times.

• Our success is linked to the price our client can get for the Oil & Gas

we help them recover. Like all commodities the price fluctuates.

• We are very experienced in working through downturns – 1980, 1986,

1990, 1997, 2000, 2008 & 2014.

• What challenges do we face now that we haven’t overcome in the past?


1986 – my first Bust!

• At Santa Fe in the North Sea we shut our first rig down at the end of Q1

and didn’t stop until the beginning of Q4.

• We lost over 50% of our workforce. We introduced job sharing to retain

key people for the recovery we knew (hoped!) would come.

• Our first rig went back to work in December 1986 and by the end of

1987 we were just about back to our pre-slump level of activity.

• Rig rates didn’t improve for several years but at least the rigs and

crews were working.

• Why will it be different this time?


1986/7 v 2014/7 What’s different?

• This downturn has lasted a lot longer than the one in the 80’s, 3 years

and counting.

• Companies started off trying to protect and retain their best workers

but it kept going from bad to worse!

• Pay rates have dropped by approximately 30% - 50% so it is a lot less

attractive to work in Oil & Gas.

• Many of our good experienced guys have been away from the industry

for a long time and have settled back into “onshore” work/home

lifestyle. They won’t give that up for short term opportunities at a rate

which is vastly inferior to their previous offshore contract.


1986/7 v 2014/7 Comparison continued

• Even the ones who want to come back no longer have current

certification. The industry expects them to come with this, not all can

afford to refresh it or are willing to do it on the promise of upcoming

work.

• Years of bad press regarding unemployment, low utilization and

uncertain future makes our industry unattractive to new entrants.


Standard of Living

0

10

20

30

40

50

60

2010 2011 2012 2013 2014 2015 2016 2017

Roustabout Salary v CPI

OCB Roustabout Indian Consumer Price Index


UK Job Losses


How do we attract good people now?

• We can’t do much about pay rates due to the low Day Rates but we

must compete with other industries for the skilled personnel we

require.

• Nationalisation is a key component of all our plans. Using local labour

eliminates or reduces flight costs, visas, accommodation etc.

• Training! We will have to find the funds to establish training

programmes so we can safely introduce new entrants to our industry.

• Re-training! We’ll need to get the experienced crew back but we’ll need

to invest time re-familiarising them with their previous roles. Drillers

who spent the last 2-3 years driving a taxi can’t go straight back as

Drillers.


Cost Breakdown

Cost Element Industry Specific

Influencing Factors

Salary Yes Need to maintain a significant differential above salaries paid for working locally.

Insurance No Will be impacted by our risk profile and claims history.

Travel No Everyone travels so tough times for us doesn’t mean cheap tickets!

Accommodation No As above although location specific so some places are dependent on us.

Visas No Individual Governments and open to change

Workgear No Used by all industries

Benefits No Provided to employees in all business sectors.

Taxes No Individual Governments and open to change

Training Yes In the main industry specific but costs will be impacted by other factors e.g. travel

Support No Your support staff and service providers can work in many different sectors


Closing Remarks

• The purpose of my presentation today is to highlight the challenges we

face regarding sourcing skilled, experienced personnel.

• We have probably forced the rates down as far as they’ll go.

• The cost of labour will rise quickly as the market recovers.

• We will have to spend a lot on training and assessing our recruits &

employees.


Closing Remarks

• The usual short cut taken by some companies is to pay a little more to

attract people who have current experience and valid training

certificates.

• When this happens the rates will start to spiral out of control again.

• We all need to focus on attracting experienced people back to our

industry but also on bringing in new blood, the drillers of the 2020’s.

• When preparing budgets and proposals pay attention to the cost of the

crew, you can’t fix rates for long periods.


Closing Remarks

• Lets learn from mistakes made in the past and create an

environment where we can attract and retain good people.

• Send our people to work confident that we have done all we

can to ensure they succeed and will return home to their

families safely.

• Avoid a bidding war for personnel, forcing our costs to a

level that we cannot afford.


The End!

Thank you for your time.

Any Questions?

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