Salaries soaring on oil rigs
It’s a lonely, hard job, but the pay is well worth it
What jobs offer the highest pay? Investment banking is up there. So is specialist surgery. But consider this. Slightly over twenty years ago, Johnathan Roberts started work on an oil rig at US$5 an hour. Today, the newly appointed operations manager of Norway’s Standard Drilling makes about half a million dollars a year.
Even accounting for inflation, it’s a huge jump for the 45-year-old American. Salaries on oil rigs have soared because of a global boom in offshore drilling.
Managers and workers are scarce in this specialised industry, where the work is intense and the job involves living on a platform in remote seas for weeks. For new players in Asia, where the energy demands of booming economies are driving a foray into offshore drilling, the costs and availability of skilled workers will be a big restraining factor.
“The amount of money they are making an hour is just mind-boggling now, just five years ago they were making just half that,” said Roberts, who moved to Singapore this year from Texas. He said his pay more than doubled in 1999 when the industry faced a labour shortage like the one that appears to be emerging. The increasing demand for oil and gas is pushing energy companies to explore frontier areas like the Arctic and new offshore zones given that output from accessible fields is declining. Global oil demand has risen 14% in total to 88 million barrels per day (bpd) in 2011 from 2001, according to the BP annual statistical review. Rapidly growing economies have accounted for much of the increase - consumption in China doubled in the same period to 9.76 million bpd.
Energy and mining offer good salaries, said Wyn James, a Singapore-based Briton who left a career in banking this year to open Zhen Global, a firm that recruits and places workers in mining and oil extraction.
“What we are seeing now is an acute shortage of people actually with applied skills, from engineering or chemical backgrounds,” James said.
“Even if the skills do exist globally, they don’t necessarily exist in the place that is needed. So what we are doing is we are picking up people from all corners of the world and we are sticking them into projects, whether it’s short-term or medium-term, but where they can earn reasonable money, live in a different country, live offshore, whatever that may be.”
Deepwater drilling, one of the most difficult but most lucrative parts of the extraction business, has mainly been centred in the Gulf of Mexico. But in the past decade, Brazil has become a key player, exploring untapped reserves in the Santos basin as far away as 300 km (188 miles) southeast of Sao Paulo, and at depths of over 1,500 metres. That drive is sucking in hundreds of rig operators, drillers, engineers and other technicians.
On the other side of the world, China National Offshore Oil Corp aims to build capacity to produce one million barrels per day of oil equivalent in deep waters offshore China by 2020.
India, Asia’s third biggest oil consumer, is also expanding into the deep waters of the Bay of Bengal.
There were 540 offshore oil rigs in the world last year and, by the end of 2012, the number should rise by 51 to 591, says Faststream Recruitment, a UK-based firm that specialises in hiring for the shipping, oil and gas industry.
It is the biggest jump for any year in the past decade, said Mark Robertshaw, managing director of Faststream. In 2013, the number will grow by 28 to 619.
The increase would mean more than 11,000 new jobs over the next 12 to 18 months from a total of 117,000, based on an average need of about 184 jobs on one rig, he said.
“If you consider that over the past 10 years, the annual number of rigs under contract has grown to average 539 during 2011, it becomes apparent that offshore employment for workers actually housed on floaters and jackups will spike significantly,” Robertshaw said.
The labour crunch has already seen pay for a roustabout, the least skilled worker on a rig, nearly double in the past five years to US$18US$20 an hour. A roughneck, a rank higher, earns about US$27-US$28, said Roberts, the US rig manager.
“When the rousta gets a raise it doesn’t just stop there,” he said. “It goes all the way to the top.”
A rig operates on 12-hour shifts and typically workers do 14 days and then rotate out for a break for another 14 days.
The schedule puts off many and with salaries in IT and other industries growing, an engineering graduate or technician has other options.
“Skilled labour is becoming difficult to find,” said Scott Kerr, chief executive of Norwegian deepwater drilling company Sevan Drilling.
The salary increases show up on balance sheets. For Keppel Corp, the world’s largest rig builder, wages and salaries surged 27% to US$1.43bil by 2011 from 2007, while the number of employees increased 5.7% over the same period, according to its annual reports. Nearly 90% of staff work in the oil rig division.
Besides pay, companies try to attract talent with career opportunities.
“An engineer does not need to stay an engineer all his life. I was trained as a naval architect and I practised for a few years, but beyond that I was in management,” said Choo Chiau Beng, chief executive of Keppel Corp.
“In some respects, being a highly paid CEO has attracted people to Keppel, because it shows you don’t need to be a lawyer to be highly paid, you can be an engineer and be highly paid.”
For rig men like Roberts, the money is not to be sneezed at.
“After clearing taxes, my first check after one week was US$167,” he said. “My first apartment was very small, it was a little bitty one bedroom studio.”
Today, Roberts owns a home in a community in Texas that has manicured lawns, landscaped gardens and four golf courses. He is saving to buy a US$2mil ranch.
“I didn’t come up with a silver spoon in my mouth, I came up working through the ranks,” he said. — Reuters