James McCallum is the chairman of Xergy, the start-up tech company behind Proteus, a digital platform to change the way in which we work.
At a time when cuts in production and a deepening demand crisis are at the forefront of the oil and gas industry’s challenges, access to talent might seem like tomorrow’s problem.
Reeling from a commodity recession lasting almost seven years, the Covid19 pandemic has potentially tipped the industry over the edge and things will never be quite the same again.
A historically low active rig-count with an associated furloughed or redundant workforce signal significant corporate failures, compounded by a raft of acquisitions and mergers where the accountants in head offices use size as the lever to drive down cost of supply.
In a world where upstream oil and gas companies were already out of favour with financial investors and the public, we need to face up to and change our approach to how we access and use talent.
No industry has historically been more influential in facilitating economic stability and it is energy security or access to energy that remains the foundation of that stability. There are, however, some important areas for consideration before we pat ourselves on the back and adopt the all too familiar stance that we just need to be patient and it will all come good in the end.
Firstly, through a lack of engagement and transparency, we have allowed a growing environmental lobby to position our industry as out of favour with the public. We have relied on simple demand extrapolation of a world, seemingly hooked on hydrocarbons, to fuel our belief that demand for product would ultimately correct sentiment. The pace of development of electric vehicles has surely shaken some of that resolve.
Our industry’s almost complete absence from the environmental debate cannot be allowed to continue. Growing public discord, particularly from tomorrow’s generation of consumers, can only drive enforced legislation which will be a very blunt instrument.
By far the better outcome is that our industry, as one, embraces energy transition as our commitment to meeting the energy needs of our planet through the acceleration of low carbon solutions alongside our excellence in the supply of more conventional hydrocarbon products where there is still demand.
Secondly, our reliance on the sustainability in the last decade of a vibrant, albeit oil price sensitive, shale oil industry which, until recently, contributed upwards of 10% of the world’s production. This brought apparent economic stability and a false dawn in terms of our continued sense of self importance. This was founded on two principles: shale oil was a very effective instrument in driving down global oil prices, which would continue to stimulate a vibrant US economy and shale oil provided the US a security of supply that meant it no longer relied on Middle East production with its associated impact on foreign policy spending.
This all worked well, as long as there was enough margin for the large global producers. But, even before the Covid19 demand collapse, this model was already broken. High shale oil production levels and uneconomic costs in a price war with OPEC producers over market share, had seriously eroded banking confidence in the sector. Large numbers of wells were being shut-in and it was increasingly impossible to secure finance for new development activity. Recent discussion on a possible government bail-out for some shale producers is an indication of how important the current US administration considers security of supply. When we recover from Covid19 it is therefore questionable how much shale oil production will return to the supply side of the balance sheet when, even in the ground, it still provides an effective brake on excessive commodity prices.
Finally who is going to be left to drive the industry forward? With a very large intellectual community of the industry now being either forced into retirement, electing to retire or made redundant, where is the capacity or the appetite going to come from?
For almost three decades, the industry has discussed this impending resource crisis – a direct result of incessant cycles of layoffs in cost cutting recessions, followed by ever lower levels of graduate recruitment. As a result, the industry is now awash with grey hair and no hair.
The answer is to stay connected to this most important generation of talent. We need to use all our wisdom to make our, once great, industry great again. That means using all our skills and our inquisitiveness to seek out ways to stay connected and introduce methods of working that make our industry attractive to new generations of talent that want to make a difference and achieve a very different work/life balance.
Let’s be clear, we are no longer talking about a world of company cars, excessive air travel to meetings, personal office cubicles in large city glass boxes. We are definitely not talking about companies whose commitment to values, gender and ethnic diversity or corporate responsibility can be demonstrated by words without action.
We are talking about companies that are proud to be seen as creative and entrepreneurial both in a social as well as business context, where in a spirit of collaboration, we come together to relentlessly pursue and deliver an energy transition that meets the needs of our society. But, at the same time, respects the needs of our planet. We must shift from current working practices to creating a working environment that enables our employees to work to the best of their ability.
We need to stop using expressions like open-plan or home working and instead think of our work spaces as places where we can physically interact as a compact with our chosen place for connected working.
We must build into our lives the digital tools that enable us to have all the work/life connections that underpin our mental happiness with the tools that connect us to our colleagues as efficiently and effectively as if we were sitting next to them. No more two hour commutes, no more 9 to 5 grind, no more sitting exhausted at desks, no more waiting for access to a critical piece of software, no more working for a boss or a company you don’t respect.
Let’s use this crisis as an opportunity to change. We have no option but to change and, as an industry, we have already waited until the last minute. Even before Covid19, our industry was increasingly publicly demonised, struggling to get investment and, critically, nowhere near being an employer of choice.
For as long as I can remember we have been paying lip-service to the “people are our most important asset” mantra. It is time we stopped thinking we know what’s best for the world and use our incredible ingenuity to listen and connect the diverse but complementary needs of all the generations of talent we will need to get things back on track.
Learn more about how Proteus can change the way you work by clicking here