Labor, Equipment Shortages Impact Industry

Technology glitches get the headlines, but many factors contribute to industry delays.

Skilled labor shortages and long-lead times for key equipment are key challenges major oil companies are facing especially in developing the ultradeep waters of the Gulf of Mexico. An OTC panel discussion focusing on "New Waves in the Gulf of Mexico"  cited these two items as reasons why projects are being delayed and costs are escalating.

"There's a lot of excitement in the industry," said Sandeep Khurana, Facilities Advisor International Division of Devon Energy, "but these projects do take time to develop."

Referencing the delays in the Tahiti project, Brian Smith, General Manager Major Capital Projects of Chevron North America, said it was a safety decision to replace the mooring system before proceeding, but that decision then impacted the lift vessel needed. "There are only three vessels in the world that can do our job and they are booked a year or two in advance. You can face a significant delay due to their availability."    

Russ Ford, Vice President Technical Americas of Shell E&P, agreed saying there is not a lot of slack in the system. "However, a lot of projects are still on track. Unfortunately, they don't get a lot of attention."

Khurana added, "What gets impressive quotes is if something gets delayed."

Smith said that all the majors are facing a similar situation with critical equipment."You have to order your key equipment a long time in advance, sometimes two years or more, so you don't have a delay in  your schedule." Smith said one way to combat the rising costs is to have a long-term relationship with contractors. "In our case, Transocean is building two drillships specifically for Chevron that will arrive in the Gulf of Mexico in a couple of years."

As far as the staffing shortage, Ford said that they're seeking oilfield veterans with 10-15 years of experience. "The downturn in the late 80s took a lot of the people out of the industry. We're pretty successful in recruiting new graduates and we're making an effort to encourage older workers to stay longer by keeping a vibrant, interesting work environment."

Smith of Chevron said "We're really trying to recruit worldwide from universities, especially in areas where we have a presence like Thailand and West Africa. We're putting a lot of resources into recruiting."

Efforts also have been made to use skilled workers from other countries to alleviate shortages. "In some of the Gulf Coast shipyards, there was a shortage of welders and the government was pretty flexible in regards to Mexican nationals," said Smith. Other projects cited have used skilled workers from the Philippines, Malaysia and Holland.  

Shell's Ford reminded people that the industry has a long-term investment horizon. "Delivery is the key. We need to have our components in place. Decision we make now will help determine what the future of the industry will look like years from now."  

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