Workforce Report 2018

WORKFORCE REPORT 2018

WORKFORCE REPORT 2018

I seem to be missing a blue slice of image that is on the printed copy - to check if with cover a/w?

COVER to come

Contents

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1. 2. 3.

Foreword

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Key Findings

Industry Overview and its Impact on Total Employment

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3.1 Industry Overview 3.2 Employment Overview 10 3.3 Supporting Indirect Jobs in Other Sectors 11 3.4 Regional Employment 12

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4.

Offshore Demographics

14 15 18 20 23 25 27 28 29 30 32 32

4.1 Overview

4.2

Geographical Distribution

4.3 Workforce versus Industry Activity 4.4 Residential Locations and Nationalities

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4.5 Gender

4.6 Age

5.

Future Considerations

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5.1

Industrial Relations

5.2 Gender Pay Gap

5.3 Brexit

5.4 Tax and the Self-Employed

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WORKFORCE REPORT 2018

The UK Oil and Gas Industry Association Limited (trading as Oil & Gas UK) 2018 Oil & Gas UK uses reasonable efforts to ensure that the materials and information contained in the report are current and accurate. Oil & Gas UK offers the materials and information in good faith and believes that the information is correct at the date of publication. The materials and information are supplied to you on the condition that you or any other person receiving them will make their own determination as to their suitability and appropriateness for any proposed purpose prior to their use. Neither Oil & Gas UK nor any of its members assume liability for any use made thereof.

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1. Foreword Welcome toOil &Gas UK’s 2018 Workforce Report . This year’s report builds on the successful Offshore Demographics reports of previous years to include overall employment figures and consideration of some of the key issues relating to employment. For the first time in four years, we estimate a slight upturn in employment in 2018, as the industry continues to improve its competitive position. Total employment is expected to rise by nearly 3,000 jobs across the course of the year to 283,000, up from 280,000 in the previous year. This comes after total employment supported by industry fell by 14 per cent in 2017 - below previous estimates of 302,000 as the downturn continued to be felt by the supply chain. Increased levels of investment were seen in the sector but were slow to filter through.

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On a positive note, the number of workers in the west of Shetland region continues to rise, more than doubling since 2014 thanks to several major developments such as Clair Ridge and Laggan-Tormore.

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The report reinforces the size and importance of the industry, not just in terms of returns to the Treasury, but in the variety of skills and geographic spread of jobs the sector supports. The industry is truly UK-wide, supporting not just jobs recognisable as oil and gas roles, but in many other sectors such as professional services, metal products and specialised construction activities.

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Gender diversity in the offshore population remains below that of onshore and is an important factor in explaining why the industry’s average gender pay gap is higher than the national average.

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Fourteen per cent of those who travelled offshore last year were from outside of the UK – with half of those coming from other EU countries – indicating that workers from outside the UK continue to make up a significant proportion of the total workforce.

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Workforce engagement is key and it is therefore imperative that the industry articulates a shared and compelling vision for its future. The North Sea industry has coalesced around Vision 2035, which sets out the shared aspirations of:

• •

Extending the productive life of and adding a further generation to the industry

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Doubling the oil and gas supply chain’s turnover from exports

Advancements in technology, a priority area for industry, will inevitably result in changes for the workforce. For example, increased digitalisation may create remote working opportunities. As such, it will be vital for the industry to understand the existing and future workforce and to proactively develop the skills required to harness the opportunities afforded by these new innovations.

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Despite the difficulties of recent years, the industry has demonstrated its resilience and adaptability and continues to offer exciting and challenging roles with real opportunities for personal development, both in the UK and abroad.

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Dr Alix Thom, Workforce Engagement & Skills Manager, Oil & Gas UK

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WORKFORCE REPORT 2018

2. Key Findings

As activity levels pick up in 2018, job numbers could rise for the first time in four years

However, total employment in the UK offshore oil and gas industry fell 14% in 2017, to around 280,000

Offshore workforce employment is returning to levels in line with the long-term trend prior to the downturn

Almost 50,000 people travelled offshore in 2017, 6% down on the previous year

The oil and gas industry’s gender pay gap is 6% higher than the national average

However, at 24.4%, the sector’s average pay gap is in line with other STEM-related industries

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• The industry continues to support jobs across the UK. 57 per cent of sector jobs are based in England, 39 per cent in Scotland and the remainder across Northern Ireland and Wales • Indirect employment has seen the largest reduction since 2014, as project sanctions and capital investments were deferred or cancelled • Employment taxes and national insurance contributions from jobs supported by the industry generate at least £2.5 billion per year, reinforcing the industry’s importance to the UK economy • The largest reduction in offshore personnel is among drillers, as drilling activity falls to a record low • As part of an industry-wide efficiency drive, companies have reduced the number of non-essential offshore visits, reflected in the 25 per cent contraction in non-core workforce since 2014 • The west of Shetland area has seen the greatest offshore development activity and therefore its workforce has more than doubled since 2014 • Only 3 per cent of the offshore workforce are women, compared with 23 per cent of the industry as a whole

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• Pay gap reporting reflects a higher proportion of men in upper pay quartiles • The results highlight that there are fewer women in senior technical and/or managerial roles • Women make up the majority of part-time workers, who tend to be lower paid

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WORKFORCE REPORT 2018

3. Total Employment

Workforce Report 2018 - Facts and Figures

In Summary L atest estimates show that the oil and gas sector currently supports around 283,000 jobs in the UK through direct employment, indirect employment and jobs that are induced by the sector’s wider economic contribution. Although some companies are continuing to make reductions in the size of their workforce, the 2018 estimate anticipates a slight increase (almost 1 per cent) on the 2017 figure. This will represent the first increase in total industry-supported employment since 2014. While hundreds of thousands of jobs across the UK were supported by the sector last year, the out-turn of 283,000 is 7 per cent lower than the 302,000 estimate published in Oil & Gas UK’s Economic Report 2017 . The primary factor behind the fall was lower-than-expected capital investment last year. The industry supports around

The industry supports around

force Report 2018 nd Figures

283,000 jobs

Almost 50,000 people Total employment is expected to increase in 2018

283,000 jobs

travelled offshore in 2017 for the first time since 2014 Industry has had to face the threat of industrial action Production per offshore worker Industry's economic contribution 42% spreads across all areas of the UK

Almost 50,000 people Total employment is expected to increase in 2018

The industry supports around

283,000 jobs

travelled offshore in 2017 for the first time since 2014

since 2014

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Females represent

Almost

Production per

3.1 Industry Overview Over the last three years the oil price has fallen from circa $109 per barrel (bbl) in mid-2014 to an average of $54/bbl in 2017, leading to a significant contraction across the sector. In the aftermath of the price fall, oil and gas companies have had to streamline and rationalise to sustain their businesses and focus on improving efficiency in response to the prevailing business environment. This has inevitably had a negative impact on employment both from the reduction in activity and efforts to reduce costs. In the UK there has been a deferral of new capital projects, with investment in the UK Continental Shelf (UKCS) falling from a record high of £15 billion in 2014 to £5.6 billion last year. Only four new capital projects were approved during 2016-17, totalling less than £1 billion of new investment over two years. This compares with the preceding six years when, on average, £8 billion of new projects were approved each year. The lack of projects has been challenging for the whole industry, particularly for those specialising in the development of facilities and the drilling of wells. However, as industry has responded to the ‘lower for longer’ business environment, companies have begun to move from cost-cutting and the deferral of new activity to focusing on where efficiencies can be made to increase production efficiency and improve competitiveness. The Oil & Gas UK Efficiency Task Force (ETF) has been working closely with industry in support of these trends, acting as a catalyst for sustainable change. A combination of more efficient operations, less activity and cost deflation has led to a £2.8 billion reduction in operating expenditure from 2014-16. Production efficiency 1 has improved from 60 per cent in 2012 to 74 per cent in 2017, with further improvements expected. These efficiency gains, coupled with a wave of new field start-ups, have resulted in a 16 per cent increase in production since 2014. When combined with the 30 per cent reduction in operating expenditure, average unit operating costs have halved over the same period 2 , improving the international competitiveness of the UKCS. Positive signs are emerging that point to activity levels increasing in 2018, with up to 16 new developments (totalling £5 billion of investment) being considered for approval this year. Furthermore, it is hoped that the raft of merger and acquisition (M&A) activity on the UKCS will stimulate additional new investment in brownfield projects, as new owners look to increase and extend production from their North Sea assets. Recent M&A activity includes Chrysaor’s $3 billion asset package acquisition from Shell 3 ; Neptune Energy’s acquisition of a 70 per cent stake in Engie’s upstream business 4 ; EnQuest’s deal to increase equity and become operator of the Magnus field and associated infrastructure 5 ; and Total’s acquisition of Maersk Oil. 6 Decommissioning activity now represents approximately 12 per cent of expenditure across the industry. Although there is valuable opportunity for the supply chain, with over £17 billion expected to be spent on decommissioning activity through to 2025, there is still a much greater focus on prolonging production operations, stimulating drilling activity and bringing new projects onstream.

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1 Production efficiency is the total annual production divided by maximum potential of an asset. 2 Oil & Gas UK’s Economic Report is available to download at www.oilandgasuk.co.uk/economicreport 3 See www.chrysaor-future.com/en/home 4 See www.engie.com/en/journalists/press-releases/negotiations-sale-interest-exploration-production-international/ 5 See www.enquest.com/media-centre/press-releases/2017/24-01-2017.aspx 6 See www.total.com/en/media/news/press-releases/total-acquiert-maersk-oil-pour-7-45-milliards-de-dollars-dans-le- cadre-dune-transaction-en-actions-et

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WORKFORCE REPORT 2018

3.2 Employment Overview It is estimated that the upstream oil and gas industry currently supports almost 283,000 jobs in the UK, based on the latest projections of expenditure for 2018. These employment figures are a combination of direct employment 7 within the sector, indirect employment 8 across the wider supply chain and jobs that are induced 9 by the sector’s wider economic contribution. Although some companies are continuing to make reductions in the size of their workforce, other companies are now adding to their numbers as activity begins to pick up gently in 2018. This will represent the first increase in total industry supported employment since 2014.

It is also observed that total employment in 2017 was lower than previously estimated at circa 280,000, primarily driven by lower-than-expected capital investment last year.

Figure 1: Total Employment Supported by the Offshore Oil and Gas Industry 10

2014

2015

2016

2017

2018 Estimate

Direct

41,300 206,100 216,500 463,900

37,300

35,600 155,100 136,200 326,900

36,100 125,100 118,800 280,000

36,800 126,700 119,200 282,700

Indirect Induced

169,468 180,232 387,000

Total

500,000

450,000

Direct

Indirect

Induced Total

400,000

350,000

300,000

250,000

200,000

150,000

Employment Supported by the Offshore Oil and Gas Industry

100,000

50,000

0

2014

2015

2016

2017

2018

Source: Experian

7 Those employed by companies operating in the extraction of oil and gas and associated services. 8 Employment as a result of supply chain effects caused by oil and gas sector activity. For these companies, extraction of oil and gas and associated services will be one part of a wider business. 9 Employment supported by the expenditure of income from the oil and gas sector. 10 The 2016 and 2017 figures have been revised to reflect updates from the Office for National Statistics and changes to industry expenditure.

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While hundreds of thousands of jobs across the UK are still supported by the sector, the 2018 estimate represents a decline of more than 180,000 compared with the peak in employment of more than 460,000 jobs in 2014. This reflects the fall in capital investment and lower expenditure on operating assets on the UKCS, as well as a drive for greater efficiency in the prevailing business environment. The forecast increase is based on the expectation that total industry expenditure will begin to increase this year. The period of greatest rationalisation appears to be behind us, with companies increasingly focused on sustaining improvements and adding new activity. It is hoped that the new greenfield projects anticipated this year could unlock around £5 billion of new capital investment over time, providing a much-needed boost throughout the supply chain. However, the timing of this investment remains uncertain. Any further delays or deferrals will likely have an impact on industry employment, particularly across the supply chain where every £1 million spent by industry on capital projects typically provides employment for twelve people across the supply chain (indirect jobs) and another eight (induced jobs) within the wider economy. 3.3 Supporting Indirect Jobs in Other Sectors It is important to recognise that the UK offshore oil and gas industry draws on the skills of many other sectors of the UK economy. Figure 2 outlines the breakdown of industries that make up most of the supply chain, based on the latest figures available for 2017.

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Figure 2: Supply Chain Employment Impact by Industry (Top 15 by Percentage of Indirect Employees)

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Construction of Buildings 2%

Utilities 2% Civil Engineering 1%

Machinery and Equipment 4% Other Manufacturing 2%

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Professional Services 20%

Wholesale 4%

Specialised Construction Activities 4%

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Rubber, Plastic and Non- Metallic Mineral Products 4%

Administrative & Supportive Service Activities 16%

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Finance 5%

Computing & Information Services 5%

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Land Transport, Storage & Post 8%

Metal Products 14%

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Retail 9%

Source: Experian

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WORKFORCE REPORT 2018

Oil and gas activity supported more than 25,000 jobs in UK manufacturing alone in 2017, including the various sub- sectors of metal products, rubber, plastic, other non-metallic mineral products, and machinery and equipment. Around half of these jobs were within the metal products sector, which includes the manufacture of critical parts for oil and gas infrastructure, containers, drilling and construction facilities. Professional services and administrative and support services account for more than a quarter of indirect employment. The former includes architectural and engineering activities, scientific research and development, and legal services, while administrative and support services include office and security services, as well as employment agencies. 3.4 Regional Employment Whilst direct employment by the oil and gas industry is increasingly concentrated in the north east of Scotland, the sector provides employment across the whole of the UK. Figure 3 considers the total employment provided by the sector (direct, indirect and induced). Scotland benefits from the largest share of employment from the oil and gas sector, with 80 per cent of direct employment and 39 per cent of total jobs provided by the sector. The most recently available regional statistics (2016 data) show supported employment in the north east of Scotland decreasing to 28,300 from over 31,000 in 2014. Total unemployment in the north east of Scotland has risen during the downturn, with statistics for Aberdeen City above Scottish and UK averages. However, in 2017 the number of people employed in Aberdeen City had increased by 8,300, bringing total employment (not just oil and gas) to its second-highest level on record. 11 While these trends cannot be directly correlated to the oil and gas industry, it is acknowledged that the industry represents a significant proportion of the economy in the north east of Scotland. 12

11 The Press and Journal , 23 May 2018 12 In their submission to the Economy, Jobs and Fair Work Committee of the Scottish Government (2017), Aberdeen City and Aberdeenshire Councils stated that ‘Productivity in the North East of Scotland is higher than almost all regions in the UK and this is largely a result of the Oil & Gas industry’; www.parliament.scot/S5_Education/Inquiries/PSE026_Aberdeen_City-Aberdeenshire_Councils.pdf

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Outside of Scotland, Greater London and the south east have the second largest number of jobs supported by industry, accounting for more than one-fifth of total employment. This is largely due to the concentration of professional services and specialist engineering firms based in these areas.

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Figure 3: Regional Employment Supported by the Offshore Oil and Gas Industry

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West Midlands, 5% Yorkshire & Humber, 6%

East Midlands, 5%

Wales, 3%

East of England, 5%

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South West, 6%

Greater London, 11%

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North East, 3%

South East, 10%

Northern Ireland, 1%

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North West, 6%

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7

Scotland, 39%

Source: Experian

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WORKFORCE REPORT 2018

force Report 2018 nd Figures

283,000 jobs

4. Offshore Workforce Profile

Total employment is expected to increase in 2018 Almost 50,000 people

The industry supports around

In Summary O ffshore employment levels are strongly linked to industry activity. This is most clearly demonstrated by the fact that the largest reduction in personnel has been amongst drilling contractors, during a period where drilling has been at record-low levels. Changes to company operating practices and the low number of new project approvals over the past three years have also contributed to a reduction in the number of people travelling offshore. Almost 50,000 workers travelled offshore in 2017, the lowest figure since 2010. During 2010-14, record growth and capital investment saw increases in the numbers of workers moving offshore, which tailed off during the recent downturn. However, this report finds levels returning to those in line with the long-term trend for offshore workers prior to 2010. There is also a regional distinction. The number of offshore workers in the west of Shetland region, which has been the area of greatest offshore development activity, has doubled since 2014, whereas all other regions of the UKCS have seen reductions of over 15 per cent during the same period. It is anticipated that there will be an increase in activity levels this year, which could provide a boost to the supply chain and offshore workers. This is positive news for an industry where recruitment has been limited since 2014. Bringing through younger workers is crucial to the future success of industry. It is therefore encouraging that the number of workers under the age of 30 increased last year. However, further work is required to improve the gender balance of the offshore workforce, with females representing just over 3 per cent. Almost 50,000 people travelled offshore in 2017 Industry has had to face the threat of industrial action 283,000 jobs Production per offshore worker Almost 50,000 people Total employment is expected to increase in 2018 for the first time since 2014 The industry supports around 283,000 jobs

for the first time since 2014 travelled offshore in 2017

Production per offshore worker Industry's economic contribution Industry has had to face the threat of industrial action 42% spreads across all areas of the UK Brexit must be managed carefully Females represent just over 3% for continued access to skilled workers from across the EU of the offshore workforce since 2014

42%

travelled offshore in 2017

since 2014

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Industry has had to

Brexit must

Industry’s

4.1. Overview In 2017 49,330 people travelled offshore, a 6 per cent reduction compared with 2016 (52,489). The offshore workforce is now more than 20 per cent smaller than in 2014, which was a record year for investment and represented peak levels of industry employment.

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Figure 4: Total Number of Offshore Workers

70,000

65,000

3

60,000

55,000 lennosreP fo rebmuN

4

50,000

45,000

5

40,000

6

35,000

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Vantage POB

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WORKFORCE REPORT 2018

The decline in offshore workers has been spread across a range of disciplines. The number of workers employed in maintenance roles has fallen by 17 per cent (1,404) since 2014, as operators looked to optimise their maintenance regimes to improve efficiency and productivity. This has been achieved without compromise to safety and alongside a reduction in maintenance backlog levels. There has also been a 35 per cent (1,636) decline in drilling employees reflecting the 40 per cent fall in the total number of wells drilled on the UKCS since 2014.

Figure 5: Reduction in Offshore Employment by Top 10 Disciplines

9000

2014

2017

8000

7000

6000

5000

4000

3000

2000

Total Number of Workers

1000

0

Source: Vantage POB

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For the purposes of this report the offshore workforce is split into core and non-core workers, with core personnel designated as those who spend more than 100 nights offshore in a year. The number of workers has fallen across both categories since 2014 – by 20 per cent (over 5,800) to 23,113 for core workers and 25 per cent (over 8,900) to 26,217 for non-core workers. Figure 6 shows that just under one-third of the non-core workforce spent less than ten nights offshore in 2017, as companies have reduced the number of non-essential offshore visits. However, since 2014 the largest reduction in non-core workforce is in those spending 81-99 nights offshore – a 34 per cent decline – which reflects the reduction in larger projects and development work.

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Figure 6: Number of Nights Spent Offshore by Non-Core Workforce

12,000

4

2014 2015 2016 2017

10,000

8,000

lennosreP fo rebmuN

5

6,000

6

4,000

2,000

7

0

0-10 11-20 21 - 30 31 -40 41 - 50 51 - 60 61 -70 71 - 80 81 - 90 81 - 99

Number of Nights Offshore

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Source: Vantage POB

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WORKFORCE REPORT 2018

In 2017, as always, the majority of workers were employed by contractors (37,984), with those employed by operators representing just 23 per cent (11,346) of the offshore workforce. The number of workers employed by operators has fallen by over a quarter since 2014, with non-core personnel having faced the largest reductions.

However, the proportion of personnel employed by operators and contractors has largely remained consistent since 2014.

Figure 7: Total Personnel Travelling Offshore for Operators and Contractors

60,000

Contractor

Operator

50,000

40,000 lennosreP fo rebmuN

30,000

20,000

10,000

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Vantage POB

4.2 Geographical Distribution The geographical distribution of the offshore workforce on the UKCS has been relatively consistent over time. The central North Sea remains the area with the highest proportion of workers as it has the largest amount of offshore infrastructure and is responsible for almost 60 per cent of current production. The west of Shetland area has seen the largest growth in employment, with workers in this areamore than doubling since 2014. This is due to the relatively high number of major projects progressed within this area in recent years such as Clair Ridge, the Quad 204 redevelopment and Laggan-Tormore. Workforces in the northern and central North Sea have faced an average yearly decline of 12 and 10 per cent respectively since 2014. This is likely to be due to these more mature areas having a relative lack of new major projects being progressed.

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Figure 8. Geographical Distribution of Offshore Workers on the UKCS in 2017

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Northern North Sea Total

West of Shetland Total

2

% of Total Workforce

% of Total Workforce

2014 2017

1,704 4,169

3% 8%

2014 2017

8,482 5,584

13% 11%

3

Central North Sea Total

4

% of Total Workforce

Morecambe Bay (incl. East Irish Sea) Total

2014 2017

31,408 22,361

49% 45%

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% of Total Workforce

2014 2017

1,261 1,057

2% 2%

Southern North Sea Total

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% of Total Workforce

2014 2017

6,023 4,456

9% 9%

Multiple Sectors Total

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% of Total Workforce

2014 2017

15,235 11,703

24% 24%

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WORKFORCE REPORT 2018

4.3. Workforce versus Industry Activity Drilling Activity

Drilling activity decreased for the fifth year in a row in 2017, with a record low of only 94 wells (71 development, 14 exploration and 9 appraisal) spudded on the UKCS. This has had a direct impact on the number of personnel travelling offshore as rigs are stacked and drill crews made redundant. Overall, the number of drillers has declined by 35 per cent since 2014, to 3,032. The central North Sea has seen the biggest reduction in drilling personnel, by over 40 per cent since 2014. Conversely, the west of Shetland has seen drill crews increase by 54 per cent since 2016, due to high levels of recent development activity.

Figure 9: Number of Core Personnel versus Drilling Activity

35,000

300

Development

Exploration

Appraisal

Core Personnel

30,000

250

25,000

200

dellirD slleW fo rebmuN

20,000

150

15,000

100

Number of Personnel

10,000

50

5,000

0

0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Vantage POB, Oil & Gas UK

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Industry Expenditure Total industry expenditure was £15.7 billion in 2017, down from £16.9 billion in 2016 and less than half the level of 2013, as companies have adapted to the challenging business conditions. Capital expenditure has fallen by almost two-thirds since 2014, to £5.6 billion in 2017. This is due to ongoing projects reaching the end of their development phase, the limited number of new field approvals and efficiency gains in existing ongoing developments.

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Figure 10: Number of Core Workers versus Total Expenditure

Total Expenditure Core Workforce

3

30

35,000

30,000

25

4

25,000

20

)yenoM 7102( noilliB £

20,000

15

5

15,000

10

Total Personnel

10,000

6

5

5,000

0

0

7

2012

2013

2014

2015

2016

2017

Source: Vantage POB, OIl & Gas UK

For the first time in three years operating expenditure per core offshore worker increased slightly in 2017, as operating expenditure stabilised at £7 billion and the workforce continued to decline. However, operating expenditure per worker remains at one of the lowest levels since 2008.

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WORKFORCE REPORT 2018

Production The level of production (barrel of oil equivalent [boe] per worker) can be used as an indicator of productivity. Total production has increased by 16 per cent since 2014, driven by improved production efficiency and a wave of new project start-ups. Combined with the reduction in offshore workers, the number of barrels per worker increased by 6 per cent in 2017 and has risen by 42 per cent since 2014. This trend is expected to continue through 2018. However, on a revenue-per-worker basis, productivity remains relatively flat, recognising the fall in commodity prices since 2014.

Figure 11: Annual Production per Offshore Worker

70,000

Barrels Per Core Worker Barrels Per Worker

60,000

50,000

40,000 )eob( noitcudorP

30,000

20,000

10,000

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Vantage POB, Oil & Gas UK

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4.4. Residential Locations and Nationalities Figure 12 shows the spread and density of offshore workers according to their UK residence, reinforcing the UK-wide economic impact of the industry. Just under half of the offshore workforce reside in what are considered traditional oil and gas hubs. Aberdeen City and Shire are home to the largest proportion (28 per cent), 15 per cent are from north east England (Tyne and Teesside) and 5 per cent in Norfolk, around Norwich.

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Figure 12: Residential Locations of Offshore Workers

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¯

0

90

180

360

Miles

Workforce Distribution, by Postcode District

Sakthi Norton 17 April 2018

Coordinate System: WGS 1984 Web Mercator Auxiliary Sphere

23

WORKFORCE REPORT 2018

Of the 49,330 workers who travelled offshore in 2017, 86 per cent were British nationals. The number of British nationals working offshore has fallen by 22 per cent since 2014, in line with the contraction of the total workforce, while the number of workers from outside the UK has contracted by 30 per cent over the same period.

Figure 13: Number of Total Workers Travelling Offshore with British Nationality

60,000

50,000

40,000

lennosreP latoT

30,000

20,000

10,000

0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Vantage POB

Seven per cent (3,477) of the offshore workforce in 2017 were from other EU countries. Given the skills coming to the UKCS from within the EU, the possible impact of Brexit could pose challenges for the sector if its ability to attract critical skills is hampered, especially if there is an increase in offshore activity levels.

24

Figure 14: EU and Non-EU Nationalities in the Offshore Workforce

1

7,000

Total EU Workers (excluding British nationalities) Total Non-EU

6,000

2

5,000

4,000 lennosreP latoT

3

3,000

2,000

4

1,000

0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

5

Source: Vantage POB

4.5. Gender In 2017, 1,681 women travelled offshore, representing just over 3 per cent of the total offshore workforce. This is 6 per cent less than in 2016 and 27 per cent down on 2014, reflecting the general reduction in activity, albeit there has been a slightly higher reduction than that of the male workers offshore (23 per cent since 2014).

6

7

Figure 15: Number of Male and Female Workers

5%

70,000

Females Males % females

8

60,000

4%

50,000

9

3%

40,000 lennosreP latoT

30,000

2%

10

20,000

Female Proportion of Workforce

1%

10,000

11

0

0%

2010 2011 2012 2013 2014 2015 2016 2017

Source: Vantage POB

25

WORKFORCE REPORT 2018

Overall, the gender profile of the industry is comparable to other STEM-related industries such as construction and defence, but below the national average of 47 per cent women across all sectors. The industry’s offshore workforce is lagging despite individual company and industry-wide efforts to improve gender diversity.

The most recent labour market study to include the gender split of oil and gas overall was published in late 2014 13 , and gave a figure of 23% for the industry.

Catering employs the largest single proportion of women offshore (27 per cent). Together with maintenance (12 per cent) and administration (4 per cent), these disciplines accounted for 43 per cent of the female workforce in 2017.

Figure 16: Breakdown of Female Personnel by Key Discipline

2,500

Other

Catering Maintenance Admin

2,000

lennosreP fo rebmuN

1,500

1,000

500

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Vantage POB

13 ‘Fuelling the Next Generation’, EY. www.ey.com/uk/en/industries/oil---gas/ey-fuelling-the-next-generation

26

4.6. Age The average age of offshore workers in 2017 was 42.2, compared with 42.7 in 2016. Although this is still one of the highest average ages recorded in the last ten years, the number of workers under the age of 30 has increased by over 20 per cent since 2016. A marginally younger age profile is positive news for the industry’s future. However, the number of younger people working offshore is below 2012 levels. The age range 18-23 has seen the largest reductions since 2014 (44 per cent). This could be a result of much lower levels of new recruitment into the industry.

1

2

Figure 17: Age Profile of the Offshore Workforce from 2010 to 2017

3

2,500

2017 2016 2014 2012 2010

2,000

4

lennosreP fo rebmuN

1,500

5

1,000

500

6

0

18 23 28 33 38 43 48 53 58 63 68 73 78

Source:Vantage POB

The contractor workforce has a higher proportion of those aged under 30 than that of operators. This could perhaps be explained by a higher number of apprenticeships being offered by the service sector and that contractors’ personnel make up the majority of the offshore workforce.

7

The average age of the core workforce is 43, slightly older than that of the non-core workers at 41.4. Both average ages have increased slightly since 2014 when they were 42.2 and 39.6, respectively.

8

Figure 18: Age Profile of Core and Non-Core Workforce

9

1,000

900

800

Non-Core Core

700

10

600 lennosreP fo rebmuN

500

400

11

300

200

100

0

18 23 28 33 38 43 48 53 58 63 68 73 78

Source: Vantage POB

27

WORKFORCE REPORT 2018

283,000 jobs

for the first time since 2014 travelled offshore in 2017

5. Future Considerations

Almost 50,000 people Total employment is expected to increase in 2018

The industry supports around

Production per offshore worker Industry has had to face the threat of industrial action 42% spreads across all areas of the UK Industry's economic contribution Brexit must be managed carefully Females represent just over 3% for continued access to skilled workers from across the EU of the offshore workforce since 2014

In Summary S ince 2014, the UK oil and gas industry workforce has contributed significantly to the progress made by the sector as businesses have had to adapt to the challenging market conditions. Although this period has been difficult for everyone involved, these changes have been required to ensure continued sustainability of this industry for now and decades to come. Looking ahead, it is recognised that effective workforce planning – as well as engagement – is critical for industry to maximise the recovery of the UK’s oil and gas resources, with the wider benefits this brings to the economy in terms of jobs, security of energy supply and a supply chain anchored in the UK that exports its services worldwide. There are also a number of new challenges and opportunities on the horizon, such as Brexit. Fourteen per cent of those who travelled offshore, often in highly skilled and critical roles, came from outside the UK in 2017, half of those coming from other EU countries. As the UK moves through the transition period, it is vital that the arrangements that are put in place for the movement of labour are as frictionless as possible. In addition, at the time of writing, the limit on tier two visas has been reached for six consecutive months, raising further concerns of skills shortages (not just restricted to oil and gas). If realised, this could lead to cost increases that will impact industry competitiveness. There is also the prospect of changes arising from the Taylor Review recommendations published in July 2017, the government response released early 2018 and the consultations emanating from them. Also, the Government’s consultation on off-payroll working, concerning the possible extension of tax (IR35) reforms from the public to the private sector has just closed. Such an extension will have significant implications for companies who use the services of self-employed contractors. For industry to achieve its vision for the future and remain competitive in the global market, it is essential that the workforce is equipped and skilled to embrace continued development and the deployment of new technologies. The recently published Workforce Dynamics Review , commissioned by OPITO and conducted by Robert Gordon University’s Oil and Gas Institute, provides a useful focus for industry regarding this transition. travelle offshore in 2017 Industry has had to fac the th eat of industrial acti n Production per offshore worker 42% since 2014 Brexit must be anaged carefully Almost 50,000 people travelled offshore in 2017 Industry has had to fac the threat of industrial action for the first time ince 2014 283,000 jobs for continued access to skilled workers from across the EU

Industry’s gender pay gap (hourly pay) is 24.4%

£

compared to the national average of 18.4%

deals total nearly $6 billion combined over the first half of the year

28

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