11 Jan You Lost Your Oil and Gas Job. Now What?
You have lost your oil and gas job. What should you do now?
As happens with depressing regularity, the global oil and gas industry has been scaling back its workforce as a way of coping with the on-going low prices of oil and gas. The headline oil and gas job losses are staggering –100,000 or more, depending on which source you read. If you’re among the thousands affected, this must feel pretty crappy. But there’s sometimes a silver lining to these economic waves, and I thought I’d share a few observations from the many previous such contractions that I’ve been through over the years.
What’s behind the scale back in oil and gas jobs?
It’s always about supply and demand. There’s lots of oil sloshing around the market and in a relatively disorderly manner (thanks to dramatic oversupply actions of OPEC and Russia). Demand has not yet recovered from the pandemic, and the slow roll out of vaccines coupled with public distrust of Big Pharma, suggests recovery is still months if not years away. BP has even argued that we have already hit peak oil demand and the industry has flatlined.
Money for reinvestment in oil and gas is becoming scarce. The greatest and immediate impact to the workforce is for those in project roles. Existing projects will be completed, but new projects will be impacted (shelved or delayed). The cutback ripples throughout the supply chain.
But the pandemic has also shone a light on a huge range of work activities that were both behind the times and under the radar. Either the savings from making changes didn’t amount to enough to bother, or the failings were tolerable, or the managers concluded the risks from changing outweighed the inefficiencies of the status quo, or the technology behind the change simply was too novel.
The pandemic has decisively tipped the scales in favour of change.
Today, a whole range of what I describe as privileged white-collar work (as it typically takes place in offices somewhere), is now up for discussion. And as changes roll across these roles, managers and employees won’t want to, and in many cases, won’t be able to return to the good old days. No job is truly safe anymore.
And I believe we’re just at the starting point for deploying the internet of things, cloud computing, blockchain, robotics, gamification, agile methods…
Will oil and gas jobs come back?
There are no guarantees, but history has shown that cutbacks in capital spending in oil and gas eventually choke off the supply of fresh oil and gas. Once this happens, the demand for oil and gas exceeds supply and the prices come back up. Companies then restart their capital spending, and the cycle starts anew. The problem is that no one knows how long it will take for demand to deplete the inventories built up last year and to overshoot supply, because all the demand forecasts are rubbish.
Oil and gas is still an attractive industry because of the build in demand from 1.2 billion cars, 300 million heavy trucks, 50 thousand ships and vessels, 35 thousand largely idle air craft, billions of homes, businesses and factories. They are all wholly or largely dependent on fossil fuels for energy. But the capital markets have clearly concluded that at least the automotive market will be battery-electric. Tesla stock is up 700% in the year, and it’s barely a car company. Ford, by comparison, is flat. GM is up just 20%. Hyundai is rumoured to be working on new car technology.
Winter is coming.
Take stock of your situation
Don’t underestimate your working experience with an oil company or one of the big suppliers. It signals a level of experience with large and complex company operations, and probably exposure to some of the most sophisticated systems anywhere. And your experience will be recognised anywhere in the world. The industry likes to buy experience, so your history in the sector might well pay off sometime in the future.
Of course, consider what you are looking for in a job. Income security or diversity of experience may become a more important driver for you than a large salary.
What should you do now?
There is no easy path forward at this point, but assuming the industry is still of interest to you, there are a number of possibilities that could work for you.
LOOK FOR GROWTH
First, some basins around the planet will continue to grow. I look for basins where the product has been either pre-sold or the infrastructure is a large fixed cost. The coal seam gas sector in Queensland is one such basin. The coal seam gas has been presold for years and so the gas companies have not much option but to continue to drill and complete wells and field compression. The industry will need to take its costs down, but that is very different from cancelling spend altogether. Existing large basins with lots of installed capital, like the Canadian oil sands, the Middle East, and the off shore industry, will continue to spend.
BECOME AN ENTREPRENEUR
Second, and not for everyone, consider an entrepreneurial direction. Oil companies can be accidental incubators for innovation and experimentation, but they are generally not good at commercialisation. Perhaps there’s some technology or solution that has become stranded in oil company hands, owing to capital constraints or internal red tape, that could become a platform for a commercial advancement. I would look for something with external appeal (ie, not specific to a single company), particularly something a bit edgy that will be in demand when prices come back.
Clean technology and creative digital solutions are candidate areas.
REBADGE AS A CONTRACTOR OR CONSULTANT
Third, consider contracting back to the former employer. The reality is that the jobs may go, but some of the work will not, and they will need to contract to get it done. The big consulting houses generally operate under the same logic – that the work is still there – in such areas as analytics, logistics, asset management, supply chain. You’ll need to really beef up your on-line presence because that’s how the buyers search for suppliers now.
GET INTO OPERATIONS OR PRODUCTION
Fourth, pay a call on operations. There’s no doubt that the cool part of oil and gas is the project part. Big budgets, tough timelines, new kit, latest technology. But when there are no projects, the only place to be is in operations. Ops is cash flow, and in tough times, cash is king.
TRY THE TECHNOLOGY SECTOR
Fifth, have a look at the tech sector, particularly the very large companies that sell cost or productivity solutions to oil and gas. These outfits generally have solid technical chops but lack oil and gas domain expertise. The same applies to start ups focused on oil and gas. They may be great at AI, but they likely know next to zip about petroleum.
RETRAIN FOR THE OIL AND GAS JOB OF THE FUTURE
Finally, you might consider investing in training in some of the hot areas, like data science, machine learning, cloud computing and blockchain. These fields are growing exponentially, whereas the expertise to work with them is not. Plus, the combination of your oil and gas know how and a new digital tool will be unique in the marketplace.
We’re all being schooled by the market at the moment, and these low oil and gas prices serve as a very good reminder of the need for discipline. What are the take-aways?
COST, COST, COST
The only sustainable advantage in this industry is to be the low cost producer. Everyone else gets it in the shorts. And with an average cost of production of $13 per barrel, the Saudis set the pace. A ruthless attention to costs is a critical skill.
Be great at Lean, continuous improvement and process reengineering. Being part of the low cost play in an oil company with a portfolio of plays is a good place to be right now. Similarly, being part of an organisation that can weather the storm and have a longer term view of workforce planning is critical. When the taps turns back on, large companies won’t want to spend another 4 -5 years to build up trained and experienced staff.
Warm up the external oil and gas network before it’s needed. If you don’t have an external network, it’s probably time to start building one. Too many industry professionals tend to concentrate on building their large internal company networks, only to see it vanish when the layoffs start. It never ceases to amaze me when an oil and gas professional reaches out to me on LinkedIn and I see they have just 300 connections. A good rule of thumb is that if you have 5000 connections and are reliably on LinkedIn, you will have more opportunity than you can respond to.
GET AHEAD OF THE CURVE
It’s hard to read the market, and no one wants a reputation as a job hopper. But lots of oil professionals jump off projects before they’ve come to an end, and have landed on their next project. It feels a little disloyal, but better to be on an elevator going up than one going down. Get involved in anything that is clean tech, digital, or sustainability related. That’s where the demand is.
Last, but not least, think about what potential employers are looking for: quality outcomes, safety, optimisation and efficiency. These should be your best selling points.
Check out my book, ‘Bits, Bytes, and Barrels: The Digital Transformation of Oil and Gas’, available on Amazon and other on-line bookshops.
Take Digital Oil and Gas, the one-day on-line digital oil and gas awareness course.
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