Scotland's Independent Expert Commission on Oil and Gas: report

9. Skills

Key Messages:

• A window of opportunity exists to establish a world class generation of new professionals and the future visionary leaders of the oil and gas industry in the UKCS.
• There is an over-emphasis from industry on short term solutions and recruitment strategies to attract already skilled, qualified and experienced personnel rather than on developing sustainable skills to meet future needs.
• A balanced mix of short, medium and long term objectives is required for sustainable talent and skills development and investment in the UKCS.

The Skills Gap

1. The current skills gaps in the UKCS are not a new phenomenon. This is a challenge which has been recognised by industry and, while changing in specifics over the decades, creates both impediments to companies taking advantage of opportunities and contributes markedly to the escalating costs of doing business in the UKCS.

2. The window of opportunity to tackle the skills gaps is growing smaller as the UKCS landscape changes, and new oil and gas provinces emerge and develop. The Commission believes that action must be taken now before that opportunity is lost.

3. The Skills gaps in the oil and gas industry affect the capacity and future sustainability of all involved parties: the oil and gas industry at all levels in the supply chain; Government; regulators; and academia. There is some confusion amongst stakeholders around the roles and responsibilities of the various sectors to take a lead on skills development.

4. Training and education is offered by a mix of providers - from companies providing internal training, programmes delivered by commercial providers or membership bodies, through to open award-bearing courses offered by educational institutions.

5. Some of this provision is supported through government funding but much of it is not. As a result no single body has the authority or power to direct, regulate and/or control what is offered. Inevitably much of the provision will be dictated by market demand, which will often focus on the short-term need rather than a long-term vision.

Recommendation 1: As a priority, Government must use its levers to counter the impact of long-term industry under-investment in skills, and the impact of the inflation of wages

Short-term needs and Long-term planning

6. In many competitor oil and gas regions there is an expectation that those who are granted licences should contribute to the development of local talent. It is a strategy that could yield real benefit for the future. However, the UKCS has not taken this approach, with a consequent lack of strategic oversight and monitoring of local talent development.

7. While the industry acknowledges the value of government initiatives, there remains a sense of lack of cohesion and coordination. Greater collaboration amongst providers remains an aspiration and work to this end is already visible through a number of initiatives, such as the establishment of Energy Skills Scotland ( ESS) in 2013.

8. The development of skills which capitalise on the current potential of the industry remain a priority for Government and have resulted in the production of an Energy Skills Investment Plan ( SIP). Current work is on-going by OPITO to establish the needs of industry in terms of skills - the results of which should be available by Summer 2014, and will inform the future direction of the SIP.

9. To establish a formal, coordinated link between industry and education an annual data collection exercise, such as that currently being conducted by OPITO, should be undertaken. This exercise will identify current skill needs of the industry in a clear and recurring format, allowing for precise identification of the areas to which colleges and universities should respond in their outcome agreements with the funding body (Scottish Funding Council). Government should provide additional funding for students in identified priority areas.

10. There are some constants in terms of skills gaps, with engineers and geoscientists remaining a high priority. Strategically there remains a high level of need for "experienced" staff, particularly those with management potential and/or experience. Additionally there is a lack of high quality drilling supervisors in the UKCS and a widespread recognition of the importance of highly skilled project managers and controllers.

11. Industry is focusing to an ever greater extent on recruiting staff with proven experience, rather than providing opportunities and the necessary support for inexperienced individuals to gain experience in a safe environment. The corollary has been an over-emphasis on employing skills rather than on developing sustainable skills to meet future needs. This has resulted in a focus on short term solutions and recruitment strategies to attract already skilled, qualified and experienced personnel.

12. Alongside recruitment an industry-wide effort should be made to develop staff in a more systematic manner, through induction processes supported by tenured mentors with significant experience in the field. With a constrained pool of experienced people and the desire to always hire the 'perfect' candidate, there can be insufficient emphasis on individual skill development.

13. The global marketplace for skills is vast and competitive, with the UKCS frequently losing home-grown talent to overseas opportunities. Compensation for appropriate skills is therefore spiralling out of control, making some projects in the UKCS uneconomic as a result. The widespread 'poaching' of skilled, experienced individuals remains a real problem not only in Scotland but globally.

Recommendation 2: An excellent skills base must be established both to meet immediate and long-term future needs.

Roles and responsibilities

14. The opportunity exists for the UKCS to take a leading edge in skills development, but this will require a clarification of roles and responsibilities.

15. The role of government should be:

a. to fund investment in the skills areas essential to prolong the UKCS, in the geosciences, in engineering and in the management of projects and resources.

16. The role of industry is to:

b. invest in long term skills development, building on formal qualifications, safe mechanisms to grow expertise in application and to work with others to grow continuous learning amongst the workforce.

17. Academia needs to:

c. be attuned to industry needs and to work together to ensure all subject and disciplinary skills are provided as part of a partnership approach, while investing with government in areas of niche specialist research capacity growth.

18. Opportunities exist for skills programme developments that support late-life and extended-life field operation, including EOR, enhancing ageing asset integrity, field extension and management, subsurface specialisms, innovative technologies, collaborative working and decommissioning. Equally career development programmes aimed at raising technical to supervisory skills capacity are required.

19. As with other aspects of maximising potential, stakeholders tend to agree that coordination and the encouragement of collaboration is an important role for the new Regulator, in seeking to 'solve' the skills challenge. The new Regulator should therefore act as a catalyst for future investment in skills development from both industry and Government, through stewardship, funding, licensing and regulation.

20. The skills and employment domain continues to be highly influenced by economic factors affecting the industry more widely and cycles of investment and constraint have impacted the attractiveness of the industry as an employer.

21. The visibility and attractiveness of the industry to school leavers and graduates is not currently optimal and a lack of recruitment can only exacerbate this issue, together with the impact of high levels of retirement. There is also evidence to indicate that young people from schools, colleges and universities are more attracted to the expanding renewables sector.

Recommendation 3: The Regulator should act as a catalyst for future investment in skills development from both industry and Government, through stewardship, funding, licensing and regulation.

A regulatory mandate

22. The prevalence of and reliance on contract workers, estimated by many to be as high as 80% of workforce, continues to be a barrier to skills development and investment in CPD and career progression.

23. A balanced mix of short, medium and long term objectives is required for sustainable talent and skills development and investment in the UKCS, and a stronger future regulatory mandate should seek demonstrable competence across both core and contracted staff for licence holding companies.

24. The development of systems to enhance knowledge transfer must be made a priority. Greater awareness of the role of higher education and what it can bring to the "world of work" would be advantageous for the basin. An industry wide mentoring scheme could facilitate knowledge transfer between staff approaching retirement and recent graduates and mid-career positions.

25. There remains a challenge in terms of filling middle management positions due to the balance of skills and experience required, especially in managing projects. Skills development models need to accommodate the three essentials;

• subject knowledge;
• experience; and
• management capacity.

Recommendation 4: A stronger future regulatory mandate should seek demonstrable competence across both core and contracted staff for duty holding companies.

A sustainable future

26. There is a chance now for industry to work with academia, supported by Government, to establish world class technical and graduate programmes with the goal of establishing a world class generation of new professionals and the future visionary leaders of the oil and gas industry in the UK.

27. The pursuit of TVA must include a governmental consideration of skills capacity development in the UKCS. This will ensure a sustainable skills development plan is produced, which will enhance the development of an internationally competitive supply chain in the long-term, whilst ensuring provision of required skills to maximise production in the short to medium term.

Recommendation 5: Industry in the UKCS should work with academia to establish excellent technical and graduate programmes with the goal of establishing a world class generation of new professionals.