Job losses in UK's North Sea raise skills and safety concerns

* Companies slash jobs in face of oil price plunge

* Experienced workers retiring early, raising safety fears

* Previous downturns led to skills gaps in the sector

* GRAPHIC-Age distribution: http://link.reuters.com/kan74w

By Claire Milhench

LONDON, June 16 (Reuters) - Cost-cutting in Britain's NorthSea oil and gas sector could lead to more acute skills shortagesin future, industry experts have warned, with some expressingconcerns that safety could be compromised.

A plunge in crude prices over the last 12 months hasprompted oil majors such as Royal Dutch Shell, BP, Chevron and ConocoPhillips to lay offhundreds of workers.

Oil field services groups such as Amec Foster Wheeler, Wood Group and Petrofac are also inconsultation with employees over job cuts.

"We have seen a lot of panicking," said Alastair Cole, adirector at Spencer Ogden, an energy recruitment agency. "We'veseen some very quick decisions made to balance the books in theshort term, and there's going to be a big gap in the future."

A report published in February by Britain's Oil and GasAuthority found that firms had significantly reduced staffinglevels and contractor rates.

"The (cost-reduction) programmes should recognise the risksof potentially losing key skills and expertise required for thefuture. Great care must also be taken to avoid adverse impactson safety, the environment and maintenance programmes," it said.

Many experienced older workers are also opting to hang uptheir wrenches in favour of early retirement, just as ageingplatforms need more specialist care and attention.

"Not only do we have installations that have been out there20 or 30 years, but many of these installations also have asignificant number of people on them who have been there fromthe beginning. So knowledge transfer is an issue," said JohnWishart, president of Lloyd's Register Energy.

It's a huge turnaround from the situation last summer whencompanies were struggling to recruit senior project managers ofthe right calibre, leading to rampant wage inflation.

"My worry is that we could take it too far," said BrianCampbell, a director at PwC. "Then when the oil price goes backup and everyone is scurrying around for the same talent, ratescould go through the roof and we're back to square one."

MIND THE GAP

Similar cut-backs in previous downturns created gaps in theindustry in the mid-career age group of 35-45 year-olds (seegraphic). This led to accelerated promotions, with talent hiredaway by other organisations and some people promoted ahead oftheir competency level, industry participants say.

Cole said he knew of people retiring early because ofworries that in a few years' time, the supervisory levelsoffshore would be filled by less experienced people.

He cited the example of an offshore installation manager whosaid that since the downturn of 2008, people could be promotedup the ranks of an offshore rig in 4-5 years, rather than theminimum of 15 years that it used to take.

"It doesn't mean they're better - it's just a necessity. Hesaid that will become a safety issue and he doesn't want to bethere when something goes wrong," Cole said.

Some industry veterans point out that younger managers haveno direct memory of the 1988 Piper Alpha disaster, in which 167men died after a gas explosion.

That accident occurred against a backdrop of industrycost-cutting adopted after the 1986 oil price plunge - asimilarity that is ringing alarm bells with some.

"The scars and memories of an event like Piper are leavingthe industry," said one engineer with 33 years in the sector."The deaths from Piper were a result of lots and lots of smallbut very bad decisions. Those same decisions are being takentoday, I see it consistently in my work."

As a result of Piper Alpha, offshore safety has beenradically overhauled, reducing fatalities to very low levels,but some fear that as collective memory fades, standards willstart to drop again.

For their part, North Sea operators insist that safetyremains paramount. Commenting on job losses back in March,Shell's upstream vice president for the UK and Ireland, PaulGoodfellow, said changes would be implemented withoutcompromising Shell's commitment to "the safety of our people andthe integrity of our assets".

LOSS OF EXPERIENCE

A December 2014 study by Ernst & Young estimated that around38,000 full-time workers were expected to retire between 2014and 2019, out of a total workforce of 375,000.

But David Gibbons-Wood, director of the Centre forInternational Labour Market Studies at Robert Gordon University,Aberdeen, said that where companies are undertaking redundancyprogrammes, it will accelerate exits.

Thomas Helmer, who worked in the industry for almost 40years as an engineer and manager, and now works for a crisismanagement company, said he was concerned about the loss of "aphenomenal amount of experience in a very short period".

"The key to risk management is knowing what can go wrong,"he said. "If you don't have that knowledge and experience youwill not select and implement the appropriate controls."

He said problems with current safety procedures includedflawed management of corrosion defects, some deluge testingbeing overdue and poor controls over temporary equipment. Headded an increase in bureaucracy over the years had keptsupervisors behind desks rather than walking the floor.

"It is true that the offshore industry has become safer ifyou look back, but that does not mean a major event cannothappen."

(Editing by Tom Pfeiffer and Pravin Char)