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Head content vs head count

Oilfield Technology,

It is not news that the ‘big crew change’ is well under way. In a few years the fraction of people with less than five years experience should grow to approximately 20%. Experienced technical managers know intuitively that competency affects performance, but because it is difficult to put a specific value on technical competence, it is hard to gauge the impact of its absence. Is it possible to estimate the impact of this relative lack of experience on the petroleum business? Fortunately, one data set that can provide some insight into the quantitative impact of a skills shortage on performance is drilling performance in the US since 1950.

Measuring the impact of competent people

So while we can be certain that very soon there will be a large number of people working in our business with less than five years experience, what is less certain is the impact that this may have on the industry. Quantitatively measuring the performance of technical professionals is difficult, even under the best of circumstances. While we can never answer with certainty questions like: ‘What is the economic impact of inexperienced personnel designing a facility, a well log analysis, a drilling operation, or a problem well diagnosis?’; it is possible to estimate the impact of inexperience on drilling operations. Drilling operations statistics in the US have been measured in a complete and consistent manner for over 60 years.1, 2 This provides some insight into the possible effects of the looming demographic shift by showing how high level drilling performance has changed over that time.

Note in defence of drillers

Drilling certainly isn’t the only activity in our industry that requires skilled people and is adversely affected when there aren’t enough skilled people to do the work at hand. Due to the fact that their performance is so readily measurable, it is always too easy to show experience gaps affect drilling performance. However, without proper experience, surely prospects will be misanalysed, completions improperly designed, problem wells misdiagnosed, logs improperly interpreted, facilities over or under designed, etc. as frequently as mistakes were made while drilling.

Implications for the next few years

What does this historical data mean for the current big crew change? If the looming shortage of skilled personnel will, as it seems, result in approximately 20% of the industry personnel having less than 5 years experience, then it is reasonable to expect something on the order of a 20% reduction in performance across the board. To put the magnitude of this into focus, in 2013 the industry will spend approximately US$ 635 billion on exploration and production.3 A 20% reduction in across the board performance correlates with an economic cost on the order of US$ 120 billion/y.

As the financial stakes are probably quite high, competency management (ensuring that you have the right people with the right skills working in the right place at the right time) will be a key driver for managers in the coming years.

Written by Ford Brett, PetroSkills, USA.

The full version of this article can be read in the May issue of Hydrocarbon Engineering.

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