Resource shortages and operational issues

The pool of technological talent needed to sustain industry’s capabilities for meeting global energy demands is shrinking alarmingly. Skill shortages particularly affect the West. NASA has estimated that US colleges produced fewer than 200,000 technically based graduates to replace the two million experienced professionals who retired between 1998 and 2008.

The American Petroleum Institute, which has stated that skill shortages are projected in fields crucial to technological progress, polled 22 US oil companies, including integrated companies, independent producers and service companies. This revealed that several companies find that petroleum engineers, engineering analysts, technicians, geologists and geophysicists are in short supply.

As the talent flow in the West slows to a trickle, the Asian universities are producing almost as many technical graduates as the USA and Europe combined. India, China and Russia are taking leading roles as resource-rich countries in the global talent market. To tap into this large pool of talent, Shell has established Shell Technology India to attract and retain cutting-edge Indian talent and to engage this young workforce in areas that include exploration and production, refining and chemical processing.

While talent is being developed in the East, industry-wide collaboration with government and education, down to elementary level, is vital in the West to rebuild the attraction of careers in science and engineering. In Shell, we are very active in sponsoring undergraduates through engineering degrees; developing new recruitment and mentoring programmes; improving knowledge transfer and succession planning; hiring people mid-career; and tapping into retired staff. Above all, we seek to offer careers that are agile, creative and exciting, and supported by comprehensive career development programmes.

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Following a period of exceptionally high global demand for both contractors and materials, how does the oil and gas industry execute projects in times of far greater uncertainty? How should executives adapt their strategies in the face of slowing growth, particularly those concerning engineering, procurement and construction and materials? 

In uncertain times, the most effective approach is to take the long view and to turn challenges into opportunities. Enterprises may also build on the abilities and the technologies that have been developed during the buoyant times to cope with the competition for contractors and the volatility of raw material costs.

The long view is surely that, whatever the cost, the world still needs an abundance of energy, even if the heady forecasts of future demand are likely to be downgraded significantly in light of the October 2008 financial crisis. Demand will still be there whether it is higher or lower than the predictions. Refineries must be built, maintained and improved, and energy efficiency must continue in order to maintain cost-effectiveness and lower greenhouse gas emissions. The adoption of improved technology and the pursuit of further improvements in energy production are vital in order to provide basic needs for the global society. 

Innovation lies at the heart of this, as does good leadership. And a new kind of business model, in which innovations and good practices are developed collaboratively at industry level, may emerge. Major asset owners will need to work seamlessly with contractors and suppliers across their value chains and networks. This is, therefore, a time for concerted efforts and mutual support based on innovative thinking.

The environment is a key issue on the agenda of governments around the world – and the oil refining industry is right on the front line. It has a major role to play, not only in curbing plant emissions but also in delivering the cleaner fuels that society is calling for.

Transportation fuels must comply with increasingly onerous product specifications. Sulphur levels are not the only challenge; refiners will also need to find solutions for new benzene, density, aromatics and olefinicity specifications.

Meanwhile, the pressure to reduce the levels of carbon dioxide emitted to atmosphere has stepped up throughout industry and, indeed, in all walks of life. This pressure influences the design and adoption of technology. It also introduces an element of uncertainty into the refining industry.

Different countries and regions consequently operate under diverse restrictions and legal requirements. For industry players, it is hard to gauge where the burden of carbon dioxide emission restrictions will fall. Will it fall on the manufacturer, the distributor or the consumer? How do you position yourself? What do you advocate? How do you present your brand? Will you have to keep investing millions of dollars to maintain a licence to operate?

Meanwhile, the refining industry has seen corporate policies that place a premium on workplace health and safety become widespread. This is especially important, as refinery hardware operates under high pressures and at high temperatures. A top priority for our business is the health and well-being of our employees. Our health, safety and environment golden rules are simple: comply with legislation, standards and procedures; intervene in unsafe or non-compliant situations; and respect our neighbours.

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Brochure

Carbon and energy management (PDF, 364 KB) - opens in new window