Nexen Inc. - Does the Petroleum Industry Need an Image Makeover?

For the first time in the history of the World Petroleum Congress (WPC), young professionals and students who are interested in actively participating in the oil and gas industry, will find a space in which they will be able to express their opinions, meet other professionals from the industry and share viewpoints.

This afternoon in Madrid, Spain, the Youth Programme, sponsored by Nexen, will also provide a platform for young people from all parts of the world to demonstrate their skills while creating an opportunity for petroleum industry management to find and select the industry professionals of the future. All these activities will provide a perfect opportunity for Young People to stand out and be considered for what they are, a key element in the oil and gas industry, the future.

Read one paper below by Leor Rotchild, Secretary, World Petroleum Council Youth Committee and Senior Analyst, Social Responsibility for Nexen Inc. as he discusses the issue at hand for this year's Youth Programme Special Session.

Does the Petroleum Industry Need an Image Makeover?
Attracting the best and brightest young talent will require an image makeover but youth are too savvy and mistrustful to fall for an empty PR exercise. This makeover will have to be grounded in substance, consistent with their desire for a better world.

By Leor Rotchild, Secretary, World Petroleum Council Youth Committee, Senior Analyst, Social Responsibility, Nexen Inc.

Over the past century of oil and gas development, the petroleum industry has overcome many challenges ranging from financial to technological. But now, a new and different problem is emerging, just at a time when profits are soaring and demand for oil is expected to rise from about 85m barrels a day to 120m barrels a day by 2030.

The problem lies with the most vital and common element required in the production of oil and gas: people.

Over the past few decades, there has been a dwindling number of young employees joining the industry. Currently, the average oil and gas employee is 50 years old and while this translates to an experienced workforce, when these people retire, there are not enough skilled people to take over.

The skills gap, which is estimated to include a 38 per cent shortage of engineers and geoscientists in the next two years, could cause more safety and environmental incidents, project delays, supply shortages and result in even higher prices.

There are three main reasons for the low number of youth entering the oil and gas business. One is simple demographics: the number of young people reaching employment age is smaller than the number of employees retiring. As a result, companies around the world have already begun competing to hire them.

The second is that oil and gas is viewed as a sunset industry and that a career in this area is a ‘dead end.’ This is reinforced by projections of peak oil and the widespread industry layoffs that took place during the 1980s and 90s. In the U.S., 500,000 people were laid off during those two decades, resulting in an 85 per cent drop in petroleum-related undergraduate enrollment between 1982 and 2003.

The third reason is that the petroleum industry has developed a negative reputation through human rights abuses, corruption scandals, explosions, major oil spills and other issues. Climate change is rapidly becoming one of the defining challenges of this generation and much of the public’s fear and frustration around this issue is directed at the oil and gas sector. As a result, many young people are choosing careers in industries with less tarnished reputations.

How can the petroleum industry improve its reputation and make oil and gas careers more attractive?

New technologies are being employed in the petroleum industry all the time. There are directional drilling technologies that drill vertically, horizontally and even in corkscrews to hit targets. There have been major advancements in deep subsurface imaging for greater accuracy through numerous different rock types. Yet many today consider a wind turbine as the common symbol of progress. Youth see wind and other renewable energy sources as exciting examples of innovation. Plus, investing in renewable energy provides opportunities to improve the image of the industry and creates a more innovative working environment. However, developing alternative or renewable energy requires extensive research and financial resources.

Research and development (R&D) is an important function in any industry but over the past few decades, R&D spending in the petroleum industry has fallen and is considered low compared to other industries.

In addition, oil and gas companies direct most of their R&D efforts toward increasing the effectiveness of existing processes. Very little time and money is spent on developing new ideas. With so many broad global energy challenges, there has never been a more urgent need for the industry to take risks, collaborate and transform - both physically and psychologically - from just an oil and gas business to an innovative energy industry.

There is a strong desire within this new generation of employees to ensure their personal values are aligned with their employer’s values and it is important for companies to recognize this and take steps to meet this new demand.

Believe it or not, when it comes to managing human assets, the petroleum industry could stand to learn a thing or two from the Big Four accounting firms. PricewaterhouseCoopers, Deloitte, KPMG, and Ernst & Young attract 20,000 to 25,000 University graduates each year. Mobility across geographic locations is a key component of their recruitment and retention strategies. Many new entrants receive training before they even graduate University and visit an overseas location within their first year of employment.

Schlumberger also provides an interesting case study as they have become known for providing an innovative working environment and world class training. All engineers headed for the field participate in a three-year education program combining classroom and project work. Schlumberger has also built a global network of university alliances through scholarships and support for women in engineering, which serve as the company’s recruiting pool.

Both examples highlight the need for successful recruitment programs to appeal to youth values of diversity and continuous learning, as well as the importance of engaging with the education system.

Today’s war for talent cannot be won by simply increasing compensation. What is required is a change to the image of the industry but this can only truly be done by changing the way we do business.

Environmental responsibility, meaningful community investments and innovative, forward-thinking energy development must become touchstones of the industry. We must demonstrate pro-active leadership and think outside the traditional oil and gas box.

The petroleum industry should not shy away from engaging youth on controversial topics. Youth should be invited to work within the petroleum industry to be part of the solutions to the major challenges they are concerned about. Wild conceptual ideas to solve broad energy-related challenges should be encouraged and industry-wide collaboration to implement sustainable solutions should be the norm.