Knowledge Management Strategies for Mitigating the Big Crew - Wipro

Knowledge Management Strategies for mitigating the Big Crew Change in E&P
[4] [5] [6] The average age of oil field engineers is 48 and 50% to 60% will be eligible for retirement within 10 years. The expected
attrition rate is 6% per year.7 The disciplines hardest hit include petroleum engineers, process engineers, geologists, and
geophysicists. Employee age also follows a bimodal distribution with a large number of older employees, a number of younger
employees and not much in the middle. A good example is Halliburton, where 56% of employees have less than five years of
experience, 17% have 5 to 10 years’ experience, and 27% have more than 10 years’ experience.8 Halliburton is considered a
young company in the industry with bimodal distribution over-weighted at the young side of the curve. Aramco is a similar
example. According to Allah Al-Saif, Senior VP of E&P, "nearly half of our workforce [Saudi Aramco] is less than 30 years of age.
Furthermore, surveys suggest that in the next few years more than 60 per cent of our engineers will have less than 10 years of
experience”.
The industry will be most at risk when the experienced employees retire, shifting the small middle group into leadership with
support from a large group of inexperienced employees.
Workforce volatility is not new to the oil and gas industry; it has been an issue for the last 150 years. As the price of oil climbs,
companies quickly hire. As oil prices fall, companies lay off. Since the 1980s the price of oil has gone from the $10s to the $140s
and back to the $50s today. The workforce demographics reflect this. However, oil price volatility is only one component. The Big
Crew Change has its roots in the 1980s and 1990s and occurred for three reasons:
1. Mergers and low oil prices caused hundreds of thousands of people to leave the industry
2. The image of E&P as low-tech and a dirty, sunset industry makes it less attractive for young people
3. Competition from other industries
There is also a regional graduation deficit for E&P engineers. The US enrolment in key E&P industry skills like petroleum
engineering fell 85% between 1982 and 2003. For example, in 1993 there were 11,000 petroleum engineering students in the
United States at 34 universities. By 2005, that number had plummeted to 1700 people at 17 universities. 10While the situation
in the United States is grim, in parts of the world such as India and China there is a surplus.
In 2006, Schlumberger Business Consulting surveyed 115 universities and 30 companies to compare available labor and
demand.11 The results of the survey showed major deficits in the United States, Canada, Russia, Saudi Arabia and Iran. Major
surpluses were found in China, Indonesia, India, Venezuela and Mexico. The deficits and surpluses roughly balance themselves.
One of the challenges going forward will be to either relocate these engineers closer to their work or to find new ways to
leverage them in their native countries.[7] [8]
6 | www.wipro.com/industryresearch
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