Desperate Shortage of Petroleum Engineers and Geologists Hits the Oil and Gas Industry

The oil and gas industry, which has experienced widespread layoffs over the past decade, now finds itself facing a desperate shortage of qualified petroleum engineers, geologists, and geophysicists. Employers are recruiting on college campuses, seeking roughly 500 petroleum engineers in 1998 from a nationwide graduating class of around 250. Chevron Corp. alone is looking for about 250 recruits after hiring just 60 in 1995.

The shortage is attributed to a decline in enrollment in petroleum engineering programs, which followed the oil price crash of the mid-1980s and the massive layoffs that ensued. Some sources estimate that the oil industry lost 500,000 people during this downcycle, while consultant John S. Herold Inc. says big oil has shed 870,000 workers since industry employment peaked in 1982. The current oil price downturn is also causing concern, as petroleum engineering institutions struggle to attract students to their programs.

Key Takeaways:

• The oil and gas industry is facing a desperate shortage of qualified petroleum engineers, geologists, and geophysicists, with employers seeking roughly 500 petroleum engineers in 1998 from a nationwide graduating class of around 250.
• The shortage is attributed to a decline in enrollment in petroleum engineering programs, which followed the oil price crash of the mid-1980s and the massive layoffs that ensued.
• Some sources estimate that the oil industry lost 500,000 people during this downcycle, while consultant John S. Herold Inc. says big oil has shed 870,000 workers since industry employment peaked in 1982.
• First-year salaries for petroleum engineers now average about $55,000, up nearly $5,000 from last year's levels, with contracts including a signing bonus of $4,000-$5,000.
• Smaller exploration and production companies have begun on-campus recruitment or returned to it, unable to lure good people away from the majors, which now compensate their technical people very well.
• The shortage is expected to worsen in the coming years as world oil demand grows and more projects open up for development.
• Companies are considering other options, such as hiring mechanical or chemical engineers and training them to perform the tasks of a petroleum engineer, but such training can be costly and time-consuming.

Statistics:

• 500: The number of petroleum engineers needed in 1998 from a nationwide graduating class of around 250.
• $8/bbl: The price of oil in 1985, which led to a massive layoffs and a sharp drop in students.
• 1800: The number of students registered in Texas A&M University's petroleum engineering program in the boom days of the early 1980s.
• 205: The current enrollment in the program, a huge drop from the 1,800 registered in the boom days.
• 40: The number of students expected to graduate from Texas A&M University's petroleum engineering program in June.
• 60: The number of students expected to graduate from Texas A&M University's petroleum engineering program this fall.
• $55,000: The average first-year salary for petroleum engineers, up nearly $5,000 from last year's levels.
• $4,000-$5,000: The signing bonus included in contracts for petroleum engineers.
• 500,000: The number of people estimated to have lost their jobs in the oil industry during the downcycle that followed the oil price crash of the mid-1980s.
• 870,000: The number of workers shed by big oil since industry employment peaked in 1982, according to consultant John S. Herold Inc.

Sources:

• David E. Preng, president of Preng & Associates, a Houston-based consulting company specializing in the placement of energy personnel.
• Charles Bowman, head of Texas A&M University's petroleum engineering department.
• John S. Herold Inc., a consultant.
• Chevron Corp., an oil company.