Characteristics and Possible Impacts of the Aging Workforce Transition on the Outer Continental Shelf Oil and Gas Industry in the Gulf of Mexico Region (GM-09-01-02)

MMS ENVIRONMENTAL STUDIES PROGRAM: ONGOING STUDIES
MMS OCS Region:	Gulf of Mexico
Planning Area:	Gulfwide
Title:	Characteristics and Possible Impacts of the Aging Workforce Transition on the Outer Continental Shelf Oil and Gas Industry in the Gulf of Mexico Region (GM-09-01-02)
Total Cost: $196,247	Period of Performance: FY 2009 - 2011
Conducting Organization:	Coastal Marine Institute, Louisiana State University
MMS Contact:	Sindey F. Chaky
Description: Background: The oil and gas industry is a primary contributor to state and local economies in the Gulf of Mexico Region. The U.S. Energy Information Administration projects that the worldwide demand for energy produced by oil and natural gas will double over the next 20 years. To support energy demands, significant physical infrastructural investments have been made. However, comparable efforts to shore up the human infrastructure of the oil and gas industry have not been made. As a result, population and industry trends suggest a looming workforce crisis that will be triggered by an inevitable wave of retirement among our nation’s oldest workers. Almost half of the U.S. workforce is projected to be over the age of 55 by 2020. This aging trend is more pronounced for skilled and semi-skill workers, and significantly so for the oil and gas industry where the average age of retirement is 55 years. A second contributor to the aging workforce crisis is the low levels of employment replacement, particularly among the skilled and semi-skilled trades that are vital to oil and gas production and exploration companies. Since the collapse of oil prices in the 1980’s, across sectors and occupational groups, fewer people are being trained for and entering careers in the oil and gas industry. Although some companies have recently taken steps to offset spiraling replacement rates by working to retain and recruit new hires, the lengthy on-the-job training models common in the industry forecast a ten-year time lag before the newest hires cultivate the professional expertise and experience needed to operate independently in their fields. Until then, labor shortages associated with this “missing generation” will only intensify as the Baby Boom generation approaches retirement, taking with them valuable institutional knowledge and skill. The workforce transitions associated with population aging and labor shortages indicate a workforce crisis that will challenge OCS oil and gas production and exploration companies. As a result, these transitions also threaten the social and economic foundations of the employees, families, and communities that so heavily depend on the industry.
Objectives: To determine the scope and impact of the workforce trends on current and anticipated business planning and productivity specific to the GOMR; To assess common, as well as unique, business strategies for managing the aging and labor shortage trends; To examine relationships among company characteristics (e.g., average age, size, and functional composition) and management practices; To assess differences in impacts and practices across sectors and occupational groups; and To discuss potential impacts of these workforce transitions on employees, families, and communities in the GOMR.
Methods: The project will employ a mixed-method research design to examine employment practices and the impacts of the aging workforce transition in two contrasting OCS industry sectors, oil and gas exploration and production companies in the GOMR. Data will be gathered in two phases to inform three general workforce themes: (1) company characteristics (e.g., workforce age, occupational groups, functions, and sectors); (2) current labor trends (e.g., skill shortages, personnel placements, retirements), and (3) anticipated changes to business plans, production, and/or practices related to personnel management. Data literature and discussions with industry experts and personnel will be recorded, coded, and synthesized to indentify modal themes, and then analyzed to detect consistencies and differences across companies, communities, sectors, and occupations.
Products: The deliverables for this project are: Quarterly and annual reports Database of all project data Peer-reviewed journal article about aging workforce Professional conference presentation - preliminary results Cooperative agreement proposal for continued research Presentation to MMS at Information Transfer Meeting Graduate student master's thesis proposal Project summary to be disseminated to business leaders and industry workshop Final Report
Importance to MMS: The project will address the MMS goal to provide a scientific analysis of the social and economic impacts of the aging workforce crisis on GOMR companies and communities, and to help resource managers make informed decisions about how to prepare for these transitions as they become more salient in years to come.
Current Status: Researchers conducted a subject matter expert interview with a representative from one of the major OCS oil and gas production and exploration firms, and are in the process of scheduling an interview with others. These industry interviews are being used to develop the protocol for the telephone discussions. To facilitate these discussions, researchers have begun to develop a participant list of all small-to-large oil and gas exploration and production firms in the GOMR. In addition, researchers have obtained U.S. Census and Bureau of Labor statistics regarding the demographic characteristics of employees who work in relevant occupational sectors in the GOMR. Furthermore, recruitment is underway to select three graduate research assistants to assist with data collection during the summer months, and a graduate research assistantship offer has been made to a prospective incoming Industrial and Organizational doctoral student who will assist with this project during the 2010 - 2011 academic year. LSU will continue to conduct discussions with industry subject matter experts on the nature of the challenges associated with workforce aging. The protocol for the telephone discussions will be submitted for LSU Institutional Review Board approval, and the participant list will be finalized by mid-March when we begin to administer these telephone calls. The project is progressing according to schedule.
Final Report Due:	August 2011
Publications:	N/A
Affiliated WWW Sites:	N/A
Revised date:	February 2010
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