Hitting your numbers in Oil and Gas. How to hit your numbers. when there is a skills gap.

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1 Hitting your numbers in Oil and Gas How to hit your numbers when there is a skills gap.

2 Hitting your numbers in Oil and Gas 60 % of oil and gas workers are over 45.

3 How to hit your numbers when there is a skills gap. Oil and gas industry producers are under more pressure than ever to perform, but at the same time they face an unprecedented shortage in skilled labor and the pool is continuing to drain fast. Simply put, there aren t enough experienced people for the work that needs to be done. In a recent industry survey, the shortage of skilled workers is the single largest concern expressed by employers, at 30.6 percent, higher than world economic instability with 29 percent. 1 With Canadian oil sands production poised to reach 3 million barrels a day by 2021, forecasts suggest that the shortfall in workers to service that figure will be 114,000 short. This is one example of a growing global trend, and one that needs to be balanced alongside the natural resources available, and how to extract, process and transport them in the most cost-effective way. Continuing staff shortages and high staff turnover have an impact on asset safety, with inexperienced employees, or, in many cases, third-party contractors, unsure how certain processes get implemented or how some systems work. And with operations moving into more hazardous environments onshore and offshore, the safety implications continue to rise. 1 Source: Hays Oil and Gas Salary Guide

4 Hitting your numbers in Oil and Gas Offshore implications. As operations move further offshore, the potential risks inherent in contracting inexperienced or less knowledgeable staff are compounded. Technology raises the bar for remote operations, but it s imperative that the staff engaged to do the work have a deep understanding of the processes required. With the right people, subsea production facilities can cost up to 50 percent less to operate than surface platforms, due to reductions in topside staff and supplies required. And by moving production to the seabed and decreasing the amount of pressure otherwise needed by surface platforms to extract resources, oil and gas companies can recover up to 20 percent more from producing fields.

5 50 % less to operate than surface platforms. The implications for the boost in recovery combined with the reduction in capital investment are huge. Companies can explore smaller, deeper fields that might not have been economically viable previously. They can mine reserves located in the remotest arctic environments not conducive to a topside production platform. At the same time, they can help improve safety by reducing the number of personnel needed to operate the production facilities. As subject matter expertise retires, substantial industry knowledge is potentially lost, too. The concept of placing experts in regionally-located hubs is gaining pace. Their expertise can then be shared across many assets using internet-based tools and secure cloud computing to manage the data presented. As the industry strives to balance demand, supply and costs, strategies such as these help oil and gas companies to serve the world s energy needs using a combination of advanced technologies and innovative thinking.

6 Hitting your numbers in Oil and Gas Changes onshore. Onshore, unconventional plays are further testament to the changing face of the industry. At the same time, international oil companies from countries including China, Japan and Australia are investing in development of these unconventional plays to pick up knowledge they can apply in undeveloped shale plays in their own countries. The seven shale plays that account for over $54 billion in oilfield services expenditures in 2012 will make a major contribution to North America potentially becoming a net oil exporter around Source: Oil and Gas Financial Journal, August 1,

7 In this scenario, automation can play a major role in bringing together various systems located over a large geographic area. This allows operators to help reduce total lifecycle costs when realizing the potential of new resources by having one, consistent network environment in place that supports optimization of efficiencies and production. The new technologies open up new avenues for the oil and gas workforce, but also, indirectly, through the need for support services, pipeline companies, transport operators and infrastructure developers.

8 Making the most of new technol Hitting your numbers in Oil and Gas To meet increasing demand, the industry needs to access a supply of suitably-qualified professionals to help to take advantage of the new technologies available today. Cost-effective alternatives to hard-wired systems including EtherNet/IP continue to emerge, helping to address staffing pressures and the increasing speed of development, operations and production required in the commercial world today. As the world s leading industrial network protocol, EtherNet/IP helps enable facility-wide control and data visibility across applications. By providing actionable information, it enables people to make better business decisions. It offers the flexibility to be able to react to market conditions and other variables, and facilitates communication from wellhead all the way through to the enterprise level.

9 ogies. As the industry evolves, the key is finding the balance between staff who know the industry and staff who know how to make the most of new technologies. Younger operators lacking the skills to operate legacy DCS systems will be more comfortable working with advanced automation technologies and so helping to take advantage of the productivity and performance benefits available.

10 Hitting your numbers in Oil and Gas Staffing environment: North America Ongoing staff shortages make it difficult to capitalize on the opportunities afforded by US shale development and production, and Canadian oil sands activity the demand for manpower outstrips supply. Senior, skilled, highly experienced staff are retiring and there s not enough new blood coming through. New, automated technologies, however, help to reduce the need for staff numbers, and suit a younger generation more comfortable with the digital solutions available. Alberta, Canada is projecting a shortfall of 114,000 workers by 2021, when oil sands production is set to be three million barrels a day. 4 Staffing environment: Latin America Refinery safety is an ongoing issue in this region, with high accident numbers reflecting the fact that, in some cases, staff are not knowledgeable or experienced enough for the work that needs to be done. Putting integrated information, control, power and safety solutions in place help to meet increased consumer demand and capitalize on the resources available. Shale gas activity in Argentina and Brazil s offshore industry will increase the need for skilled staff in these regions. 6

11 Staffing environment: Europe, Middle East & Africa Oil and gas companies in this region have increased pay by between 5 and 12 percent over the past two years, where the average increase is just 1.5 percent. 7 Staffing environment: An industry average wage, twice the UK national average at 64,000 7 highlights the artificial salary inflation that comes with staff shortages in the oil and gas industry in the North Sea and across Western Europe. These shortages could undermine the region s ability to maximize returns in development of its unconventional gas and oil production outputs. Activity and staff levels continue to increase in the Middle East, while in Eastern Europe opportunities for shale gas development are being explored. Asia Pacific The region faces a labor crunch due to staff and skills shortages. As markets expand, the insufficient supply of people prevents optimal performance. A base of graduate talent is available and has the academic knowledge, but falls short on practical industry awareness and expertise. In APAC, where investments are about 40 percent higher than in the North Sea, the continuing demand is strong for engineering and technical expertise needed for the refinery, chemical and power processing areas along with support for projects in Australia. 5 4 Source: Alberta Oil Energy Sector Insight, August Source: Global Oil & Gas Workforce Survey, conducted by Oilcareers.com and Air Energi Sept Source: Global Oil & Gas Workforce Survey, conducted by Oilcareers.com and Air Energi Sept Source: Aberdeen and Grampian Chamber of Commerce survey, November 2012

12 The oil and gas industry in focus. This is one of six Rockwell Automation guides focusing on key industry challenges The future of world energy: adapting to meet the challenges. 4 ways to maximize assets. Ensuring operational excellence. 4 ways to reduce operational costs. Balancing operations and maintaining profitability. How to hit your numbers in critical control and safety. The costs and complexities of industry safety issues. How to hit your numbers when there is a skills gap. Overcoming staff shortages worldwide. How to hit your numbers in operations management. Optimizing production and reducing costs. For more details about the comprehensive solutions we offer in oil and gas, visit