The knowledge of a generation of chemical, oil and gas professionals is circling the drain. By all measures, the COVID-19 pandemic has further accelerated this trend.
Chemical, oil, and gas (COG) companies face a difficult question: how to do the same (or more) with a level of expertise now imperiled by what some have dubbed the “Great Crew Change” — a wave of retirement and the need for a new generation to take the helm. Oil and gas organizations also face a question about mentorship and the standardization of best practices: how best to bring up and coach younger or inexperienced professionals to sustain and advance domain knowledge to create competitive advantage.
In an era marked by growing calls for low-carbon and renewable forms of energy, as well as the cost-cutting measures undertaken in the wake of the pandemic, chemical, oil and gas companies have the tall task — and taller opportunity — to leverage expertise at scale.
The knowledge drain by the numbers
More than 100,000 employees in the U.S. COG industry lost their jobs in 2020 with the slump in demand. Most affected were extraction and oilfield services. Globally, job figures pointed to the same losses. If oil and natural gas prices recovered to US$45/bbl and US$2.5/MMBtu, respectively, 70% of the positions eliminated during the pandemic-induced downturn would still not be backfilled by the end of 2021 — reducing the total COG workforce by 10-15% from pre-pandemic levels.
Many of those leaving the industry were petrotechnical experts instrumental in exploration and production operations, including geoscientists and engineers, who have chosen to retire or accept early retirement packages. Unlike the recovery from the industry-wide downturn in 2014-15, in which the U.S.-based operators cut half a million jobs in the process, many have signaled their retirement this time is for good. Some oil and gas professionals have pivoted to wind, solar and hydropower, and see greater job stability and growth as the demand increases for low-carbon and renewable forms of energy.
The COG industry is already facing steep challenges to recruit and retain a younger generation of petrotechnical workers. In recent years, college enrollment in petroleum engineering programs has declined. Despite the appeal of a high-paying career, many students saw oil and gas companies as lacking the innovation and forward-thinking digital initiatives they expected. In addition, concerns also about the environmental impact of carbon-intensive operations, as well as the boom-and-bust cycle of the oil and gas industry, have prompted many would-be petroleum engineers to seek jobs in other industries.
A knowledge drain, a skills gap
Pre-pandemic, U.S.-based COG companies were looking at a shortfall of at least 40,000 skilled positions by 2025. The raw numbers of the talent shortage undervalue the loss of subject matter expertise at hand. With many experienced workers having left the industry, on-the-job training and informal teaching are harder to come by. There are fewer opportunities for the passing on of specialized knowledge.
Oil and gas executives agree — the pandemic worsened the skills gap. In a 2020 EY survey of industry executives, 92% reported that the ability to navigate the talent shortage would be critical to the success of their business in the near-term. The same survey found that 43% of respondents identified the increasing availability of big data and analytics as one of the top three industry-wide trends that would positively impact their company’s business growth in the near-term.
Deepened by early retirements, career switches, and aspirants cautious of the cyclical nature of a COG career, the pandemic also exacerbated the skills gap associated with the knowledge drain.
Plugging the knowledge drain
The knowledge drain and the related skills gap open up an opportunity to incorporate digital solutions in workflows as a method to build out more efficient operations, upskill or reskill, and attract and retain new workers to the industry. These technologies also counteract the perception of COG operations as less forward-thinking.
Digital solutions, including advanced analytics, provide a cost-effective way to digitize specialized domain knowledge while alleviating the skills gap and smoothing the personnel transition. Here are three ways chemical, oil and gas companies are using advanced analytics to plug the knowledge drain.
1. Codify subject matter expertise
Chemical, oil and gas companies have a significant wealth of knowledge among senior personnel. Such domain knowledge makes marked differences in productive operations. It is one of the reasons that many companies have taken to poaching leaders from competitors to transfer and institutionalize expertise amid the industry-wide talent shortage. Digital asset performance management solutions, remote monitoring and data science models for critical pieces of equipment, including for emerging asset types and smart sensors, lessen dependence on veteran employees and allow companies to maintain control over expertise.
2. Shared access to datasets and expertise across the enterprise
Advanced analytics solutions can also cover the torrent of data emerging from newer technologies like smart sensors on critical assets. With shared access to datasets, different departments and business units beyond traditional users of on-premise historians can take advantage of all the available data. Critical for this shared access to data is the retention of context. Without that information, many of the end use cases for operationalizing time-series data, like improved health, safety and environmental (HSE) reporting or integrating data from key systems for digital twins, are limited by networking or licensing restrictions.
In addition to standardized best practices for data management, as well as business outcomes through better enterprise monitoring, planning and reporting, shared access allows stakeholders to measure and evaluate performance across plants. Identification of performance gaps, as well as solutions, gives COG companies the digital solutions for incremental improvements in operations without significant enterprise risk.
3. Shorten the on-ramp to competence and enhanced training programs
The adoption and use of digital solutions also instills best practices, flattening the learning curve for more inexperienced personnel. With asset performance management, for example, advanced analytics can deliver sufficient lead time on pending failures to advance condition-based maintenance and ensure that the team has the right skills at the right time to make the correct repair. In addition, data-backed visibility into equipment conditions validates inspection and maintenance routines, lightening the demands of mentorship on more experienced employees to focus on higher-value tasks and providing more junior engineers and data scientists with asynchronous coaching.
When years of experience count, make learning valuable
Chemical, oil and gas companies have a serious challenge in the knowledge drain, and they have the tools to stem and reverse the looming loss. With skeleton crews keeping plants up and running, and remote monitoring and control playing a more critical role in operations, leveraging data to gain real-time visibility, standardizing best practices and training personnel are key next steps to building out more efficient and sustainable operating models.
Amid industry-wide upheaval, digital solutions like advanced analytics are proving to be a mainstay for resilient teams and organizations.
Andrew Soignier is the VP of Global Sales at Uptake, a Chicago-based Industrial AI and Analytics company.