Oil and gas production held in due to engineer shortage

The global production of oil and natural gas will be hampered in the coming years because of a shortage of engineers and other project managers.

Photo: Oil and gas production held in due to engineer shortage

By 2010, companies trying to produce hydrocarbons can expect to find between 10 percent and 15 percent fewer engineers than they need, according to a survey by Massachusetts-based Cambridge Energy Research Associates.

CERA's report, being released this week, is based on an analysis of engineering and management needs for more than 400 projects expected to begin worldwide in the next five years.

"Pressure in the industry continues to increase as companies vie for the limited pool of skilled resources, and personnel costs rise as companies recruit from each other," said Pritesh Patel, a CERA associate director and co-author of the report.

Engineers are vital to the search for and production of oil and gas, a process that has become more complicated in recent years as companies explore and drill in deeper waters and more rugged terrain.

Petroleum engineers, for instance, evaluate potential oil and gas reservoirs, work with geologists and other specialists to understand rock formations and monitor drilling and recovery operations. One of their big tasks is to design methods that achieve maximum recovery of oil and gas.

Bustling oilfield activity and retiring baby boomers, among other factors, have petroleum outfits large and small trying to hire thousands of engineers, and experts say the trend is expected to extend into the next decade as worldwide energy demand grows.

CERA said engineering contractors in a few years will need more than 55,500 engineers to meet the requirements of the 400 projects studied.

The firm surveyed global engineering contractors and found a current base of 55,100 engineers involved in exploration and production activities. But with an average age of 51, more than half of those engineers are expected to retire by 2015 - an attrition rate of roughly 6 percent a year, CERA forecasts.

Meanwhile, the rate of new entrants is expected to be from 2 percent to 5 percent.

Petroleum executives acknowledge the dearth of qualified personnel, but they say the picture is getting brighter. College enrollment numbers are improving as the industry aggressively touts the potential for challenging work, exotic postings and starting annual salaries at $70,000 (49,313 EUR) or higher.

In addition, the industry is adapting to meet its commitments, the report says. For example, some oil companies and their contractors and subcontractors are considering partnering on projects and profit-sharing arrangements as a way to secure adequate engineering resources, CERA said.

In the meantime, Patel said, companies may pass on high-risk projects in hostile or remote environments because the highly skilled engineering needed may not be available.