July 2018

Growth in offshore activity calls for recruitment boom

Launch of Rystad Energy Analytics and Client Portal extends our product portfolio to the new level

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Article: Oil and gas projects worth $110 billion are coming off the backburner

Article: India's oilfield service market catalyzed by deepwater push


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Rystad Energy sees a massive need for recruitment in the offshore space as new projects are being sanctioned and activity levels are approaching 80% of their historical highs.

The past years’ negative trend in employment in the oilfield service industry is leveling out. While there was a massive 35% reduction of the workforce between 2014 and 2016, the overall headcount at the top 50 oilfield service companies remained stable from 2016 to 2017. The lack of change in total is a result of increased hiring by companies exposed to the North American shale business and continued, if more modest, cuts for companies delivering to the offshore sector.

Companies involved in the North American shale industry faced especially large cuts from 2014 to 2016, however these companies were the ones adding to their workforce last year. Halliburton and Nabors Industries, both large companies heavily exposed to the North American land market, expanded their workforces by 10% and 5%, respectively. Among smaller companies with a strong focus on fracturing services, Trican Well Service nearly doubled its workforce, and RPC increased its staff by 40%, including re-hiring employees that had been let go. Aggregate hours worked within support activities for oil and gas is now back at the same level as in April 2015, which is just 15% lower than the peak in December 2014.

As employment in the oilfield service sector overall remained unchanged, growth within North American shale means that companies exposed to the offshore sector continued to struggle. National Oilwell-Varco and Saipem, two companies with larger offshore segments, both reduced their workforce by more than 10%. For 2016 to 2017, the contraction in employment slowed for the offshore-focused UK oil and gas industry; between 2016 and 2017, there was a 4.2% reduction in total employment, compared to reductions of 15.6% for 2015 to 2016 and 19.4% for 2014-15.

However, since the end of 2017, hiring has also been picking up within the offshore sector as rising oil prices encourage more offshore projects to be sanctioned. In 2018, Rystad Energy expects almost 100 projects worth about $95 billion to be sanctioned, as can been seen from the chart. This compares to only 45 projects in 2016. With an additional 100 projects expected to be sanctioned in 2019, with higher average cost per project, the required activity levels for these would be 80% of the peak in 2013. This is by adjusting for the unit price reductions that have occurred in the offshore space during the downturn and comparing it with the $219 billion that was sanctioned in 2013.

Together with expected continuous growth in shale market, we should see growth of the overall service sector labor market to the levels seen in 2010. The 20% growth expected towards 2020 would call for massive recruitment and is good news for professionals that want to enter, re-enter or switch paths in the oil and gas sector.