Halliburton, Baker Hughes, Schlumberger, others operate their own training facilities

Implications: Rebekah Kebede in New York reported in the International Herald Tribune issue of May 2 that the U.S. energy sector is short of workers. Even high pay fails to attract new talent. This has slowed drilling and refining projects. Industry observers say the shortage could last because young people avoid the oil and gas industry in favor of high technology jobs. Companies are hiring workers away from competitors by offering higher pay. The industry has an aging work force with a majority of workers eligible to retire by 2017. Sam Grossman, president-elect of the National Society of Professional Engineers observes that new engineering graduates seek employment in exotic branches of the field like biotech and extremely small size product manufacturing. Welders and electricians are in short supply because high school students are steered way from vocational training. Students prefer going to college to become white-collar workers. Foreign companies also employ skilled American workers.

Analysis:  Drilling companies, service companies and even major oil and gas companies have always provided advanced training for new employees, even those with advanced college degrees. But today companies are hiring high school graduates with no experience whatever and putting them into basic courses including fundamental courses in chemistry, mathematics, physics and importantly, the English language. A major source of delay and confusion in multimillion dollar offshore construction contracts is lack of accurate communication. Often, the hull and pontoons of an offshore rig are built in the Far East. U.S.A. built oilfield machinery and equipment is shipped to the construction site for assembly. Then the partly complete rig is towed to Brazil for final outfitting and marine trials. Opportunities for mistakes related to lack of comprehension exist in all three locations. Delays result. This is translated into higher finding and development costs as well as increased operating costs. Together the inflationary pressures in the international oilfields of the world approach 15%/year. This, in turn elevates the floor price for new crude oil supplies. Canadian bitumen; Orinoco Tar Belt, deepwater Gulf of Mexico are all at or close to a $40/bbl floor price. Arctic oil is pushing steadily toward $50/bbl and no one really knows what the floor price for Shtokman field natural gas and condensate will be. In the Middle East, construction costs of liquefaction plants has soared from $200/tonne in 2002 to $600/tonne in 2007. This year quotations of $1,000/tonne have appeared for construction in Iran’s South Pars field. With existing oil fields losing capacity at the rate of 4 million bbl/day/year, the only viable alternative immediately available is pipeline natural gas and liquefied natural gas (LNG). Oil field companies not only train American high school graduates from the ground up but they also train thousands of Asian workers, particularly those from Pakistan and India. Construction yards in the Middle East are overloaded with Asian workers. Many of them are clamoring for higher pay to meet increased food prices. In the U.S., alternate energy sources such as wind and solar require engineers and technicians to install and maintain equipment. Few of these people exist. In the final analysis, in a world with population increasing daily, multiplying needs for both energy and food, lack of education is a severe handicap. But it may be that help is on the way. Chinks are beginning to appear in the up-to-now bulletproof armor of the world economy. Many analysts and observers think the world may be on the brink of a severe Great Depression of the 1930s variety. One only needs to read the CEO (Jamie Dimon) message in the Annual Report 2007, JP MorganChase & Co to realize what a treacherous fulcrum the world economy teeters upon. If the bottom falls out, the world will have workers aplenty, skilled, unskilled and – hungry.