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Oil and gas companies are struggling to meet stakeholder demands amid rising fatalities and loss of institutional workforce knowledge.
In brief
- A labor shortage in the oil and gas (O&G) industry became even more acute during the pandemic, hindering the sector’s ability to safely ramp up production.
- O&G companies see the value of digital technology in transforming their workforce, but they lack the critical skills to activate a strategy.
- Industry leaders need to take a multifaceted approach to creating a reliable talent pipeline that can support an evolving list of market demands.
This article is co-authored by:
- Shannon Roberts, Principal, Climate Change and Sustainability Services, Ernst & Young LLP
- Charlotte Pugh, Senior Manager, Climate Change and Sustainability Services, Ernst & Young LLP
As production capacity in the oil and gas (O&G) industry recovers toward pre-pandemic levels, there are significant concerns about the workforce and its ability to operate safely and reliably.
When the pandemic struck, production was paused and many workers — operators, servicers and contractors — fled the industry for good. As production resumes, O&G companies are struggling to find qualified and experienced operators who can fill vacancies to safely and efficiently operate rigs.
It’s a problem that is having tragic consequences. The International Association of Oil and Gas Producers (IOGP) found that the number of fatalities in the industry increased by more than 40% from 2020 to 2021. The 20 fatalities occurred in 15 separate incidents, according to IOGP’s 2021 safety report.¹ This inability to provide a safe work environment is constraining the industry’s ability to expand production, as operators can’t upskill their workforce quickly enough to support an increased workload and, ultimately, meet stakeholder demand.
So what can the industry do to both bolster and protect its workforce?
Workforce falling short on numbers, experience
The industry’s personnel problem is not just about numbers. When so many workers were forced out in 2020, valuable experience and wisdom was lost that enabled companies to safely and efficiently meet a variety of work challenges. Today, leaders need to reprioritize a safety culture that protects the wellbeing of their employees and enables a workforce with the skills and training to overcome these challenges. This starts by implementing sound safety practices and controls to reduce the risk of workplace injuries and catastrophic accidents, on top of the urgent need for reinforcing, and in some cases, providing new courses on safety fundamentals. Controls can range from integrated environment, health and safety (EHS) management systems, such as ISO 45001, risk assessments, and engineering services that protect workers from hazards and help quantify levels of risk, to improved visibility and targeted safety sweeps to assess the workplace in real time. The development and implementation of sustainable controls are necessary to verify that safety performance remains high. To meet these challenges, O&G companies need to drive safety into all aspects of their operations, offer tools and resources to support this effort and measure progress.
Prior to the pandemic, the O&G sector was already struggling with significant labor gaps as experienced workers retired and fewer workers joined a volatile industry facing perception issues. However, the longevity of the industry, and the workforce that supports it, can be bolstered by digital transformation and tools. Technology services, such as dedicated EHS management system software and metrics databases, particularly when paired with wearables, can be leveraged to provide actionable data around risk, injuries and the effectiveness of corrective actions.Companies across the industry are rapidly deploying remote operations and cloud-based infrastructure to improve drilling efficiencies and reduce the number of required rig workers. But operators will need to focus on strengthening the safety culture and giving workers the authority to stop work without fear of retribution when unsafe conditions are present. To enable this, teams need to be equipped with the right skills, data and knowledge to identify hazards and be safe whether at the rig site or in the office. Providing workers with the controls, tools and skills necessary to de-risk the process will, in turn, instill confidence both within the field and management teams.
For example, training records can now be digitally stored in cloud-based applications and accessed by supervisors in the field directly from QR codes affixed to workers’ personal protective equipment (PPE). Enablon Go, a smart device application, allows workers to report and access information from anywhere with an internet connection, further enhancing communication and potentially making risk assessments and job safety aids available in real time.
There is considerable work that needs to be done to make this happen. In the 2020 EY Oil and Gas Digital Transformation and the Workforce Survey, nearly 90% of respondents said the ability to adopt digital technologies is a competitive advantage; yet fewer than half said they had an adequate supply of critical skills, such as digital literacy, data science and AI. This survey was conducted two years ago, but it is clear that this problem has yet to be addressed in a meaningful way.
Deploy a continuous learning strategy
Transforming a key company asset — its workforce — so it can continue to generate differentiated value requires leadership commitment, a culture of empowerment and robust planning. Reskilling is more than training: It is a combination of continuous education, managed experiences and robust coaching. Creating an environment that amplifies the need for all to learn and relearn, from base operational procedures, to refreshed safety policies, can drive meaningful change. An open forum that allows for questions and discussion about what’s happening on the job can prove helpful in creating this type of environment.
O&G companies should take an engineering approach when assessing risk. Leaders should think about how to capture and address problems that occur: What was the root cause of the problem, and how can strategies be designed to mitigate the risk and prevent the problem from reoccurring? By enhancing operating models, companies can drive continuous improvement and meet measures of success.
O&G operators should consider the following key questions:
There are tools and strategies that can make the O&G industry workplace a safer place. The first step is taking the time to understand your risks. Commit time and leadership support to identify strategic approaches that lead to a more knowledgeable, resilient and safe workforce — one that is ready to meet the challenges that come with the job.
Challenging the existing safety culture — and truly understanding desired safety outcomes — is a critical first step in understanding where the industry needs to go in order to reduce risk and negative outcomes. Leadership will need to determine which safety skills and engagement strategies are desirable and effective, how to manage change at a rapid pace, and then operationalize and sustain the gains realized.
There isn’t a one-size-fits-all playbook to address workforce safety challenges. However, the playbook for survival and success asks companies to be intentional in addressing the skills, mindset and culture to properly equip a safe and efficient workforce.
Summary
Pressure is mounting on oil and gas industry leaders to fortify their workforce as the sector continues its recovery. Safety and reliability must inform any strategy as companies move forward and seek to meet market expectations.
How EY can help
