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THE WALL STREET JOURNAL: Staff Worries at Energy Firms

February 20, 2008; Page B3D

More than 70% of energy companies expect their future operations to be hit by shortages of skilled personnel, according to a survey commissioned by the London-based Energy Institute.

The survey of senior energy-company management, individual employees and human-resource specialists conducted from 2005 to 2007 found about half of the international-energy work force will retire within 10 years, and internal training programs aren’t delivering enough personnel to replace them at the senior level.

“The risk of future serious shortages in science, engineering and technical skills has emerged, exacerbated by increasing global demand, large-scale downsizing leading to lack of recruitment into the energy sector during the 1980s, and a large section of the work force rapidly approaching retirement,” the report accompanying the survey said.

The institute’s report and industry representatives at a London seminar called on the industry to improve its training programs, work closer with universities and schools, and attract more young people into the industry.

The loss of senior workers is the main problem. Jon Glesinger, chief executive of executive-search firm Expert Alumni, said, across all sectors of the economy, “the coming retirement of baby boomers has become tremendously serious.”

He said the U.S. alone will lose 34 million skilled workers to retirement from 2005 to 2015. “No one is coming through to fill those slots. We need phased retirement and flexible work systems introduced,” he said.

The energy industry, which is seeing unprecedented levels of activity to meet rising demand after a long downturn in the 1990s, has been especially affected.

“All companies in the sector are fighting for the same people, including national oil companies. … There is real competition for the best graduates,” said Lynda Armstrong, vice president of technical solutions at Royal Dutch Shell PLC’s exploration and production division. She added that the world’s remaining oil reserves will be more difficult to access, requiring even more highly skilled workers to develop new technology.

It isn’t only the upstream arm of the industry that is affected. “There is a predicted shortfall of gas engineers of around 20,000 [in the U.K.] … because people aren’t being trained,” said Rod Kenyon, director of the British Gas Engineering Academy, the retail arm of the U.K.’s largest utility, Centrica PLC.

The Energy Institute report concluded that the skills shortage needs to be treated as a strategic boardroom issue, with improved training and recruiting programs. It also recommended greater engagement with universities to ensure they are offering the right kinds of qualifications.

There are signs of progress. Industry-funded oil- and gas-skills academy Opito has placed 769 apprentices with companies operating in the North Sea, 97% of whom have completed the program and gone on to work within the industry.

Mr. Kenyon said there has been a renaissance in general technical apprenticeships in England, with 250,000 now in on-the-job training, and a government target to build that number to 400,000.

The report said it is vital for the industry to raise its profile and convince young people that it offers exciting long-term careers.

“We have to make our companies more attractive,” said Mr. Kenyon. “Young people don’t lie awake at night dreaming of a job in the gas industry.”

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