A pervasive shortage of technical skills is costing the energy sector billions of dollars every year in lost value. One global oil and gas recruiting firm estimated last year that 41% of this skills shortage is due to lack of adequate education and training
So, why are operators struggling so much to acquire and retain a skilled workforce? There are several reasons, but two in particular stand out to us since they have recently emerged within the continuing education landscape.
1. The significant—and likely permanent—headcount reduction resulting from the pandemic.
2. Conditions where technical skill requirements are rapidly evolving due to the clean energy transition and net-zero initiative.
The combination of these two new and indisputable realities has created an environment wherein, if left unchecked, the skills gap will almost certainly get worse.
A seemingly obvious solution to the skills gap problem would be for energy companies to ramp up their investment in skill development and training. But this ignores the constraints energy producers currently face.
For instance, despite current favorable economic conditions, investors remain supportive of the producers’ focus on increasing return on capital vs. increasing their general and administrative (G&A) budget.
In addition to the pressure to drive cashflow, a more pressing constraint is time. When I ask upstream professionals whether they feel they are doing enough to upskill in their career, most say no. The reason is usually time, or lack thereof.
Today’s positive economics combined with lean operations mean that time for training is extremely limited.
Avenues for Learning
Suppose the above conditions don’t change.
Suppose we will continue to run lean as an industry, and as a result, time and budget for training will always be a problem. What can we do as an industry to reduce the skills gap? What are the available avenues for upskilling?
The baseline option is to do nothing. In other words, we can learn by doing.
To its credit, a great deal of technological advancement has resulted from this approach. The advantage of doing nothing is that learning will always take place on the job.
It could be argued that this is also an efficient option since the learnings from the work are directly applicable to the work. However, this “do nothing” approach carries both cost and risk. Risk comes in the form of mistakes that could have been avoided with proper training.
The associated costs can be high and include drilling into a depleted zone or a botched completion. The industry has many examples to draw on where neglecting knowledge- and experience-sharing has proven to be enormously inefficient and costly.
An alternative is to insource all training. This is considered to be a low-cost avenue since it relies on using subject matter experts already within the company to teach other employees. Hence, existing stores of wisdom and company best practices can be disseminated with no additional investment.
Of course, this also takes away each expert’s time from their core responsibilities. But moreover, the sole use of internal expertise restricts knowledge transfer to what is contained inside the organizational silo.
This raises another avenue: the informal learning that takes place between industry peers. It is my opinion that this is the most valuable outcome of having a technical society such as SPE.
By attending conferences and building a network, you are building a list of contacts to call upon when facing problems you’ve never encountered. This comes with some risk for individuals since one must ensure they don’t materially breach company confidentiality.
There is also post-graduate education. In speaking with individuals from different energy producers, I’ve learned that many organizations still sponsor graduate degrees for select employees. Such programs enable people to rise from a generalist to a specialist, or vice versa in the case of a typical MBA program.
Those with master’s degrees earn more on average than their counterparts with bachelor’s degrees. But not all individuals will pursue post‑graduate education.
Yet another option for developing new skills is online learning. A major benefit to this learning option is that, in theory, the learning can be much more time efficient. In our experience, we typically see that a one-day short course translates into about 4 hours of online learning content. Learners can skip sections of the course where they already have the knowledge and focus on those sections where they do not.
Online learning has been around in various forms for decades. However, the growth of massive open online courses (MOOCs) has been a more recent phenomenon. Yet despite its prevalence and popularity amongst students and professionals, online learning has yet to be widely adopted within the energy industry.
We see several drivers for the industry’s lag.
For one thing, what generally leads to economies of scale for MOOCs is when the market for learners is in the tens of millions. Many petroleum and other energy courses tend to be specialized and have audiences in the tens to hundreds of thousands. There is also the challenge of replacing the in-person experience of a course with something better.
I personally subscribe to the analogy that the online learning industry is a bit like the e-commerce industry was in the late 1990s. It existed, it was functional, but the user experience often left something to be desired.
Only when that user experience improved in the late 2000s did e-commerce become widely adopted. For an online learning course to be effective, it must cater to different modes of learning (visual, auditory, logical, kinesthetic, etc.). It must be engaging and even enjoyable for the participant. This requires both a certain minimum level of content quality and a well-designed interactive experience.
Another perceived challenge with online learning approaches is adoption. Completion rates for MOOCs have been found to be around 15%. I say this is a perceived challenge because it would be wrong to conclude MOOCs are less effective than in-person courses solely based on completion rates.
The average completion rate of an in-person short course is 100% if all attendees stay until the class is over, but this does not mean 100% of attendees had an effective learning experience. It is not uncommon to have at least a few people on their phone or browsing the internet during a short course.
Regardless, increasing adoption and completion of online courses is a challenge worth pursuing.
An Educational Experiment
Throughout the past year we conducted a sort of uncontrolled experiment. We analyzed the data of approximately 1,400 students who had participated in our online courses.
For each course, the student had the option to choose their learning process. These methods included: Unstructured, Teams, Cohorts, and Enrollments.
- The Unstructured group were provided with access to digital courses without any program to follow.
- In Teams groups, the progress of each student could be monitored by other team members and managers.
- Enrollments represents a single learner who has given him/herself specific timebound learning goals.
- Cohorts is like Enrollments, but the learning takes place within a group.
We then analyzed the data to determine if any particular learning method drove higher lesson completion rates. A Shapiro-Wilk test indicated the data was highly non-normal, which meant parametric approaches were not appropriate to use.
It was found that the Cohort method was most correlated to higher lesson completion rates. When learners were part of a cohort, the student completed an extra course day per month in comparison to the Unstructured approach (the baseline). This represents a 67% increase with strong statistical significance (p-value of 1.5 e-13).
Within the confidence interval of the data, the Enrollment group was not observed to increase average completion rates. However, Enrollment did affect the distribution, specifically increasing the probability that a user would get further through the course.
In addition, it was found that the lesson completion rates varied by job type. In particular, executives tended to withdraw after several lessons.
It could be postulated that executives are not expected to have deep technical knowledge in a given area but do want to have some general knowledge on the subject. In most courses, the more-general topics are covered in the first few chapters.
It was also found that completion rates varied among organizations. Much of this variability could not be explained by the previous factors mentioned. This indicates that something else about the organization is driving higher or lower lesson completion rates.
The explanation for this is unknown but may have to do with how well the training program was rolled out, how employees are incentivized, or company culture.
Achieving Success in Corporate Online Learning
In terms of the recipe for success in online learning, the most common denominators we have seen include:
Ensuring accountability. People are more incentivized to do something when they know they will be held accountable for it. This doesn’t necessarily mean micromanaging employees to ensure they complete their lessons. But it might mean a simple assessment of the knowledge one has obtained from the course is called for.
Showing employees that training is valued. If one were to ask the average executive if they valued training the answer would almost assuredly be “yes.” However, value is also communicated through actions. If a company doesn’t create space for learning, or encourage employees to seek and complete training, the message the employee receives is that training isn’t a priority.
One of our clients, a medium-sized operator, had as many learners completing courses as a typical supermajor. We later learned that management had made learning a performance objective. Because performance was tied to compensation, learners were highly incentivized, and as a result, this company had much higher activity than its peers.
Key Conclusions
Keeping the workforce up to date with vital technical skills in the face of budget and time constraints has always been a challenge in the energy sector. Today, we face a global energy crisis and an uncertain future for the energy mix; the only certainty being that demand will continue to increase.
Therefore, the stakes have never been higher to maintain an educated, skilled technical workforce in the energy sector. The status quo, sadly, will not get us there.
Online training promises to be a valuable tool in meeting the future upskilling needs of energy workers, but only if the industry can achieve critical adoption rates—a distant goal at present, but one that is nonetheless achievable.
Our preliminary empirical data, collected through the 2-year commercial deployment of an online training platform (containing a wide selection of energy-related technical courses), suggests that participant engagement with online learning content can be nurtured and improved using the following simple techniques.
1. Attach a degree of accountability to the training course (via manager or peer group).
2. Establish there is a schedule of some kind associated with the training course.
3. Ensure the organization makes space for learning and defines learning/upskilling as a valued performance metric
It is clear that changes are required—perhaps a complete reimagining of continuing education in the workplace—before the energy sector can fully leverage the benefits of online learning. Our study presents some promising results, leading us to believe that this endeavor is more than worthwhile.
Acknowledgments to David Anderson and Ruben Amortegui, SAGA Wisdom, and Jeremy Adamson, University of New Brunswick, for their contributions in the analytics study.
Dylan Lougheed, SPE, is the cofounder and CFO of SAGA Wisdom, a digital learning company for the energy industry. He is a professional engineer with 15 years’ combined experience in high‑tech and oil and gas industries. Past technical roles include the director of engineering software at IHS Markit (acquired by S&P Global). He also actively serves SPE, having authored several papers in unconventional reservoir engineering, chairing sessions for various unconventional resource conferences, and as the former director of growth and development for the Calgary Section. He holds a bachelor’s degree in computer engineering and biology from Queen’s University and a master’s degree in business administration from the University of Calgary.