Thursday, January 8, 2009

The Great Crew Change

There has been a lot of chatter recently in the oil and gas industry about what is termed "The Great Crew Change". For those of you not in the industry, a crew change on an offshore oil rig means that the guys who have been working out there for the last few weeks or months, and know every intimate detail of the operation and equipment, pack up and head for shore, while a fresh team arrives on board and invariably spends the first few days familiarizing themselves with the peculiarities and quirks of the unique local processes, probably re-inventing solutions that left with the previous crew.

The "Great Crew Change" is used to describe the fact that because of the cyclical nature of this industry, most of the senior technicians and managers in the industry today were hired during the "boom" of the late 1970's to mid 1980's (remember the bumper sticker from West Texas in 1986 - "Please God just give me one more oil boom, and I promise this time I won't piss it away"?. That means they are now in their 50's and getting ready to retire, and with them goes a quarter century worth of experience and knowledge. According to a study in late 2006 by consulting firm Booz Allen Hamilton Inc., about 56 percent of workers in the oil and gas industry are between 35 and 54 years old. With 55 as the average industry retirement age (although with the 2008 crash in the values of 401 retirement accounts, the joke is that "90 is the new 50"), more than half the oil and natural gas employee base will leave over the next decade. This will be only slightly offset by the fact that a lot of technical professionals will be retained as consultants after they retire.

But here is a more personal and visual way to understand what the industry will be losing - yesterday at 5:05 PM I walked around my company's office at Dairy Ashford in Houston, sent one text message, and by 5:15 I had over 100 years oil and gas experience gathered around the bar at Big John's Ice House, without even breaking a sweat. It is going to be very hard for the Engineering grad student that we recruited last year to do that...

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