You Just Lost Your Oil and Gas Job. Now What?

Oil and gas guru Geoffrey Cann shares some valuable job market insights…

Once again the global oil and gas industry is scaling back its workforce as a way of coping with the dramatic collapses in the prices of oil and gas. The headline job losses are staggering –100,000 or more, depending on which source you read. If you’re among the thousands, this must feel pretty crappy. But there’s usually a silver lining to these events, and I thought I’d share a few observations from the many previous such bloodlettings that I’ve been through over the years.

What is behind the scale back?

It’s all rather simple. There’s too much oil coming onto the market and in a relatively disorderly manner, and OPEC, who would normally try to manage the market to reduce its volatility, have elected to let supply and demand balance naturally. Therefore, prices have fallen from $110 per barrel to $50 per barrel. Most companies would struggle if their revenue line was cut by 50% in just a few months, and oil and gas is no different.

While Australia’s LNG exporters have pre-sold most of their product, money for reinvestment is scarce. The greatest impact to the workforce is for those in construction or project roles. Existing projects will be completed, but new projects will be impacted. Next comes the efficiency savings, such as the implementation of shared services, office closures and reorganisations, which results in head office staff moving on. High cost work, often done by contingent workers, consultants and contractors, is halted or shifted over to full time surplus staff, and the high cost team are transitioned out. Some companies try to freeze salaries or roll back wages. Outsourcing to low cost economies picks up, and in areas not normally considered outsource candidates, like engineering. No job is truly safe.

Unfortunately for Australia, the collapse in oil prices coincides with the fall off in mining construction projects. Skills between oil, gas and mining are relatively transferrable, which is good, and the mining industry has always had a boom and bust cycle. Workers in these areas tend to be a resilient lot.

Will the 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 catch up to dwindling supply. All we can assume is that it’s still an attractive industry, until such time as renewables are sufficiently advanced to take over. And as the baby boomer generation retires out of the oil and gas sector, there should be some openings for talent during the next several years.

story: Where are Oil and Gas Prices Going?

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. Capital management experience is also an asset – the oil and gas industry tends to run joint venture megaprojects and experience on these mega undertakings can translate into valuable insight into smaller projects. Finally, the industry likes to buy experience, so any history in the sector can 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. That European holiday may have to wait.

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.

Find the gaps

First, there are actually  large shortages of some oil and gas skills today in Australia and globally. There are so many LNG and FLNG plants coming to market at the same time that there will be shortages of skills in any number of areas. Australia will continue to build capacity to meet demand growth as the country grows from 7 to 21 operating LNG trains in the next 24 months. Just planning and executing the transition from a project to an operating company is creating new roles.

Look for growth

Second, some basins around the planet will continue to grow. 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.

Try the nationals

Third, consider opportunities with the national oil companies (NOCs). They often operate with two agendas – a commercial, make-money, agenda (like everyone else), and a national energy security agenda (unique to NOCs). During downturns, the NOCs don’t cut back staff to the same degree as the private sector, so there’s a bit more job security there. It might mean having to move abroad for a period of time.

Become an entrepreneur

Fourth, and not for everyone, consider an entrepreneurial direction. Oil companies are hotbeds for innovation and experimentation, but not good at commercialising them. 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.

Rebadge as a contractor or consultant

Fifth, 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 are also hiring, under the same logic – that the work is still there – in such areas as analytics, logistics, asset management, supply chain.

Get into operations or production

Sixth, 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 public sector

Seventh, have a look at the public sector, particularly in departments focused on oil and gas. During the boomy times, the public sector is unable to attract any oil and gas talent, largely due to the big difference in salary expectations. They may still be hiring.

Key lessons

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 don’t want 4 -5 years to build up trained and experienced staff.

Network now

Warm up the external oil and gas network before it’s needed. I noticed how a number of oil professionals from my network began to discuss career opportunities with me many months ago. It might have been lucky, but could also have been precient. Either way, they surfaced new opportunities from their network early. And 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 network, only to see it implode when the layoffs start.

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.

Stay positive

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.

Read more from Geoffrey Cann here


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