UPSTREAM OIL AND GAS INDUSTRY LABOUR MARKET INTELLIGENCE SUMMARY FINDINGS

UPSTREAM OIL AND GAS INDUSTRY LABOUR MARKET INTELLIGENCE SUMMARY FINDINGS

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UPSTREAM OIL AND GAS INDUSTRY LABOUR MARKET INTELLIGENCE SUMMARY FINDINGS Upstream Oil and Gas Industry Labour MaRket Intelligence ((LMI) ( Summary Findings A report on behalf of the Oil and Gas Industry Labour Market Intelligence Steering Group. Foreword 4 Executive summary 5 Context 7 1 Labour Market Trends 8 1.1 Definition of the Upstream Oil and Gas Industry 8 1.2 Distribution of the workforce 9 1.3 Historic trends 10 1.4 Future demand 11 2 Labour Market Dynamics 13 2.1 Recruitment 13 2.2 Hard-to-fill roles 13 2.3 Skills shortages 14 2.4 Staff retention 15 2.5 Apprentices and graduates 16 2.6 Training and development 18 3 Summary 18 Appendix A: Methodology 19 This output is based on and comprises input and information sourced from third parties (which may include public data sources). Whilst we will use all reasonable care and skill in the collection and collation of this output we cannot warrant or guarantee the accuracy of the output. It is to be acknowledged that outputs which use empirical data and/or statistical data and/or data modelling techniques cannot be taken as a guarantee of any particular outcome and are not intended to be the sole basis of business decisions. Our standard terms of business apply. Approved by: Adam Swash Position: Head of Strategy & Research Date: 05.06.2014 3

Foreword The UK is a world-leading hub for oil and gas expertise, driven by the ingenuity and skills of its workforce. The shortage of skills is however a major threat to our overall competitiveness and one of the biggest challenges that the industry faces today. Examining in depth how many people and with what skills are needed, is vital if we are to fully understand where the gaps lie and where we should concentrate our efforts in order to fulfil the potential of the UK s most prosperous industrial sector both now and in the future. The Upstream Oil and Gas Industry Labour Market Intelligence Survey is the largest and most ambitious study of its kind ever undertaken by the industry. It has seen unprecedented collaboration across a wide range of industry partners, both with the calibre of its Steering Group, and with operators, contractors and organisations throughout the oil and gas supply chain. They have been exceptionally generous in sharing very detailed and specific information about the profile of their workforce both on and offshore, and their projected skills needs for the future. This report marks the first step in a long-term collaboration to understand, track and anticipate the workforce profile across the whole industry. We have gleaned valuable insight in a number of areas and sharing that information will provide clarity to employers and training providers and assist the industry in shaping its collective response as we move towards the long-term goal of building the workforce we need to succeed in the future. Skills provision is nevertheless a complex issue which can be influenced by a number of factors relating to economic, political, environmental and fiscal developments and contexts. The ultimate goal of the research is to allow us, as an industry, to prioritise our activity in a targeted way through the creation of a solid skills strategy. This needs to be built up over time and gathering the intelligence to allow a strategy to remain valid and relevant is not a single project. We hope you will continue to support this valuable partnership as it moves into the next stage. 4

Executive summary This report summarises the findings of a review of the upstream oil and gas industry labour market. This is an industry that continues to be a major contributor to the success of UK Plc. It is an industry that this research shows has grown at a rate of 15% over the last two years and is forecast to grow a further 6% in the next two. This vibrant industry is taking on the challenges brought by the arrival of new and competing technologies, falling production, and declining exploration through an increase in new field developments and deferred maintenance catch up. The aim of this research was to both understand the labour market in depth and to provide further information to industry stakeholders about its workforce and skills requirements in order to support detailed strategic interventions for the industry. Key findings Total employment 1 is forecast to increase by 6% over the next two years (equivalent to 7,340 workers); this growth is estimated to be much higher than for UK employment as a whole: Reflecting the long-term confidence in the industry, most growth in employment has been for direct employees, rather than contractors. This pattern is expected to continue. The survey results show that have been expanding employment in engineering; quality, health, safety and environment; support/central services and technical staff. In the future, demand for staff is expected to be fuelled by an ongoing increase in demand for engineering, support/central services staff alongside technical and marine staff. Continued growth is driving up demand in an already tight labour market, resulting in ongoing specific labour market issues, including hard-to-fill vacancies and skills shortages alongside rampant wage inflation: 33% of in the upstream oil and gas sector have hard-to-fill roles. The areas where have identified hard-to-fill job roles are the similar to those reported in a 2011 OPITO survey, e.g.: - Design engineers, marine crew, mechanical engineers and CAD designer/draughtspeople. The key reason cited for hard-to-fill roles is that industry demand for suitably skilled applicants continues to outstrip supply cited by 76% of with hard-to-fill roles. A lack of applicants with experience in upstream oil and gas was cited by 30% of, while a lack of qualification was also cited at 24%. Skills shortages also exist within the current workforce: 24% of with engineering and technical staff cited skills shortages as a particular issue. Progress is being made to address ongoing issues noted in previous research: notably with the successful increases in recruitment of apprentices and graduates, a trend that is forecast to continue: Apprentices are a particularly popular route for larger employers: 29% of with 50 or more employees in the sector have employed an apprentice in the last two years. A balance of 15% of expect to increase their recruitment of graduates while a balance of 6% of 2 expect to increase their recruitment for apprentices. 1 This includes direct employees, contractors and agency staff 2 The net balance statistic is the percentage of responding increase less those responding decrease. It is an indicator of the direction of change: a net balance of zero indicates no change; a positive number indicates more responded an increase and a negative number indicates more responded a decrease. 5

However, have identified barriers that are preventing them from developing their existing workforce, particularly with respect to the level and types of training available. Accessing detailed information regarding specific job disciplines and workforce profile (e.g. relating to gender and age of employees) has been a challenge for respondents. In summary, the opportunities for the upstream oil and gas sector are significant and look set to grow. The industry is continuously changing and some are already taking action and diversifying their operations, yet the labour market challenges identified continue to affect optimum productivity. A sustainable labour market policy for the oil and gas industry has never been more critical in order to secure the future of this important and highly prized sector. 6

CONTEXT The UK s oil and gas industry is globally recognised for its skills and expertise; it is a successful driver of UK Plc economic health. In 2012-13 it was estimated to provide 6.5bn in revenue to HM Treasury in the form of taxation. 3 Government figures, however, point to an industry in transition as UK Continental Shelf (UKCS) production is forecast to decline between 20-30% from 2009-2015. 4 Many are looking to diversify, be it through supporting decommissioning, new extraction techniques or other renewable technologies, or looking at international opportunities to ensure they continue to grow. Industry estimates reveal that as many as 448,000 jobs across the wider economy 5 are supported by the wider upstream oil and gas industry. It is therefore critical that any labour market issues are understood and planned for. Managed by OPITO, this project has been carried out in partnership with Aberdeen & Grampian Chamber of Commerce, Decom North Sea, the Engineering Construction Industry Training Board (ECITB), Energy North, the International Association of Drilling Contractors (IADC) North Sea Chapter, the Offshore Contractors Association (OCA), and Subsea UK. Building on previous industry research, 6 which indicated that labour market issues were holding back the industry, this project was designed to collect detailed labour market data to identify strategic interventions in order to address industry identified issues. This report is based upon 298 responses to the Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Survey (the survey). The respondents have been drawn from all sub-sectors of the industry and represent all sizes of companies. The which responded are responsible for employing 55,815 direct employees and 10,060 contract staff in the upstream industry: approximately half of the labour market. It is therefore a representative snapshot of the industry as a whole in the UK. The report highlights the key findings of the research at a broad level. Unfortunately, many of the companies that responded were unable to provide the level of detailed labour market statistics requested in order to support the development of focused interventions. Additional work within the industry is required to articulate the detail of the workforce profile in order to address skills gaps and inform future supply of the skills and knowledge required. 3 Department for Energy and Climate Change and HM Treasury 4 Department for Energy and Climate Change 5 Oil & Gas UK 2013 Economic Report 6 OPITO s Labour Market Intelligence Survey: March 2011 7 A sample of 1,577 upstream oil and gas, selected from the membership lists of the industry LMI partners and believed to represent the great majority of working in the industry was used as the sample. The skew towards large companies in the survey means it covered nearly 50% of the employment population through speaking to 20% of the. This skew was removed for analysis purposes using a weighting frame, to ensure the analysis represents the view of the whole industry. 7

Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summary Finding 1 1 Labour 1.1 Definition Market Trends of the Upstream Oil and Gas Industry 1.1 Definition The definition of the of Upstream the upstream Oil oil and Gas gas industry Industry used in this research is based on a c industry definition 8 that breaks down the Exploration & Production (E&P) (also referred The definition as Operators) of the upstream and oil their and gas supply industry chain used in into this research various a more is Tiers general based support on and a commonly and services used industry definition category. 8 that breaks down the Exploration & Production (E&P) (also referred to as Operators) and their supply chain into various Tiers and a more general support and services category. Figure 1: Figure Tiered definition : 1Tiered of definition the oil and gas of industry the oil and gas industry Tier 1: E&P Companies (End User) Integrated Majors Large/Small Independents Energy Utility Companies Non-Operating Companies Exploration Companies Supply Chain Categories Reservoirs Wells Facilities Marine & Subsea Support & Service Tier 2: Main Contractors & Consultants Reservoir Engineering / Management Contractors Seismic Data Acquisition & Processing Contractors Oilfield / Wells Services Contractors Drilling Contractors Well Engineering Consultants Engineering, Operation, Maintenance & Decommissioning Contractors Engineering Consultancies Structure and Topsides Design and Fabrication Marine / Subsea Contractors Heavy Lift Contractors Pipelay Contractors Floating Production Storage Units Catering / Facility Management Sea / Air Transport Warehouse / Logistics Communications Recruitment & Training Tier 3: Product & Services Suppliers, Components Subcontractors & Subsuppliers Geosciences Consultancies Data Interpretation Consultancies Seismic Instrumentation Data Storage IT Hardware / Software Source: Oil Source: & Gas UK Oil and Gas UK Cementation Contractors Drilling & Well Equipment Design & Manufacture Drilling Tubulars Laboratory Services Machinery & Plant Design & Manufacture Engineering Support Contractors Specialist Engineering Services Inspection Services Specialist Steels * Tubulars Subsea Manifold & Riser Design & Manufacture Marine / Subsea Equipment Subsea Inspection Services H S & E Services Medical Services Banking & Finance Legal & Insurance Accountancy Energy Consultancies For the purposes of this research, the upstream oil and gas industry was defined as the e the three Tiers 1,2,3, excluding Support and Service. The engaged in the For the purposes industry of can this research, be broken the down, upstream through oil and the gas research, industry was as: defined as the employment in the three Tiers 1,2,3, excluding Support and Service. The engaged in the industry can be broken down, through 6% of the research, as: are Operators (E&P) (Tier 1) 6% of 26% are are general Operators contractors (E&P) (Tier; 1) and (Tier 2) 66% are specialist suppliers (Tier 3). 26% are general contractors (Tier 2); and 66% 8 Oil & Gas UK 2013 Economic Report are specialist suppliers (Tier 3). Experian Plc 2014 8 Oil & Gas UK 2013 Economic Report 8

In 2013 9 industry body, Oil & Gas UK, provided an estimate of the overall employment impact of the oil and gas industry at 448,000 across the UK. This referred to all employment supported by the industry. This research specifically looks at the upstream labour market in Tiers 1, 2 and 3; and, based on this tighter definition, using the latest figures from the Office for National Statistics (ONS), Experian s economic model estimates that there are currently approximately 131,000 employees working in this part of the industry. 1.2 Distribution of the workforce Employees within the upstream industry are based both offshore and onshore, with response to the survey showing that 28,000 employees were based offshore while the majority of the UK-based direct employees (91,000) of the workforce are based onshore. The remainder are contractors or non-uk based. Previous research 10 in 2014 showed similar patterns of offshore employment and identified 27,749 employees working offshore. The survey further reinforced the importance of the industry to the whole of the UK economy. Whilst nearly half (44%) of employment onshore was located in North East Scotland, the remainder was spread more widely with concentrations in the North East of England (25%) and 14% in the South East of England (including London). Figure 2: Distribution of UK (onshore) upstream oil and gas workforce by region (% of workforce) In addition, the upstream oil and gas industry can be categorised as having three broad areas of activity / operation that require specific knowledge, skills and expertise. Commonly these are categorised as: Topside: above the waterline Subsea: beneath the sea surface Subsurface: below the earth surface The survey reveals that 30% of work across all three categories. The remainder specialise in only one, or occasionally two, of these areas: Topside (40%), Subsea (26%) and Subsurface (17%). Clearly there will be great demand for employees who can operate across multiple areas. Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summa Figure 2: Distribution of UK (onshore) upstream oil and gas workforce of by region workforce) Source: Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Survey Source: Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Survey In addition, the upstream oil and gas industry can be categorised as having thr activity/operation that require specific knowledge, skills and expertise. Commo as: Topside: above the waterline Subsea: beneath the sea surface Subsurface: below the earth surface 9 Oil & Gas UK 2013 Economic Report The Upstream Oil and Gas Industry Labour Market Intelligence reveals (LMI) that Survey 30% of 10 2014 UKCS Offshore Workforce Demographics Report, Oil & Gas UK work across all three categories. The remainder specialise in only o of these areas: Topside (40%), Subsea (26%) and Subsurface (17%). Clearly there demand for employees who can operate across multiple areas. 9 Experian Plc 2014

1.3 Historic trends Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summar 1.3 Historic trends The number employed The number in the employed upstream oil in and upstream the gas industry oil workforce and gas 11 has industry grown over 11 workforce has the past grown two over years by the past two 15% (equivalent years to 16,796 by 15% personnel). (equivalent This is supported to 16,796 by data personnel). from the ONS, This the responses is supported to the research by data from th and forecasting to by the Experian. research This compares and forecasting to the UK overall by Experian. where employment This growth compares rates to have the been UK just overall whe over 1% for the growth past two rates years. have been just over 1%for the past two years. Data collected from the survey for this report indicates that this growth has been faster for direct employees (17%) than for Data contractors/agency collected the from staff Upstream (9%) over Oil the and last Gas two Industry years, suggesting LMI for Survey that this report have indicates that confidence in growth the long-term has prospects been faster for the for sector. direct 17%) employees than for ( contractors/agency staff (9%) ove two years, suggesting that have confidence in the long-term prospects. fo This growth in employment for direct employees is consistent across of all sizes and across all types of company. This growth in employment for direct employees is consistent across o Figure 3: Employment all types levels of - last company. two years Figure : 3Employment levels - last two years Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey, Office for National S The survey results The survey showed results showed concentrated business concentrated expanding employment on expanding engineering employment (42% in of engineerin ); quality, ) health, ; quality, safety and health, environment safety (25%); and support/central environment(25%); services (37%); support/central and technical services staff (22%). technical staff ).(22% 11 This includes direct employees, contractors and agency staff 11 This includes direct employees, contractors and agency staff 10 Experian Plc 2014

Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summa Figure 4: Broad areas of employment (direct employees and contractors/agency staff) Figure : 4Broad areas of employment (direct employees and contractors/agency staf Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey 1.4 Future demand 1.4 Future demand Subject to any unexpected changes in fiscal policy 12, or the product upstream price oil and gas s Subject to any unexpected changes in fiscal policy or product price 12, the upstream oil and gas sector is expecting to see expecting continued strong to see employment continued growth strong over the employment next two years. growth Total employment over the 13 next is forecast two years. 13 is To to increase by 6% forecast over the to next increase two years by (equivalent 6% over to 7,340 the next workers) two based years on (equivalent Experian forecasts, to 7,340 the workers survey responses forecasts, and ONS data. the This survey growth responses is and estimated ONS data. to be This much growth higher than is estimated for UK employment to be as much a higher whole, with the UK employment growth estimate as a at whole, between with 1-1.5% the for the UK next growth two years. estimate at between 1-1.5% for the ne The survey asked to estimate by how much the size of their workforce was expected to change The Upstream Oil and Gas Industry LMI asked Survey to estimate by how much th in the next two years, and the responses showed a continuation of the trend for direct employees over contractors. The their demand workforce direct was expected employees to will change grow in by the approximately next, two and years the 9% while responses demand showed a for contractors/agency continuation staff is expected of to the shrink trend by 3% for over direct the next employees two years (equivalent over contractors. to +8,582 direct The employees and -1,242 grow contractors/agency by approximately staff). 9% while demand for contractors/agency staff is expected demand for the next two years (equivalent +8,582 to direct employees and -1,242 contractors/agency 12 The fieldwork and forecasts for this project were undertaken prior to the Budget 2014. Forecasts for drilling community, collected during fieldwork, may be affected by the recent announcements on tax and policy changes for offshore vessels and flotels 13 This includes direct employees, contractors and agency staff 12 The fieldwork and forecasts for this project were undertaken prior to the Budget 2014 community, collected during fieldwork, may be affected by the recent announcements on t for offshore vessels and flotels 13 This includes direct employees, contractors and agency staff 11

Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summar Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summar Figure 5: Employment Figure levels : 5Employment - next two levels years - next two years Figure : 5Employment levels - next two years Source: Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Survey, Office for National Source: Upstream Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey, Office for National S Positive expectations for direct growth employeesare of anticipated by of and all si Positive expectations Positive types, for though growth expectations it of direct is employees for direct growth are with employeesare anticipated of 150+ employees by anticipated who of are all by sizes most and likely types, of and to all genera si though it is types, next two with though years 150+. In it employees order is to who satisfy are most with this likely 150+ demand, to generate employees it increases is critical who in are the next most that two likely industry years. to has genera th In order to satisfy next a strong this two demand, years talent. In it is order critical pipeline. that to satisfy industry has this the right demand, support it to ensure is critical a strong talent that pipeline. industry has th Responses show a strong growth for talent all roles, pipeline. but again it is engineering 14 (22%) that continues to be of paramount importance. An Responses increase in importance show growth for technical for all and but roles, marine again staff it compared is engineering 14 to (22%) the current that workforce continues profile to be of is also expected. Responses paramount show importance. growth for An increase all but roles, again importance it is engineering 14 for (22%) technical that continues and marine to be staff of c paramount current workforce importance. profile An increase is also. in expected importance for technical and marine staff c Figure 6: % of (balance) expecting an increase in their workforce (direct employees and current workforce profile is also. expected contractor/agency Figure staff) : 6% by of broad job areas (balance) expecting an increase in their workforce (dire Figure employees : 6% of and contractor/agency (balance) staff) expecting by broad an increase job areas in their workforce (dire employees and contractor/agency staff) by broad job areas Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey Source: Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Survey 14 Respondents were asked to self categorise their staff into broad role groups rather than being provided with a definition. 12 14 Respondents were asked to self categorise their staff into broad role groups rather th 14 definition. Respondents were asked to self categorise their staff into broad role groups rather th definition. Experian Plc 2014

Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summary 2 The previous sections indicated that despite declining production and exploratio 2 Labour oil Market and gas industry Dynamics is expecting continued growth and, alongside this, demand f to remain high. This growth will only be fully realised if the current and futur The previous and sections experience indicated that despite declining. This require production section and looks exploration into activity es business experience the upstream of oilthat suppl and gas industry is expecting continued growth and, alongside this, demand for skilled staff is likely to remain high. This growth will only be fully realised if the current and future workforce gain the skills and experience 2.1 Recruitment that require. This section looks into experience of that supply. The success of the upstream oil and gas sector has led to the recruitment 15 people of in over 2.1 Recruitment the last two years; this figure includes employees recruited to backfill roles in The success needs of the upstream of the oil expanding gas sector industry. has led to Evidence the recruitment from of the over respondents 20,000 15 people suggests in the last that man two years; this vacancies figure includes have employees been filled recruited externally to backfill roles rather in addition than to by meeting training the needs or 39% up-skilling of the of exi expanding industry. Evidence have from recruited the respondents new staff suggests into that and new many 34% roles of have these recruit vacancies ed new have staff been for filledexisting. r externally rather Companies than by training having or up-skilling to look existing outside staff. their 39% of existing staff have recruited to meet new their staff into business requ new roles and 34% have recruited new staff for existing roles. Companies having to look outside their existing on an already tight labour market. staff to meet their business requirements puts pressure on an already tight labour market. Figure 7: Measures undertaken in the last two years in relation to recruitment an Figure 7: Measures undertaken in the last two years in relation to recruitment and training training Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey 2.2 Hardto-fill roles 2.2 Hard-to-fill roles The tight labour market combined with high demand is leading 33% of in the upstream oil and gas The tight labour market combined with high demand 33%of is leading in the upstream o sector to have hard-to-fill roles, especially in engineering. This is a concern given that 40% of operators and general contractors and gas are currently sector have reporting hardto-fill hard to fill roles, roles, and the especially predicted continuing in engineering. upward trend in This demand. is 40%of a concern operators and general contractors are currently ard to reporting fill roles, h and the predicted c The detailed job upward roles that trend demand. have identified as being hard-to-fill included: Design engineers 16 (20% of ), followed by marine crew (19%). Mechanical engineers and CAD designer/draughtsperson were also identified 16 The detailed as being hard-to-fill job roles by more that than 10% of. have identified to-fill as included: being hard- Design engine (20% of ), followed by marine crew (19%). Mechanical engineers and CAD designer/draughtsperson were also identified to-fill as being by hard- more than 10% of businesse 15 Respondents to the Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Survey were asked to indicate how many people they had recruited over the past two years. 16 Self defined by respondents 15 Respondents to the Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Surve indicate how many people they had recruited over the past two years. 16 Self defined by respondents Experian Plc 2014 13

Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summary The areas where have identified to-fill hard- job roles have not changed from prev research published in 17 2011, with engineering roles continuing to be identified as the fill. The areas where have identified hard-to-fill job roles have not changed from previous research published in The 2011, key 17 with reason engineering cited roles for to-fill continuing hard-roles to be identified is that as industry the most difficult demand to fill. for suitably skilled The key reason continues cited for hard-to-fill outstrip roles, cited is supply that industry by 76% demand of for suitably skilled (with to-fill applicants hard- roles). A lack continues of applicants to outstrip supply, with cited experience by 76% of upstream (with oil hard-to-fill and gas roles). 30% was A lack of cited, of applicants by with while experience a lack in of qualif upstream oil was and gas at 24%. was cited by 30% of, while a lack of qualifications was at 24%. Figure 8: Reasons for hard-to-fill roles Figure 8: Reasons for to-fill hard- roles Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey 2.3 Skills shortages 2.3 Skills shortages Earlier findings Earlier showed findings that showed in the that upstream oil and gas in sector the upstream have had to oil deal and with very gas tight sector have h labour markets, tight which labour are creating markets, hard-to-fill which vacancies. are creating to-fill In addition, vacancies. hard- findings confirm In addition, that there are findings that skillsthere confirm shortages with are employees skills already shortages in. with employees already in. Skills shortages are directly impacting 26% of in the sector and are affecting their ability to operate and compete Skills within the shortages market. Large are directly in particular impacting appear 26% to of be impacted (60%). in the sector and are a operate and compete within the market. Large in particular appear to b 17 OPITO s Labour Market Intelligence Survey: March 2011 17 11 14 Experian Plc 2014

Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summary Figure 9: Businesses experiencing skills shortages Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summary Figure 9: Businesses experiencing skills shortages Figure 9: Businesses experiencing skills shortages Source: Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Survey Again, it is a lack of skilled employees in the key areas of engineering hat and tech Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey appears % and 27% respectively). Businesses in the supply chain, marine and support/central service Again, it is a lack of skilled employees in the key areas of engineering hat and tech Again, it is a from lack of skills skilled employees shortages. in the key areas of engineering and technical expertise that appears to be having appears the greatest % impact on a business s ability to operate or compete (43% and 27% respectively). and 27% Businesses in respectively). the supply chain, marine Businesses and support/central in the supply services chain, are also marine suffering and from support/central skills shortages. service 2.4 from skills Staff shortages. retention 2.4 Staff retention Findings from Upstream the Oil and Gas Industry LMI indicate Survey that the sector suffers a f Findings from 2.4 Staff retention high the survey churn indicate of employees that the sector with suffers retention from a high being churn particularly of employees with affected retention being by workers mov particularly affected by workers moving between companies within the sector. This is driving up wages. companies within the sector. This is driving up wages. Findings from Upstream the Oil and Gas Industry LMI indicate Survey that the sector suffers a f Furthermore, high it identifies churn that of operators employees and general with retention contractors are being often particularly forced to compete affected for staff on by the workers mov basis of financial Furthermore, reward packages it identifies more so than that for specialist operators suppliers. and general contractors are often force companies within the sector. This is driving up wages. the basis of financial reward packages more so than for specialist suppliers. Figure 10: Factors influencing a company s ability to retain staff Figure Furthermore, 10 it identifies that operators and general contractors are often force the basis of financial reward packages more so than for specialist suppliers. Figure 10 Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey Source: Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Survey Experian Plc 2014 15

Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summary With more than half of in the sector (58%) offering increased remunera increase staff retention, wage inflation continues to be a significant issue. With more than To half counter of this, in the sector (58%) are offering looking increased to other remuneration measures in an to effort retain to increase staff, includ staff retention, (52%), wage inflation introducing continues flexible to be a significant working issue. (24%) and improved ). benefits (22% To counter this, are looking to other measures to retain staff, including career development (52%), introducing flexible 2.5 working Apprentices (24%) and improved and benefits graduates (22%). 2.5 Apprentices Previous and research graduates 18 highlighted that the age profile of employees in the industry was its future success. While the responses did not yield sufficient data to fully re Previous research the industry 18 highlighted that the age profile of employees in the industry was a key concern for its, they provided data which shows that the industry is having success brin future success. While the responses did not yield sufficient data to fully represent the age profile of the industry, through apprenticeship and graduate schemes. they provided data which shows that the industry is having success bringing in new talent through apprenticeship and graduate schemes. 2.5.1 Apprentices 2.5.1 Apprentices Approximately 15% of in the upstream oil and gas sector have recruited Approximately 15% of in the upstream oil and gas sector have recruited apprentices in the last last two years to meet their needs. Apprentices are a particularly popular route two years to meet their needs. Apprentices are a particularly popular route for larger employers (29% of with (29% 50 of or more employees with in the 50 sector). or more However, employees the time taken in. However, the for apprentices sector) the time to develop taken the for appren skills required to and develop the volume the of skills apprentices required recruited and now the mean volume this route of alone apprentices will not fill the recruited skills gap now mean t forecast to increase not fill by 6% the over skills the next gap two forecast years (equivalent to increase to 7,340 workers) by 6% over identified the in next section two 1.4. years (equiv identified in section 1.4 Figure 11: Job roles undertaken by apprentices in the last two years Figure 11: Job roles undertaken by apprentices in the last two years Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey Of the Of the that have taken on that apprentices have taken in the last on two apprentices years, 43% have in the employed last apprentices two years, in 43% have operational roles apprentices 19 while 20% have in operational employed 19 them while roles in 20% mechanical have employed roles. It should them be in noted mechanical that there is a roles. clear It shoul difference in noted the apprentice that there specialisms is a sought clear by difference in of different the apprentice sizes: smaller specialisms are sought by bu seeking generalist sizes: operational smaller apprentices whereas are larger seeking generalist are recruiting operational in specific apprentices areas such whereas as mechanical or electrical apprentices. are recruiting in specific areas such as mechanical or electrical apprentices. 18 OPITO s Labour Market Intelligence Survey: March 2011 19 Self defined by the respondent 18 19 Self defined by the respondent Experian Plc 2014 16

2.5.2 Graduates 2.5.2 Graduates Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summary Approximately 22% of in the upstream oil and gas sector have taken on g Approximately 22% of in the upstream oil and gas sector have taken on graduates in the last two years. Unsurprisingly, last two large years. companies Unsurprisingly, are leading the large way with companies nearly half are of leading the with 50 way or with more nearly ha employees 50 in the or sector more taking employees on graduates in the in the sector last two taking years. on graduates in the last two years. Figure 12: Job roles undertaken by graduates in the last two years Figure 12: Job roles undertaken by graduates in the last two years Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey Of the that have taken on graduates in the last two years, 20% have emp Of the that have taken on graduates in the last two years, 20% have employed graduates in in mechanical engineering roles, this subject area being a common pool across busi mechanical engineering roles, this subject area being a common pool across of all size bands. Larger companies bands. (50+ Larger employees) companies have also (50+ taken employees) on graduates have with process/ also taken chemical on engineering graduates (19%) with process/ and structural engineering (15%), (19%) which and structural may reflect the engineering areas of the industry (15%), within which which may large reflect companies the areas of mostly operate. which large companies mostly operate. 2.5.3 Future demand for apprentices and graduates 2.5.3 Future demand for apprentices and graduates Over the next two years are continuing to look at expanding these routes into the industry, with demand for graduates appearing stronger than for apprentices. A balance of 15% of expects to increase their recruitment of graduates while a balance of 6% of 20 expects to increase their recruitment for apprentices. However, demand for both groups is expected to be strong from larger (150+ employees). Over the next two years are continuing to look at expanding these route with demand for graduates appearing stronger than for apprentices. A balance of 15 expects to increase their recruitment of graduates while a balance 20 expects of 6% of to busine increase their recruitment for apprentices. However, demand for both groups is exp Businesses from are particularly larger looking to overcome (150+ hard-to-fill employees). vacancy and skill shortage roles via these routes. For apprenticeships, demand is expected to be strongest in mechanical and technical roles while for graduates, Businesses demand is expected are particularly to be strongest in looking mechanical to and overcome subsea engineering hard-to-fill roles. vacancy and skill sho routes. For apprenticeships, demand is expected to be strongest in mechanical and while for graduates, demand is expected to be strongest in mechanical and subsea e 20 The net balance statistic is the percentage of responding increase less those responding decrease. It is an indicator of the direction of change: a net balance of zero indicates no change; a positive number indicates more responded an increase and a negative number indicates more responded a decrease. 20 net balance of zero indicates no change; a positi number indicates more responded an increase and a negative number indicates more responded a decrease. Experian Plc 2014 17

Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Summar Figure 13: Trends expected (% balance) for apprentices and graduates over the next Figure 13: Trends expected (% balance) for apprentices and graduates over the next two years years Source: Upstream Oil Oil and and Gas Gas Industry Industry Labour Labour Market Intelligence Market Intelligence (LMI) Survey (LMI) Survey 2.6 Training and development 2.6 Training and development Despite the success of graduate and apprentice schemes in the industry, the survey indicates that in the sector are still struggling to find employees with suitable skills and experience. As a result the role of training and development Despite the will success be more important of graduate than ever. and apprentice schemes in Upstream the industry, Oil and the Gas Respondents Industry to the survey LMI identified Survey indicat a number es that of barriers to the in development the sector of their are workforce still capacity struggling and to find e capability including suitable the appropriate skills and levels experience and. As types a result of training: the the role cost of training (22%) and and development the relevance will be m of training (19%) than were ever the. top two barriers cited. In addition, 17% of cite the constraint of the time to release off for staff and the lack of local courses as additional barriers. Cost, relevance of training and lack of local courses Respondents appear to be more to the of a barrier survey for operators identified and general a number contractors of barriers than for specialist to the suppliers. development of capacity and capability including the appropriate levels and types of training: ) and the relevance of training ) were (19% the top two barriers cited. In addition, 17% of b 3 Summary the constraint of the time off to for release staff and the lack of local courses as additio Cost, relevance of training and lack of local courses appear to be more of a bar The findings of this research highlight that while the industry is set to grow primarily due to a backlog of new general contractors than for specialist suppliers. field development and deferred maintenance, it faces a number of challenges; the ongoing demand for relevant skilled and experienced staff continuing to outstrip supply remains a key issue. Demand for direct employees will continue to be stronger than demand for contractors/agency staff and respondents have indicated future demand is expected to be strongest in the areas of engineering and technical staff, marine and skilled/semi-skilled craftspeople (along with central/support staff) suggesting a slight mismatch with the profile of the current workforce. Tackling ongoing labour market issues while ensuring a sustainable labour market policy has never been more critical. The Oil and Gas Industry Labour Market Intelligence Steering Group agreed on an ambitious scope of work with data to be collected via a detailed questionnaire. Part of the Steering Group s ambition was to acquire data on sub-categories such as age groups, job roles, gender and location of employees. However, many respondents were unable to provide the detailed labour market statistics requested to understand the depth of skills shortages in the industry, often because the data was not available, although the reasons varied depending on company size. It was agreed this level of detail would have been highly beneficial for industry and Government to aide future planning, and this will be a core requirement going forward to inform future supply of the skills required. Despite the issues in collating the data the collaboration of the trade organisations has been worthwhile, while support from industry, which was valuable and welcome, is commended, with significant time and effort having being provided. The Steering Group is now able to build on what has been achieved in this project and help prepare the industry to capitalise on future opportunities. 18 Experian Plc 2014

Appendix A Methodology This section provides an overview Upstream of the Oil and Gas Industry Labour Market Intelligence (LM Surveymethodology used, alongside a full breakdown of the survey coverage. Appendix A The 2013 questionnaire was designed and compiled by the Oil and Gas Industry Labour Market Methodology Intelligence Steering Group, led by OPITO. This group comprises: This section provides an overview of the Upstream Oil and Gas Industry Labour Market Intelligence (LMI) Aberdeen & Grampian Chamber of Commerce Survey methodology used, alongside a full breakdown of the survey coverage. Decom North Sea The 2013 ECITB questionnaire was designed and compiled by the Oil and Gas Industry Labour Market Intelligence Steering Group, Energy led North by OPITO. This group comprises: IADC - North Sea Chapter Aberdeen & Grampian Chamber of Commerce Decom OCA North Sea ECITB Subsea UK Energy North The sample IADC - North for Sea the Chapter survey was provided by the steering group de-duplication members. A process took place OCA to create a database of over 1,5 00 along with which membership organisation they we a member Subsea of. UK The sample for the survey was provided by the steering group members. A de-duplication process took place to The create survey a database was of conducted over 1,500 between along October with which and membership 2013 December inclusive organisation and they was were administered a member of. through both an online and telephone questionnaire. The survey was conducted between October and December 2013 inclusive and was administered through both an online and telephone questionnaire. A total of 298 completed interviews have been used for the analysis in this report achievi A response total of 298 rate completed of. 19% interviews have been used for the analysis in this report achieving a substantial response rate of 19%. Overall, responses were achieved from a robust and representative sample of membership org Overall, and types responses across were the achieved upstream from a oil robust and. and 221 gas representative responses sector were sample received of membership from organisations, specialist suppliers sizes and types across the upstream oil and gas sector. 221 responses were received from specialist suppliers, general contractors and 19 from operators. There was also a good mix of responses by size 58 from general contractors and 19 from operators. There was also a good mix of responses by size of business upstream (total oil upstream and gas oil and workforce gas workforce including including direct direct employees employees and and contractors/agency contractors/agency staff). staff). Figure 14: Size of business by total upstream oil and gas employees Figure 14: Size of business by total upstream oil and gas employees No. of responses 0-9 employees 62 10-49 employees 114 50-149 employees 68 150-499 employees 24 500-1,999 employees 18 2000+ employees 9 3 Total 298 In order to ensure that the analysis undertaken from the survey results is accurate and reflects the view of the industry as a whole (particularly as larger were over sampled), weighting was applied to correct the results to ensure accurate representation. In order to ensure that the analysis undertaken from the survey results is accurate and re industry as a whole (particularly as larger were over sampled), weighting was a results to ensure accurate representation. 19