A study, by EY on behalf of PetroLMI* finds that the adoption of automation and AI in the oil and gas industry will change activities and displace jobs. Technologies such as robotic process automation, artificial intelligence, natural language processing and machine learning could gradually eliminate 30% of oil and gas jobs by 2040. Unsurprisingly, technical jobs are ‘twice as likely to be automated over leadership skills’.
EY broke down the sector into some 124 job descriptions which were then analyzed in terms of the probability of their automation. Drilling and operations came out as having the highest potential for automation. Land, ESH and IT came last – albeit all three with significant potential for economies.
The 20-page report forecasts that jobs in drilling will be down 65% by 2040, geology by 50% and IT by 45%. One driver for the cuts was a finding in a 2017 EY study of oil and gas in the US that found that ‘62% of Generation Z and 44% of Millennials are not attracted to careers in the industry’ and which concluded that the use of advanced technologies could help increase the appeal to the upcoming tech-savvy workforce and to fill talent gaps associated with the reduced appeal.
EY Canada’s Lance Mortlock said, ‘The prospect of a jobless recovery means that companies will be looking to fill roles and add capabilities through technology and automation to increase optimization and reduce costs even further. While many companies had already begun this digital transformation, the pandemic created a sense of urgency to accelerate technology adoption.’
Writing in the Financial Times, Myles McCormick quoted Rystad Energy’s Matthew Fitzsimmons as saying, ‘The crash has kickstarted a lot of these digitization initiatives. We’re going to see a greater or faster adoption of some of these digital technologies, which will lead to some of these [traditional] jobs not coming back.’ About 107,000 jobs were slashed in the US oil, gas and petrochemicals sector between March and August, according to Deloitte. Shell is planning some 9,000 jobs in ‘Project Reshape’. BP 10,000 with office-based workers expected to bear the brunt of the redundancies. Schlumberger announced a monster 21,000 cut earlier this year.
Deloitte’s 32-page analysis, ‘The future of work in oil, gas and chemicals’ sees the industry as in a ‘great compression’ where companies’ room to maneuver is restricted. In the US, oil and gas employs close to 1.5 million people. The downturn means that retaining employees may be difficult as oil and gas employees now have ‘fungible digital skills’ and may migrate to other industries (technology and consulting firms, digital solution providers) where the prospects of career growth may seem brighter. A conclusion that marks a refreshing change from the frequent pretense that oil and gas folks are digital dunces!
Deloitte draws one fairly obvious conclusion, the return or otherwise of jobs to oil and gas will be mostly determined by the future oil price. A pessimistic $35 oil price for 2021 will see a measly 3% of jobs returning. An optimistic $55/bbl scenario sees 76% of jobs returning.
All three reports imply that the pandemic is forcing more digital transformation. We learn elsewhere in this issue (2020 GO Digital) that the crisis has caused a degree of digital retrenchment. In any event, if the economy gets back into shape (which is possible) and if the energy transition takes longer than folks expect (probable) then oil and gas consumption will rise. There will be another boom and folks, including geos, engineers and data scientists (maybe), will all be back in business till the next upset. But for now, one interesting question regarding the job cuts is, who is actually getting fired? If you were the leader of a large oil company and had to arbitrate between say, a reservoir engineer and a data scientist, which would you choose to ‘let go’?
* Petroleum Labour Market Information is a division of Energy Safety Canada.
© Oil IT Journal - all rights reserved.