The UK’s oil and gas industry workforce is expected to contract 9%, or by 35,000 jobs, between this year and 2019 according to a newly released report.
Produced by professional services firm EY, for Oil & Gas UK, industry skills body OPITO and the Department for Business, Innovation & Skills, the report estimates that the overall workforce will drop from 375,000 to 340,000 between 2014-2019, driven primarily by a significant decline forecast in UK capital expenditure.
Despite the drop, some 12,000 new jobs are still expected to be created due to increased spending on decommissioning over this period and expansion into overseas markets, as well as staff retiring.
The gloomy figures are driven by an anticipated drop in capital spending on the UK Continental Shelf – which was expected even before oil prices began spiraling to the US$70/bbl lows seen in the second half of this year. Capital expenditure is set to decline to £7.9 billion in 2018-19 from a 2013-14 peak of £14.4 billion, driven by a small number of high-cost projects, the report, called Fuelling the next generation, says.
The figures – and the fall in the oil price – serve as a warning for the industry not to over react, suggests a forward to the report by Gordon Ballard, co-chair of the Oil and Gas Industry Council and chairman of Schlumberger UK and Matthew Hancock, Minister of State for Energy with the UK Government.
“The recent fall in oil prices has brought home the challenges ahead, but now more than ever the industry needs to stay the course and continue to invest in developing its own – not repeating the mistakes from the 1980s and 1990s,” they say.
According to the report, the UK North Sea industry supports one in 80 jobs across the UK at an average salary of £64,000, amounting to about 375,000 people. It says the popular “ageing workforce” myth is dispelled by figures which show the offshore oil and gas industry has a relatively young workforce - the industry has a lower proportion of over-55s at just over 10% compared to a national average of 32%. In addition, the proportion of those aged 35 and below is about 40% of the workforce, compared to a national average of 31%.
Some 86% of companies have programs in place for graduates and/or apprentices and the sector is supporting 6000 graduates and 13,000 apprentices.
While 70% of respondents said they were experiencing difficulties to recruit, the scale of the shortage is less pronounced than 12-18 months ago, and is limited to specific areas such as Technical Safety, Drilling Engineering, Geosciences and Business support services, the report says. Most of these gaps are in Aberdeen.
The combined workforce for Tier 1 and the supply chain represents 281,000 FTEs (out of the 375,000 total). We estimate that this number will reduce to 255,000 by 2019.
“We expect around 38,000 FTEs within the combined Tier 1 and supply chain workforce to retire over the period,” the report says.
Women represent nearly a quarter of the total workforce compared to a national average of 47%.
However, over the next five years, total employment is expected to fall, “driven by a 50% anticipated decline in UK capital expenditure currently forecast by the Office for Budget Responsibility,” according to the report.
“The decline in UK capital expenditure is likely to be partially offset by an expected 34% increase in decommissioning spend, together with growing demand for enhanced oil recovery (EOR) skills. In addition, the digitalization of oil fields and the potential development of onshore shale would open up new opportunities for talent development in the sector.”
As a result, there will still be opportunities for 12,000 new entrants, according to the report.
It also says that the proportion of the workforce supporting overseas projects outside of the UKCS is likely to increase from 26% to 35% between 2014 and 2019, as global capital expenditure is forecast to rise.
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