Rigzone Interview- Oil and Gas Compensation Rebounds

MarEx caught up with David Kent, President of Rigzone about oil and gas compensation rebounding on higher oil prices and market stability. Rigzone is leading authority on offshore and onshore job tracking and salary compensation for the oil and gas industry, 

MarEx: Congratulations on Rigzone’s purchase by Dice Holdings. Rigzone has always been a barometer for the global oil and gas industry and it was extremely insightful to learn more about the purchase from Michael Durney, Senior Vice President Finance and Chief Financial Officer who we interviewed a few months ago. We also appreciate the opportunity to speak to you as well because the Rigzone press release of March 15th demonstrated the stability of employment in the oil and gas and marine industries.

Kent: As you know, the maritime and the oil and gas industries are intertwined. What impacts the oil and gas industry will also affect maritime businesses as well. Surprisingly, we’ve seen a huge uptick in recruitment over the past eighteen months, despite the Deepwater Horizon event.  This year alone Rigzone has witnessed more than a seventy-five percent increase in job listings on our website, which is really surprising me due to the BP incident.  When the Gulf of Mexico gets back in full swing, I believe there will be upward tick in general compensation. For the titles we track, the average is around $100,000, which is consistent with international levels.

Additionally, about half of Rigzone’s traffic comes from overseas in terms of website activity and job board postings and page views.  We have over 500 companies recruiting on Rigzone and monitoring compensation trends in real time is a valued asset to them. So, with about 520,000 unique visitors coming to our site each month, we are in a strategic position to collect and provide them data in real time.

MarEx: Do other companies also keep stats on oil and gas workers and provide the current trends to employers?

Kent: Actually, there are a lot of good firms in the business. But, companies like Hewitt use compensation experts to do surveys. Rigzone wanted to leverage our audience and get them to contribute their own pay information, and in return, we would provide compensation information about specific jobs. We did an annual survey for two years, but then realized collecting and distributing this type data would be more beneficial to employers and job seekers in real time.  This targeted information represents the industry and is a good barometer of the marketplace.

MarEx: As we speak, the Deepwater Horizon event was one year ago, the industry was truly rocked by the catastrophe in terms of jobs and production in the GOM. Was there a lot of fall-out from the event and did many people take jobs overseas to get employed? And, is that why there has been an increase in available jobs in the Gulf now?

Kent: Sure, there is some data to support this a bit. But, we believe the onshore rigs absorbed a lot of talent. Due to shale oil, onshore rig counts have really soared, and lots of jobs went onshore in Texas. Certainly, the Gulf of Mexico has always moved in ebbs and flows where jack up rigs will leave the gulf and then come back.  In terms of rigs, Brazil has just absorbed a ton of rigs, and a lot of drilling contractors, who have headquarters in Houston, have been sending rigs overseas. The Middle East from an offshore perspective has helped to absorb a lot of rigs, as well as West Africa. 

What would have really been catastrophic, had the Deepwater Horizon incident happened and oil was at $30 per barrel, this would have really made the situation much more terrible because there would have been no incentive to get production back online.  But, prices have been high and stable for quite some time, although they dropped to $30 in January 2009, but it came back very quick. The average oil price in 2010 held firmly and today it’s hovering around $100 per barrel. The offshore oil and gas industry would have like to have the permits come a little faster, but it appears to be opening up now through. Consequently, I believe it’s going to be good time in the near future for maritime professionals and oil and gas workers.  You’ve already got this upward trend on compensation, which occurred in a vacuum caused by the Deepwater Horizon, so I think the offshore workers will find themselves in a healthy period for work and pay.

MarEx: Rigzone monitors rig workers, but do you also chart wages for offshore vessel workers?  Would you consider them in the realm of oil and gas workers, yes or no?

Kent: Oh definitely, we track offshore supply vessel and tugboat mariners. Today, rigs like the Deepwater Horizon use lots of maritime professionals. Dynamic Positioning officers are just an example. The two industries are definitely intertwined and dependent upon each other.  So, from a compensation standpoint, Rigzone tracks several titles specific to the maritime industry.

MarEx: Has there been an increase in mariner jobs for offshore? Years ago, mariners working in the GOM moved from company to company for very little money because the benefits weren’t very good and there was no job stability. Obviously, modern skills and technical systems have required that workers be more highly trained. Has Rigzone seen stability in offshore support jobs and wages, or has the real increase in wages taken place only on rigs?

Kent: Our staff has data on 12 specific titles tracked in the maritime industry, and they have all increased in the first quarter of 2011 with the exception of one. While we only had a very small sample size, and it might just be us, in the categories monitored the increases were from four to fourteen percent.

As far as rig workers moving around, the Gulf of Mexico has been somewhat different from the rest of the world in terms of turnover. Certainly, the recession has had an impact on attitudes about keeping a job, so what we’re seeing is workers staying in place and not changing jobs as much. Now, with that said, high oil prices are also keeping the upward pressure on compensation. Consequently, we may be seeing more turnovers in skill sets like the DP officers, but it is also a very competitive marketplace as well. With a competitive marketplace and an increase in wages taken place translates into more opportunities to make better money.

MarEx:  Are rig workers in general moving to new opportunities around the world? I mean the ability to get someplace in a hurry plus the fact of being helicoptered or move comfortably by a crew carrier has really changed the dynamics of where workers live and work. Is that true?

Kent: Well, it’s a very good concept and probably true. But, it’s also that offshore technology has become extremely advanced. Look at Deepwater Horizon and the equipment it had onboard. The industry is not like it was twenty years ago. While we are speaking to the offshore industry, I recently read a study on land rig productivity. Today’s land rigs compared to a land rig in 1980 are really quite different in terms of production. Companies like National Oil of Barco are producing twice as much as they once did in the 80s. Baker Hughes is another example as we review decades and decades of rig counts and production. Production is up across the board due to technology and, more importantly, the rig worker who runs the machinery.

MarEx: Sometimes we forget Rigzone also counts land rigs. Certainly, there are many more land rigs than offshore, especially in the states, right?

Kent: The fact is there will always be more land rigs than offshore. Frankly, a lot of people would have left the oil and gas industry, like they did in the 80’s, if not for the on land rigs. Today’s oil prices are going the have an impact on workers and oil production from land and offshore based rigs. Rigzone is anticipating that by mid-summer there should be substantial activity in the U.S. Gulf of Mexico and rigs will be moving back into the Gulf.

MarEx: From overseas?

Kent: There are a lot of new rigs being built in places like Singapore and many do not have contracts yet.  So, if operators envision opportunities, they’ll move their rigs into the gulf. But, only if the U.S. safety requirements are not too stringent and make it uneconomical, then there should be a lot more activity and the Gulf of Mexico will absorb a bunch of rigs.

MarEx: Let me ask another question about compensation. If I am a land rig worker, I could move my family to the nearest town and see them every evening. But, you can’t do that if you work offshore. So, the question is do offshore workers get paid better than onshore workers?

Kent: That’s a good question. I would have to research the data to be able to answer the question better.  Obviously, ex-patriots are going to get paid substantially more. But, there is also an element built into offshore work because it’s a more dangerous environment, and workers must deal with water and machinery.

Additionally, the lines between offshore rig workers and the maritime industry are really becoming blurred. DP officers, ballast water control operators, which are traditionally core maritime positions, are working side-by-side with the tool pusher.

MarEx: Has BOEMRE issued more permits?

Kent: Actually, we’ve been tracking the issuance of permits and over the past 30 days have seen at least 10 permits issued. So, have things turned around? Well, it’s clearly speculation, but from a political standpoint with the unrest in the Middle East and big spikes in oil prices, there is a lot of pressure on the U.S. government to alleviate the pain and suffering at the pump. We are witnessing an increase in permits and by mid-summer should see a lot more activity, which will translate into a better economy for the Gulf Coast.

MarEx: Rigzone knows oil and gas workers better than any other company. So, in broad terms, are rig workers around the world on par with each other, or do rig workers living and working in Nigeria or someplace where there is lots of hostilities going to make more money that a worker in the GOM?

Kent: That is a true statement and ex-pats working in less ideal conditions are going to get a hazardous pay premium.

MarEx: How many job titles does Rigzone follow around the world?

Kent: Well, about 90 jobs titles for oil and gas, and jobs like ship engineers, deck hands, oilers, naval architects, marine surveyor, heavy life pipe lay, dynamic position officer, captain, ballast control tech, AB seaman in the maritime sector.  

MarEx:  What are the highest paying Rig jobs? You’ve mentioned the high-end salary range is somewhere between $100,000 and $131,000 per year, so who is making this level of compensation?

Kent: There are actually lots of jobs in this range such as a subsea engineer, reservoir engineer, an OIM, and a drilling consultant. There are also engineers, geologists and a vessel captain in the range as well. And, a tool pusher is easily in that range too.

MarEx: Honestly, for the rig workers it doesn’t seem like a lot of pay for the level of responsibility? And, it’s a tough job for mariners as well.

Kent: You have to remember they work 30 days on and 30 days off. Or you can say, six months a year for that level of compensation. To frame it for you the lowest salaries are in the $50,000 range to $200,000 at the high end.

MarEx: Do the rig worker levels include onshore?  

Kent: It’s both, but I think it’s a bit higher for offshore workers due to the hazardous environment. 

MarEx: What is interesting is the fact that whether a rig worker is in Brazil, Asia, West Africa, in the GOM or working in Alaska, the wages are similar.

Kent: What compels a rig worker to live in West Africa or any faraway place? Some people can do it for a while and some a lifetime. If you can manage the risk, you can live like royalty in another country where the cost of living is low.

MarEx: Mr. Kent, we thank you for your time.

Kent: You are welcome.

David Kent is the founder and President of Rigzone.com.  As a founder of Rigzone in 2000, Mr. Kent developed the leading online resource for the oil and gas industry delivering news, data, advertising and career services.  Today, Rigzone.com reaches more than 550,000 energy professionals each month globally and Mr. Kent continues to oversee all aspects of its growth.  Prior to launching Rigzone, Mr. Kent worked as a software developer for USWeb.  Mr. Kent holds a B.A. from Southern Methodist University graduating Magna Cum Laude in 1998.