Salaries in the oil and gas industry are trending higher in part because of a shortage of skilled labor and knowledgeable executives, according to a report published Monday. partnered with Air Energi to complete the “Global Oil & Gas Workforce Survey,” which focuses on expectations for hires and pay rates within the industry. It emphasizes that “heightened safety concerns, economic instability and a strong oil price, along with the ongoing skills shortage,” particularly for the liquefied natural gas (LNG) and subsea sectors, would continue to drive related salaries up. More than 170,000 oil and gas professionals were surveyed in more than 50 countries. More than 15,500 said they were either direct recruiters or senior decision makers.

“The skills shortage is a major challenge the industry must overcome to continue to thrive,” said Air Energi Group Executive Chairman Ian Langley. “The shortage of subsea and LNG personnel is being felt throughout the industry with significant effect in terms of project costs and delays. It’s clear that without the right people on the ground we won’t get the reserves out of the ground.”

Economic instability currently ranks as the highest concern for those surveyed, but “the shortage of skilled labor in the industry is a major consideration with far-reaching consequences for safety and security within the industry.”

Nearly one-third of those who responded identified the “ongoing skills shortage as the biggest threat to the sector, while a lack of skilled trainers was identified as a major training issue by more than 20%.”

Although the skills shortage is “troubling for the industry, employees in oil and gas benefit from higher wages in the face of labor force shortages and significant industry growth. In particular, employee packages are seeing a general upward trend, in particular for those positions considered to be high risk.” Managing Director Mark Guest pointed to the recent incident in Algeria, where terrorists stormed a BP plc facility, killing four. “The recent tragic events in Algeria have underscored existing safety concerns throughout the oil and gas industry. Positions in certain geographic areas have historically attracted higher compensation to reflect the safety issues tied to the work location.

“It is clear, though, that the industry must concentrate on developing the workforce in order to ensure knowledge is passed on and the required experience is in place to manage the world’s oil and gas reserves.”

The increasingly high levels of activity underway “have contributed to a strong candidates’ market, though rates remain stable and the trend toward permanent hires versus contractors observed in 2012 continues. Fortunately, the U.S. still holds a long-standing pool from which to recruit.”

This year the United States is expected to be a ‘big year for operators,” the survey found. “Canada and Alaska are also ramping up significantly as the development of Arctic reserves becomes a reality.”

Potential labor shortages within the energy industry have led Fluor Corp. to push for more sophisticated modular and fabrication designs that can be built in one place and assembled on site, an executive said last week at IHS CERAWeek 2013.

Fluor’s Peter Oosterveer, president of the Texas-based energy and chemicals group, said there is a concern within the services industry about the amount of supplies and materials — hence, manpower — that will be needed to build new petrochemical plants and processing facilities, especially along the U.S. Gulf Coast. Among other things, some huge petrochemical crackers have been announced for the region, which would take natural gas and convert it to chemical stocks. He believe four to six new crackers ultimately would be built.

However, constructing greenfield facilities would require about 50,000 skilled workers, and other new employees for maintenance and related work. Because of the forecast employee shortage, Fluor is joint venturing with Philippines-based AG&P to build modular systems for engineering and fabrication. It’s early days, but the JV would have one established workforce that would manufacture a variety of sophisticated modules that then could be assembled at a petrochemical or oil and gas site.

Schlumberger Business Consulting’s (SBC) Antoine Rostand said at IHS CERAWeek that a competition for talent is emerging in several “hotspots,” with a particular shortage of “PTPs,” or “petro technical professionals.” The largest number of openings are for geoscientists and petroleum engineers. The industry also is facing a loss in executive talent, especially at the middle ranks, such as executive vice presidents, as well as in leadership development and succession planning.

National oil companies have the most job openings today, with a 15%-plus shortage of geophysicists. NOCs also need more engineers: reservoir, facilities and process. Among the independents, PTPs are lacking most in process engineering. The majors have lots of job openings for reservoir engineers.

“There are 8,900 vacancies in total for all technical positions, of which 2,200 are geologists, 2,100 are drilling and completion engineers, and 1,900 are reservoir engineers,” according to the SBC oil and gas human resources benchmark 2012 study. China vacancies were excluded from the study, as were oilfield services.

Last year engineers and their peer professionals earned on average $183,000-285,000, which is 20-50% more than average earnings in 2009, according to NES Global Talent. PayScale Inc. estimated that wages in energy and mining sectors were up nine times the rate of all industries since 2008. Starting salaries for petroleum engineering graduates are around $98,000, which is almost 10% more than in 2008.

“If you can spell ‘shale,’ you can get a job,” ConocoPhillips CEO Ryan Lance said at last week’s conference in Houston.

Demand for skilled workers is so high that ConocoPhillips and some of its peers have begun to poach graduates from other engineering fields, such as electrical, mechanical and civil to train them in petroleum engineering,” said Vice President of Human Resources Sheila Feldman. The Houston operator is “really trying to expand the universe of candidates” to find new solutions to an an age-old problem. Military veterans also are being recruited at ConocoPhillips and across the energy industry.

According to PayScale, graduates in general in 2012-2013 of South Dakota School of Mines & Technology will out-earn graduates of Harvard University.

The Federal Reserve’s Beige Book released earlier this month reported that energy activity “remained mixed with modest expansions in crude oil and natural gas exploration but slower mining activity” than reported in January. “Drilling activity for crude oil and natural gas expanded further in the Cleveland, Minneapolis, and Kansas City Districts and was steady in the Richmond and Dallas districts. Future drilling activity was expected to rise in the Cleveland, Kansas City, and Dallas districts, and Atlanta noted capital spending at Gulf of Mexico ports was expected to increase export capacity for oil refineries.”

Wage “pressures” were reported to be “minimal” in most districts “but contacts reported some upward pressure for several skilled positions as a result of higher demand. Some districts indicated a shortage of skilled workers such as engineers, truck drivers, software developers, and technical jobs…”

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