Change in UK geoscience (PESGB member) employment - Alan Foum

1. PESGB membership
by employer type
change in 2014-2016
Alan Foum
December 2016

2. 2014-2016 in context
• 2014 to 2016 have been difficult years for
the oil & gas industry in Britain
• The Petroleum Exploration Society of Great
Britain (PESGB) is the leading petroleum
geoscience society in the UK and large
portion of British geoscientists are
members, about 6000 people
• The objective of the Society is to promote,
for the public benefit, education in the
scientific and technical aspects of petroleum
exploration
• The society offers monthly lectures and has
regional branches in London, Aberdeen,
Surrey, The Thames valley and North West
England
• The PESGB publish an annual directory of its
members which is a key networking
resource
• The photo shows a comparison between the
2014 directory (gold) and the 2016 directory
(green)

3. PESGB members employed
changes between 2014 and 2015
• Attempt to gauge a true scale of the changes in employment of British geoscientists
• Survey taken from the directories for 2014 , 2015 and 2016
• Survey of PESGB members employed by organisations with more than 5 members employed
during 2014 to 2016
• Excludes universities (mainly student members)
• Excludes individual members (e.g. self- employed consultants) and very small groups
• In 2014 – 3178 members employed by organisations with more than 5 members employed
• In 2015 – 2819 members
• In 2016 – 2216 members
• A fall of 30.3 % over two years

4. 2014-2016 in context
Oil Prices
• Source - The 2016 Oil and Gas UK 2016 economic report
• at http://oilandgasuk.co.uk/wp-content/uploads/2016/09/Economic-Report-2016-Oil-Gas-UK.pdf
Monthly average prices for oil (Brent) and gas
(NBP- National Balancing Point the UK
equivalent of Henry Hub), since late 2014 this
has been below $60 which is the full cash
neutrality price (Revenue - OPEX, CAPEX,
exploration costs, taxes, G&A overheads,
debt service, and dividends) for most large
companies.

5. 2014-2016 in context
Cash-flow
• Source - The 2016 Oil and Gas UK 2016 economic report
• at http://oilandgasuk.co.uk/wp-content/uploads/2016/09/Economic-Report-2016-Oil-Gas-UK.pdf
Revenue and expenditure for the UKCS
since 1970 in 2015 inflation adjusted
money. Expenditure grew rapidly from
the early 1970’s peaking in 1984, with a
precipitous decline in 1986 due to the
fall in the oil price leading to projects
being postponed. Expenditure was then
relatively constant despite the
fluctuations in revenue until growth
began in 2005 with a fall off after 2013
leading to a current low. The cash-flow
graph (orange) is interesting as it shows
positive cash-flow from first oil in 1975
until 2013. Therefore even during the
great crash of 1986 cash flow was still
positive. The negative cash-flow in 2013
was due to contractor prices severely
inflating and this was exacerbated by
the price collapse in 2014. There was a
flattening out in 2015 as operators
slashed costs.

6. 2014-2016 in context
E&A wells
• Source - The 2016 Oil and Gas UK 2016 economic report
• at http://oilandgasuk.co.uk/wp-content/uploads/2016/09/Economic-Report-2016-Oil-Gas-UK.pdf
Number of exploration and appraisal
wells drilled by quarter since 2005,
early 2016 was the worst time. This is
because it take s about a year to plan a
well so decisions would have been
taken in late 2014 during the period of
the price falling. There was an uptick in
Q2 2016 which was mainly due to
appraisal drilling. Exploration budgets
are under severe pressure and any
discretionary expenditure which is not
committed as part of exploration
licensing has basically been stopped.
Thirteen exploration wells were drilled
in 2015 this contrasts with ninety
exploration wells drilled in 1990, the
peak year.

7. 2014-2016 in context
Employment
• Source - The 2016 Oil and Gas UK 2016 economic report
• at http://oilandgasuk.co.uk/wp-content/uploads/2016/09/Economic-Report-2016-Oil-Gas-UK.pdf
The human cost of the oil slump with
124,000 jobs being lost in the UK. These
job losses were concentrated in Aberdeen
but have affected people throughout
Britain. These are skilled dedicated
people, who worked in a hazardous and
technically complex industry. Many of
them will hopefully find work but are
likely to be working in other industries.
Should there be any recovery the industry
will probably again experience high
inflation as there will be few experienced
workers left.

8. PESGB Demographics
2014
PESGB demographics from 2014 survey (before the current difficulties)
Survey represented about 10% of the membership – may contain statistical sampling error
Median member age was 44
36 % of the membership was over 50
30.4% of the membership stated that they were 10 years or less from retirement
Source - PESGB

9. Overall Summary
• PESGB membership comprises
• Operators in Red – 27% of the
membership (this includes oil companies with
non operated interests)
• Contractors in blue -22 % of the
membership
• Government bodies in Dark Green –
about 1%
• Academics (Light Green) – including
students – 4% of the membership
• Others (Yellow) – 46% of the
membership – this includes very small
employers (< 5 people), individual
consultants, retired members, etc.
• Since 2014 there has been a significant
drop in employed members but the
other member numbers have held
steady

10. Overall Summary
Members employed by mid-large employers
• 2014 to 2016 have been
difficult years for the oil
& gas industry in Britain
• Significant job losses at
all type of organisation
• Operators in red-orange
• Contractors in blue
• Government bodies in
Green
Organisation type 2014 2015 2016
Major Operators 673 612 480
Large Operators 678 596 444
Medium Operators 156 142 121
Small Operators 194 172 136
Major Contractors 337 288 224
Large Contractors 637 541 428
Medium Contractors 275 264 207
Small Contractors 162 139 113
Government Bodies 25 26 32

11. Overall Summary
Change in Employee Numbers
• Scale of member
employment
decline
• All employer
types affected
• On average a
decline of 30%
in average
PESGB member
employment
• Only exception
are government
bodies – mainly
the OGA which
has been
significantly
enhanced in
responsibility

12. Operating Companies
Operating companies have experienced significant reductions in employment – 30% drop
Several companies have been taken over or ceased operations
Most members are employed by either majors or larger operators – the proportions did
not significantly change over the three years

13. 2014-2016 Major Operators
BG has been taken over by Shell

14. 2014-2016 Major Operators
• 10 major operators employ PESGB members , ten with UK offices plus Saudi Aramco with all
PESGB members there based in KSA
• On aggregate there has been a 28% drop in employment
• There were three main employers; BP, Shell and BG ( BG has since been taken over by Shell)
who employed over 100 members each (both In the UK and Internationally)
• The next group were Conoco, Statoil and Exxon, followed by Total and Chevron with ENI
• These companies are non UK headquartered but with a significant long term UKCS presence
• All had experienced significant job losses

15. Large Operators

16. Large Operators
• The Large Cap operator group includes subsidiaries of foreign companies such as Maersk and
Nexen as well as long established UK headquartered operators such as Tullow and Premier
Oil
• On aggregate a 35 % drop in member employment
• EOn have sold their UK operations to Premier
• RWE-DEA have sold their UK operations to INEOS
• Talisman-Sinopec has been taken over by Repsol

17. Medium Sized Operators

18. Medium Sized Operators
• This is again a mixture of foreign companies with UK subsidiaries and smaller UK based firms
• Overall a 22% drop in member employment
• BUT
• Growth from INEOS (including acquisition of DEA assets) and Ophir
• The smallest companies tend to be more stable in member employment

19. Small Operators

20. Small Operators
• The smaller operators have shown much more variability in employment
• Overall a 30% drop in member employment
• Afren and White Rose Energy Ventures have gone
• While Zennor and Azinor Catalyst have expanded

21. Contractors
Contractor companies have experienced significant reductions in employment – 31% drop
Several companies have been taken over or ceased operations
Most members are employed by either majors or larger contractors – the proportions did
not significantly change over the three years

22. Major Contractors

23. Major Contractors
• The major contractors include
• Large Integrated including Schlumberger, Haliburton, Baker Hughes and Weatherford
• Large Seismic companies, CGG, PGS and Western Geco (owned by Schlumberger but counted
separately)
• Overall a 34 % drop in PESGB member employment
• Mega merger between Halliburton and Baker Hughes was blocked by US Government

24. Large Contractors
• Large Contractors include
• Smaller Seismic companies such ION,
Spectrum and Polarcus
• Large integrated G&G consultancies such
as RPS and Neftex (now owned by
Halliburton)
• And Information providers such as IHS
Energy
• Overall 33% drop in employment

25. Medium Contractors
• Medium Contractors
include specialist
geology and geophysics
firms, information
providers and
integrated consultancies
• Overall 25% reduction in
member employment

26. Small Contractors
• Smaller contractors include a wide
variety of specialist firms providing
geoscience services
• Overall a 31 % drop in member
employment

27. Seismic Contractors
• Seismic contractors have
had a difficult period
• There had been
significant investment in
2007 to 2014 with new
vessels being added
• Several vessels have been
laid up due to a slump in
demand
• There has been a 39% fall
in member employment

28. 2014-2016 Summary
• 2014 to 2016 have been difficult years for the oil & gas industry in
Britain
• The number of PESGB members employed by companies with more
that five employees has fallen by 30 %
• All sectors appear to have had similar level of cuts and virtually no
company has been immune
• The PESGB have been active in helping unemployed members with:
• Subsidised courses and PETEX conference reduced ticket price
• Networking events
• Career advice