About 43% of respondents to an informal electronic poll of attendees at one independent producers session at the Offshore Technology Conference in Houston last week found that they expect commodity prices to stay roughly the same for the next three to five years. However, 38% of the respondents think that oil prices will drop back to $40-60/bbl soon.
The poll questions were asked of about 70 attendees who had just listened to panel presentations from domestic and international independent producers. Not everyone answered every question.
When asked whether the industry will continue to face a shortage of experienced workers, 81% of respondents said the industry “will remain chronically challenged for many years.” Only 12% said qualified employee reserves will be replenished by new graduates in the next two years. Tracy Krohn, CEO of W&T Offshore Inc. commented that workers are available, but their price has gone up substantially.
“The industry always has cycles,” he said. “Domestic production cycles at about 8.3 years in the U.S. We do have drilling changes that affect how many people are needed. There’s no reason to think that we’re not going to have highs and lows again.”
William Schneider, Newfield Exploration vice president, international, said his company has had an active college recruiting program, but one of the challenges is training new recruits fast enough once they’re hired. “There are not enough qualified people, not in the E&P [exploration and production] companies and not in the services sector.”
Survey respondents were equally pessimistic about the prospects for relief from shortages of drilling rigs and equipment. About 78% of respondents said they expect the shortages to continue for three to five years, while 19% said the shortages would continue for two years.
Another question asked respondents what the greatest challenge facing independents is over the next three to five years. An equal number — 39% — said access to talent and price volatility were the biggest challenges. Access to resources came in third at 15%, and access to equipment and resources was fourth at 7%.
“We’ve been trying to hire a petroleum engineer for about six months,” said Paul Ellis, CEO of Serica Energy.
When the audience was asked where independents should be seeking their growth, 33% of respondents said it should be through the acquisition of underexploited assets, while only 5% said growth should be organic, through the drillbit. Acquisition of companies with a strategic fit got 13% of the vote. But the majority of respondents, 49%, said companies should be pursuing all of the above.
“What we’ve found is drillbit additions really add value,” Schneider commented. “To add value you really need additions through the drillbit.”
When the audience was asked who will dominate the global oil and gas industry in the next decade, the majority, 63%, said it will be the national oil companies (NOC), while 30% said it will be major producers and only 7% said it will be independents.
Schneider noted that NOCs have more of a strategic focus than a profit focus.
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