Cast your mind back only 12 months, the oil price is sitting at US$107, the scene has been set – the offshore oil industry in the North Sea is finally making a real commitment to its most important asset – people. Major investment in attracting, training and retaining talent is top of the agenda; the industry is making major strides to become the sector of choice for the best and brightest professionals creating a platform for rewarding careers that offered prosperity, stability and security. All the talk in Aberdeen is about skills shortage and the need to hire more and more people.
How things change in one short year, the Brent oil price has plummeted and continues to trade sub US$ 50, there is little or no investment in exploration, few major projects have been sanctioned and the operating cost base remains far too high in the North Sea. To compound matters the talent void in the oil business of a year ago has not gone away just because oil prices are low but still the industry is hell bent on destroying the very fragile fabric that remains.
2015 as in previous low oil price eras is generating plenty of noise from all camps on the subject of balancing the need to reduce headcount whilst retaining talent, but looming large for all of us in Aberdeen, the oil capital of Europe, is the real daunting prospect of a 1986 déjà vu when oil prices collapsed. Managerial, technical, professional and offshore workers were unceremoniously jettisoned in huge numbers with dreams and futures in tatters. Young and inexperienced oilfield professionals the first to be cast aside leaving Aberdeen to become a city in severe recession whilst the rest of the UK prospered.
When the recovery came many didn’t return. More alarming in every downturn since 1986 the industry has been slow in replenishing the gene pool with new young talented people. As a consequence the oil and gas industry in Aberdeen therefore now has to face the challenges of this potential long running downturn with a missing generation of talented 40-50 year old Senior Executives, the very leaders with the experience, know-how, energy and skills required to tackle the many challenges of another low oil price era and take up the reins from the pioneers of the past.
Today in 2015 just like 1986 the reality is that the industry is once again being led by and large by a population of very mature leaders and managers many approaching retirement, often battle weary individuals who carry with them the memories and scars of past misdemeanours or young and inexperienced management who only know how to operate in a high oil price world.
If the oil industry in Aberdeen is to sustain its position as the oil capital of Europe, take advantage of the remaining North Sea reserves and export the best of British it simply has to seriously re-think the consequences of the continued erosion of the existing human capital pool. The industry needs to commit to retain the grey beards as mentors, develop the managerial skills of the novices to cope with a sustainable low oil price and continue to invest in young up and coming talent.
Without such commitments I fear the North Sea may struggle to recover from this downturn as there simply will not be enough talented leaders to take up the managerial challenges, build companies and create the momentum that drives prosperity, stability and a platform for recovery.
Les Park is the managing partner for Talon Board Advisory.