Tick tock. Tick tock. Your drillers are about to retire. Are you prepared? The core of the industry's drilling managers is approaching 50 years of age. What happens when they leave?
It will come as no epiphany to executive leadership that drilling managers and senior drilling professionals are approaching age 50. This is a concern in boardrooms of virtually every upstream company.
It's real and it is potentially serious. What to do about it is less clear.
The oil and gas industry has now matured enough to champion the idea that knowledge - tacit knowledge in particular - of key workers is an essential and valuable resource for the organization. As the depth, complexity, costs and management challenges of a far more demanding business environment become the norm rather than the exception, the knowledge embodied in the workers of the organization grows more significant.
High tech takes over
During the last 20 years, as the oil and gas industry downsized, restructured, merged and acquired, it also shut off the flow of petroleum engineers from the leading industry-friendly universities such as the universities of Texas, Oklahoma, Texas A&M and Colorado School of Mines.
During the Internet-crazy decade of the '90s, high-tech jobs ruled the day as the smartest young graduates signed on with technology start-ups offering huge signing bonuses and salaries that often exceeded the then-current salaries of their parents. The industry turned off the college-recruiting channel at the same time more attractive career alternatives turned off college graduates to the oil and gas industry - a perfect storm.
Why would a graduate turn down an invitation to instant wealth and the potential for becoming a chief executive officer at the ripe old age of 25? The moribund oil and gas industry certainly didn't offer these graduates much in comparison during this era.
Currently, the upstream industry finds itself atop a price peak of US $65 oil with every drilling rig in good mechanical order actively under contract. The industry is awash in a sea of cash. All of this comes on the heels of the crunch of $10 oil that characterized the last years of the '90s.
During the
'80s and '90s drillers were commonly viewed by the higher ups as something akin to a backwater function. These jobs were often relegated to those who didn't quite measure
up for top management slots. The glamour roles were the exploration and production folks who occupied center stage in the hearts and minds of the organization's leadership. Drillers were viewed something like a commodity function - an interchangeable resource to be employed at will and eliminated when drilling activities were no longer needed. In some companies the attitude was that drillers were a necessary evil.
Mergers and acquisitions
The '90s saw another spate of mergers and acquisitions as consolidations squashed multiple organizations together creating the need for "synergies" (cutting costs). Drillers in many of these transactions were shuffled around or fired but generally did not fare well relative to their career status.
The world has turned and now we find drilling professionals of all types in demand as more wells are being drilled and more complex and costly wells become common.
The assumption in some quarters is that when these folks finally retire and turn out the lights in their offices for the last time, that the organization will simply go out to the marketplace and hire replacements. Sadly and unfortunately, we see the die-hard vestiges of the "drillers are commodity resources" mindset overwhelming the reality of the situation.
Far from being a commodity resource - or a modular resource that can be plugged in here and pulled out there - needed only for a finite task of getting to bottomhole depth at low cost, competent drillers are more of a premium resource than ever before.
Drilling today requires mature, experienced personnel who can effectively integrate the various knowledge-based disciplines required to develop the conduit through which hydrocarbons must flow. It's increasingly becoming a tall order even for the most seasoned pros.
Where will they come from?
Many companies are assuming that they can once more turn to the universities for help. Perhaps that help will be forthcoming. But, even if the universities are willing to be magnanimous and forgive the egregious treatment afforded them by the oil and gas industry during the last 20 years, it is doubtful that recent graduates will be able to come online soon enough, skills to deal with the multiple challenges associated with drilling 25,000-ft (7,625-m) hot gas wells or the complex drilling environment of deepwater offshore wells.
Furthermore, a common and naively cavalier assumption perpetuated in many companies suggests that retired drilling professionals will simply queue up at the front door vying for the privilege of working for any company willing to hire them. This ignores the fact that many of the aging drilling personnel want no part of the life style that has featured long stints away from loved ones and a relaxing home life and the luxury of sleeping in their own beds. Some of these folks have enough ball caps and t-shirts and want nothing more than to get away from the sound of the drilling rig.
Supermajors are making plans to go back to hiring the best and brightest from the college campus - even paying premiums to get the best talent while simultaneously recruiting recently retired drilling professionals. This will leave the rest of the industry with making do with whatever is left over.
What to do now
Time is definitely not on the side of the company that procrastinates. Start now to build bridges with the universities. It's not too late to start treating your drilling managers and the drilling organization with the respect and attention that are long past due.
But, reach out to the drillers on your payroll before it is too late. See if you can persuade them to stay longer. Pay them a premium, if you must, to get them to actively mentor younger drilling professionals. Get them to train younger staff members on their basin knowledge. Ask them to work with suppliers to introduce the next generation to those suppliers in such a way as to maximize the chances of keeping the goodwill that exists between the senior driller and the supplier network. Work with the drillers in each basin to document the drilling processes used to ensure that at least a point of departure exists for the next generation.
The underlying need that must be addressed is the continuity of the business that depends upon knowledge, experience and judgment. Concurrent with paying attention to this component of the human capital essential for sustainable performance is the need to do a better job of developing and applying human capital to specific drilling projects - no matter where they occur. By better leveraging the human talent of the drilling organization through the use of online technologies, a new type of team-based capability is slowly emerging in the industry that may help bridge the gap relative to the aging workforce. We call this the "Expert Team" and it is the result of an organizational design that strives to achieve absolute and sustainable excellence called the Alpha Organization.
Each country has a unique drilling environment. From Nigeria to New Mexico and from Siberia to Saudi Arabia, drilling must be carried out in different ways, according to the laws of the land, the available technology and service providers. An upstream company interested in sustainable excellence will strive to develop strategies and business models that work well for each country and see to it that the knowledge needed to sustain excellence in that country is not only maintained but enriched. Drilling represents the epitome of the need to design the business model associated with sustainable execution excellence. One-size-fits-all home office solutions using modular human resources will fail absolutely and relatively.

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