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Skills shortages prompt increased technological focus

26th February 2013
Skills shortages prompt increased technological focus
26th February 2013
"Seismic Shifts: The outlook for the oil and gas industry in 2013" reveals challenges ahead, claims Pekka Paasivaara
Skills shortages prompt increased technological focus
Increasing investment is being allocated to innovation and new technology in a bid to mitigate the impact of the oil and gas industry’s growing skills gap

The oil and gas sector is increasingly turning to technology to plug rapidly growing skills gaps, according to a new report on industry sentiment for the year ahead. As international energy demands continue to rise and ‘easy’ oil becomes less readily available, the industry is under renewed pressure to meet this need against the background of a shrinking talent pool.

Seismic Shifts: The outlook for the oil and gas industry in 2013 has revealed that nine in ten senior sector professionals are confident for business growth this year. But despite this, it is widely believed that solutions must urgently be found to counter this escalating skills crisis.

According to the report, which has been produced by GLNoble Denton with input from more than 400 oil and gas professionals, concerns about the availability of talent have become the number one barrier to growth. This represents a marked increase from previous years, rising from the second biggest barrier in 2012 and fifth biggest in 2011.

To counter this concern, it would appear increasing investment is being allocated to innovation and new technology in a bid to mitigate the impact of the oil and gas industry’s growing skills gap. Some 37 per cent of those surveyed believe research and development (R&D) spending will increase, while just 6 per cent expect it to fall in 2013.

One likely consequence of this will be greater co-operation between international oil companies (IOCs) and national oil companies (NOCs), as the former is called upon to provide the technologies desperately required to access reserves held by the latter.

A good example of this practice can be found in Russia, where collaboration is being encouraged to quickly boost production in previously untapped drilling locations. Increased co-operation between government-owned companies and international industry players – as seen in the TNK-BP/Rosneft deal, announced last year – is also expected to help Russia conduct a significant modernisation programme in its midstream operations.

It is important to note that this investment in technology will be also be crucial if the potential of mature reserves across the globe is to be realised in the coming year. This is again particularly important in Europe, where Seismic Shifts confirms a reignited interest in the North Sea oil and gas industry, and both the UK and Norway are listed among the top six destinations most favourable for investment. Technology-led innovation is increasingly important to achieve better performance and, in line with this, certain mature fields in the region are becoming viable investment options once again. 

In order to maximise potential output from these reserves, innovations such as the use of real-time computer technology to re-image the seismic model around a well during drilling operations will need continued support, investment and expertise. Perhaps unsurprisingly, 44 per cent of European respondents expect capital expenditure on research and development (R&D) to increase this year, a statistic above the global average of 37 per cent.

Globally, other technologies are gradually being integrated with more established drilling and exploration techniques. Applications such as digital oilfields – an umbrella term for technology-centric solutions that allow companies to leverage limited resources – are one example of how drilling operators could support their existing labour resources with technology.

Our research suggests that another key technology will be high-pressure well design. Rigs and riser systems that are able to deal with huge wells will be required as mature field development continues. These larger wells will need to be supplemented with subsea production systems that are able to deal with the associated high pressures.

Technology can also improve access to resources in existing fields through field redevelopment. In particular, the ability to drill effectively through pressure-depleted zones is an area highlighted by many as something to develop further as industry R&D spend increases.

In addition to these developments, it is important to stress that innovation within the oil and gas industry is not restricted to the upstream sector alone. Advances in pipeline technology, for example, are helping operators to overcome challenges in risk management during the construction, operation and maintenance of assets.

Current innovations include a smart device to speed up the time it takes for operators to survey, measure and record pipeline corrosion; a new technique that will cut the environmental impact of transmission operations by providing an alternative to gas venting; and a new, mobile phone-accessible pinhole camera that will remotely monitor high-risk activities surrounding transmission pipelines.

Each labour-reducing technology identified by our research is likely to go some way to lowering industry concerns about a talent crisis. Ensuring these innovations are effectively implemented will be a challenge, but if successful, the rewards could be substantial.

Forecasts for increasing investment in R&D this year are evidence of progress, but there is still scope for further innovation to support the industry’s high standards of asset safety, integrity and performance. However, technology cannot be a straight replacement for solid industry expertise. No matter how effective technology becomes, it is still vitally important that the sector’s global skills deficit is addressed, to continue strong industry confidence into 2014 and beyond.

Download a copy of Seismic Shifts: The outlook for the oil and gas industry in 2013 from: