While physical resources are being stretched, it is a lack of skilled personnel that represents one of the industry's key future challenges.
"We're putting people in challenging roles on unprecedented projects," - Jack Hartung, manager of benchmarking and cost engineering at Chevron.
Halliburton's Bowyer estimated that in 2006 the big three oil services companies together sought to hire an additional 23,500 people. This has lead to less experienced staff, tougher learning curves and accelerated training, raising safety and quality issues.
Bowyer said the industry suffers from years of underinvestment in people and from its past 'hire and fire' image. The average industry age is over 50 years and entry conditions are not proving attractive to young people.
Bowyer said that there was an attrition rate from the industry of 26% and that the attrition rate for new hires in Halliburton was a massive 60%. "A shortage of skilled people has the potential to be the biggest single constraint on our industry," he commented.
Over the next decade the number of retirements will remove many of the industry's most skilled project managers, just as more complex large-scale operations are scheduled to come on stream, potentially resulting in delays.
"We're putting people in challenging roles on unprecedented projects," said Jack Hartung, manager of benchmarking and cost engineering at Chevron.
Hartung said it is "quite possible" that quality issues on new projects will become more common in the future. The industry is also meeting its manpower shortage through the "accelerated advancement" of professionals, which could put some engineers in charge of projects before they're ready, he said.
Speaking at a conference in Houston in February, Kuwait National Oil Company Chairman Farouk Al-Zanki listed skilled labor as one of the main obstacles for Project Kuwait, which would see the country's output increase from 2.7 million to 4 million b/d by 2020.
Al-Zanki said that in contrast to current production, 80% of which is extracted from abundant sandstone reserves that require "very minimal" expertise, the majority of Kuwait's newest output will be drawn out through advanced oil recovery techniques.
International oil companies will be involved with "transferring technology and training our nationals," as Kuwait hopes to expand its oil workforce from 5,000 to 8,000 employees by 2015, he said, if legislators can be persuaded of the merits of increased participation in the country's oil industry by foreign firms.
Technology as substitute
The lack of trained personnel and advances in telecommunications technology are leading more E&P companies to perform tasks at the wellhead from operations centers that could be hundreds of miles away, according to CERA Director Judson Jacobs, who said the broad demographic change that has taken place across the E&P workforce is one of the primary factors driving fundamental changes in the way upstream companies operate their gas and oil assets.
Jacobs said that as the systems used to operate gas and oil drilling sites become more technologically sophisticated, they are increasingly requiring operating personnel with specialized expertise.
More and more, companies are gaining the capability to monitor their upstream operations on a round-the-clock basis, he said, adding that the move toward conducting from remote locations is "just beginning to gain traction in the industry." Even so, others argue that automation has not brought about the expected reduction in personnel levels.
While oil service companies have been able to invest in new equipment and facilities, they face a greater challenge in hiring, training and retaining skilled and experienced staff.
In addition, they are competing not just with operating companies, but also with the ambitions of foreign National Oil Companies.
The average old age of personnel in the oil and gas industry is a structural issue which the traditional capacities of the oil services sector appears ill-equipped to meet. As a result, the lack of available staff may prove a simple but effective brake on the industry's ability to invest effectively.
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