Houston, USA – Despite optimistic forecasts from many analysts, the Oil & Gas industry just doesn’t seem to be able to pick up where it left off before the oil price slump. The near future prospects look bleak for the sector, as both official and unofficial records show layoffs as the primary resort to cost-cutting measures. A global number of 350,000 layoffs were reported by Bloomberg, and 23,000 jobs were cut in the U.S. alone in the first quarter of 2016. Based on unofficial market data, the numbers continue to deteriorate.
The ups and downs of the Oil & Gas industry are nothing new, as the cyclical nature of this domain has long been axiomatic. Longstanding employees have been loyal to the industry through many turbulent times, because during previous slowdowns they always knew that a turnaround was just around the corner. However, this time things could be different. New energy players are entering the scene, with a lot more traction from the general public, and correspondingly, state governments. Renewable energy has become a media darling and many loyal mid- and high-level Oil & Gas employees are eyeing the industry with increasing interest.
New global investment in renewable power and fuels climbed to a record USD 285.9 billion in 2015, up 5% compared to 2014, and exceeding the previous record (USD 278.5 billion) achieved in 2011.* In its Annual 2016 Renewable Energy Jobs Review, the International Renewable Energy Agency estimates that 8.1 million people were working in renewables in 2015, 5% higher than the previous year. The U.S. is one of the top six largest job markets in renewables, together with China, Brazil, India, Japan, and Germany. Driven by growth in wind and solar, renewable energy employment in the United States increased by 6% in 2015 to reach 769,000 jobs.**
It’s ultimately quite understandable why many of the Oil & Gas experts are interested in a slight change of sector, not only for financial reasons, but also for the way in which the prospective growth opportunities seem to multiply every year. The expertise, skillset and management track record of these experts makes them highly attractive to major players in the renewables sector. The Oil & Gas experts understand the market very well, have worked extensively with related technologies, and in many cases will agree to a pay cut just to secure a long-term contract.
The disparity in former and future compensation is not slowing the migration, especially for those Oil & Gas employees who are tired of the rollercoaster of industry fluctuations, or who have concluded that they would like to make a difference by contributing to the growth and expansion of the sustainable industry of the future. Many of the new “migrants” go into renewables with zero experience and take a step back on the career ladder, but believe that they are choosing a better long-term option.
However, a point of contention remains, especially on the U.S. market – relocation costs can be high when an employee moves from a traditional Oil & Gas location (e.g. Louisiana, Utah, Colorado, Wyoming, Oklahoma, New Mexico, California, Alaska, North Dakota, Texas and the Gulf Coast region) to the Midwest and West Coast. Renewable energy employers are spread all over the country, and locations such as California have a much higher cost of living, which is particularly challenging considering that many employees accept pay cuts when transitioning.
The renewable industry shows no signs of stopping, but a new talent gap could lie ahead. If seasoned Oil & Gas experts are smoothly transferred with the aid of rapid introduction trainings, this could cause challenges for the training, hiring and retention of young talent. According to the American Society for Engineering Education in 2015, “only two programs saw a decrease in enrolment at the bachelor’s degree level: Engineering (General), which fell by 7.6%, and Mining Engineering, which saw a 13.4% drop.” However, on a brighter note, IRENA’s research indicates that the renewable energy features better gender parity than the broader energy sector.**
The primary conclusion of this research is that the longer the traditional Oil & Gas industry remains depressed, the more talent this market will lose to other technical markets which are keen to acquire their skills and abilities. Gallup’s annual Environment poll revealed that 73% of Americans (a substantial increase from 59% in 2013 and 64% in 2014) say they prefer emphasizing alternative energy, rather than gas and oil production, as the solution to the nation's energy problems. As the Oil & Gas industry’s recovery remains hesitant, the proliferation of renewable energy will continue to spread, and more and more Oil & Gas talent will cross the bridge to the other side.
* REN 21, Renewables 2016 Global Status Report Paris, REN21 Secretariat http://www.ren21.net/wp-content/uploads/2016/06/GSR_2016_Full_Report1.pdf
** IRENA (2016), Renewable Energy and Jobs - Annual Review 2016: http://www.irena.org/menu/index.aspx?CatID=141&PriMenuID=36&SubcatID=2729&mnu=Subcat
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Chris Barrett is a Client Partner at Pedersen & Partners, based in Houston, U.S. With almost 20 years of Executive Search and recruitment experience, Mr. Barrett has executed numerous senior leadership search mandates in the Oil & Gas, Global Logistics, Supply Chain, Distribution & Transportation, Banking-Internet Security & Fraud, and Compliance sectors. Prior to joining Pedersen & Partners, Chris founded and successfully managed a full service Oil & Gas, Financial Services and IT recruitment company. Earlier in his career, Mr. Barrett held a range of roles, from technical through operations, commercial, contracts and procurement within several U.S. recruitment firms. A significant portion of his work has been focused on cross-border Executive Search assignments for senior executives with an emphasis on CHRO, business partner and talent management roles.
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