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January 2012 Exclusive Story

Industry Helps Shape Instructors’ Lesson Plans

By Dan Holder

Capitalizing on their educational investments, oil and natural gas companies are scrambling to hire the next generation of petroleum engineers they have nurtured. Packed classrooms demonstrate how well the industry has learned earlier lessons, with companies both giving and receiving from universities.

During the 1980s and ’90s, according to Schlumberger’s Benchmarking Industry Talent Needs, oil and gas companies mostly neglected their future needs. When prices soared six years ago, the 2010 report asserts, demand for petrotechnical professionals rose as well, with many companies reporting a substantial increase in recruitment targets. But because of their earlier inattention, many companies were unable to fully satisfy their employment goals, a shortfall that continues today.

In 2010, the global economic slowdown led to some concern among petroleum students that many engineers in the workforce would delay retirement as they sought to rebuild their retirement portfolios, while lower commodity prices led a range of companies to cut back on their college hires.

That pessimism has passed.

By 2011, an ever-healthier global economy was driving increased oil and gas activities, and company recruiters were flooding college campuses to meet that production demand by hiring the next generation of petroleum professionals.

As the United States continues to discover new oil and natural gas plays, the need for talented engineers to explore and produce those resources is increasing, asserts Kip Welch, director of recruitment at Chesapeake Energy Corp. He adds that Chesapeake, like many producer and service companies, combines its aid to schools with involvement with professional societies and student organizations.

“Chesapeake expects its engineering departments to grow for many years, and we are committed to hiring and training recent engineering graduates for long-term careers,” Welch says. “College campus professional societies in particular offer opportunities for our company to provide education to our industry’s future professionals and network with potential employees.”

In addition to indications of long-term job stability, there now are strong financial inducements to an oil and gas career. According to the National Association of Colleges and Employers’ fall 2011 survey, based on 205 reported employment offers, the average salary for petroleum engineering graduates with bachelor’s degrees is $82,740, a 7.1 percent jump from last year’s numbers. In a separate survey, the Colorado School of Mines points out every one of its students earning a master’s in petroleum engineering between December 2010 and May 2011 has found a job in the energy field.

Oil and gas companies don’t just interact with centers of learning at the recruiting table, since universities are providing needed research as well as the next generation of graduating talent. Najib Abusalbi, manager of corporate university relations for Schlumberger Ltd., points out his company works with research institutions across the globe, with both parties benefiting.

“Schlumberger is launching programs in countries to develop the oil and gas related sciences and engineering programs in universities where resources have been discovered, because one of our business policies is that we want to recruit where we work,” he says.

When the company establishes its research and training program with universities, Schlumberger is striving to uncover the techniques and equipment that will be essential as much as a decade out, Abusalbi states. The long-range university research complements the company’s internal research and development efforts, he points out, with Schlumberger’s emphasis on applied technology working with the schools’ research into fundamental science.

Now Hiring

Schlumberger Business Consulting has been tracking industry employment numbers since 2004 in its Oil & Gas Human Resources Benchmark. Its look at 2010, released in March 2011, suggests what the study calls a “big crew change” will evolve over the next several years, with the industry transitioning from a senior-intensive demographic profile to a much younger one. The change will be caused by the loss of 5,000 experienced petrotechnical professionals by 2014, Schlumberger reports. The survey includes geoscience and petroleum engineers, with reservoir, drilling, completion and production engineers classified as petroleum engineers.

A 2009 survey predicted the industry would need 8,000 graduates in 2011, followed by declining company requirements through 2014. Renewed business optimism has reversed that expectation, and the new report projects demand will soar to 30,000 engineers by 2014.

Additional evidence of the industry’s need for new petroleum engineers includes:

  • A May 2011 Engineering article reported oil and gas employers posted more than 5,800 new online job ads in the previous three months, a jump of 84 percent compared with the same period in 2010. The article says industry hiring has increased 233 percent over the four-year low recorded in February 2009.
  • A Bureau of Labor Statistics forecast projects employment growth for petroleum engineers at 5 percent over the next decade, a number below the average for all occupations only because it says the number of job openings is likely to exceed the relatively small number of graduates.
  • Looking out to 2018, the bureau predicts the oil and gas extraction sector will need 11.4 percent more petroleum engineers. Assessing the nation’s overall requirements, the forecast says the need for petroleum engineers will jump 18.4 percent.

An Aging Workforce

This is a great time to be a petroleum engineering student, assert professors at several universities offering petroleum engineering degrees.

Jennifer Miskimins, an associate professor at the Colorado School of Mines, cites company recruiters who say job prospects for the next couple of years are very positive.

Petroleum engineering graduates are riding in a perfect storm, Miskimins holds. With the easy oil and gas resources produced, prospects now being pursued are much more technically challenging, and a recovering global economy covets those oil and gas reserves even more, making the engineers’ role even more valuable, she says. In addition, the “gray hair” syndrome of engineering professionals closing in on retirement means a large amount of experience is on the verge of exiting the workforce.

“In five to 10 years, we will lose a lot of knowledge, so companies are trying to get people hired so they can learn from that knowledge,” she reports.

Looking back at previous price collapses and periods of industry downturn, Susan Schrader, an assistant professor of petroleum engineering at Montana Tech of the University of Montana says she thinks most students are more concerned with getting a foot in the door with an energy company.

“I am especially pleased that even during the price slowdown in 2010, it was not real hard to place students,” Schrader reports. “I have not heard a lot of long-term concerns. There is more of ‘I hope the price of oil is still over $100 a barrel when I graduate next year,’ more than ‘I am concerned about what is going to happen over the next couple decades.’”

Jon Olson, an associate professor in the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin, points out petroleum engineering always has offered the highest-paying B.S. offered by the school’s engineering department. “Even in the bad times, the first three quarters of our students get jobs without any trouble,” he says.

In 2002, according to Texas Tech University statistics, there were fewer than 2,000 undergraduates pursuing petroleum engineering degrees in the United States, Olson quotes. That number has jumped to 5,000, with another 1,500 enrolled in graduate programs. “In the past 10 years, enrollment has almost doubled across the country, while UT-Austin enrollment has almost tripled,” he says.

Miskimins reports seeing similar increases in student interest in petroleum engineering at the School of Mines. Since she began teaching at the school in 2002, typical class sizes have jumped by 20, to 50-60, with department enrollment now standing at 450 undergraduates. She compares that number with the 120 when she started teaching.

Public Perceptions

While there is some negative press hitting oil and gas companies, students are fighting to get into petroleum engineering programs. Miskimins says the public’s general negative impression and common belief that alternative energy sources soon will replace fossil fuels are not enough to dissuade applicants. She recalls when she received her bachelor’s more than 20 years ago, family and friends predicted she would be unemployed within five years.

“Well, the industry is stronger now than it was then,” Miskimins asserts. “We are a fossil fuel-based economy and we are going to be that way for a long time.”

Olson points out the perception that the oil industry was dying was more prevalent five or six years ago. “Even among the general public, not many would say that now, because there is so much activity,” he says.

The environmental impacts of oil and gas activities are a more widespread issue for petroleum engineering students, Olson asserts, adding those concerns have not stopped many from applying to UT-Austin.

“We tell the students going into the petroleum business that there is an incredible need in society for energy, most of that energy comes from fossil fuels, and the best predictions are that that will continue to be so for decades to come,” he says. “And speaking of fears of oil’s impending scarcity, the scarcer it becomes, the more engineering it will take to find and develop.”

Like any other engineering endeavor, there are risks, Olson says, pointing to the Deepwater Horizon explosion and oil spill. The UT-Austin program does not shy away from discussing those accidents in order to show that more good engineers are needed to prevent similar accidents in the future, he says.

Like accidents, no one can predict the economic future, Olson admits, pointing out that while uncertainties exist regarding commodity prices and their impact on future hiring rates, the strongest likelihood is that oil prices will remain strong for the foreseeable future.

“Natural gas prices have slipped, and that has been somewhat problematic for people working in natural gas, but the oil side still is going strong and our students still are getting lots of job offers,” Olson says.

The advice given to freshmen at UT is that job market predictions are just that, Olson says, so students should not pick majors based on the size of possible paychecks. “They need to pick something they really enjoy doing, and something that complements their strengths,” he suggests.

The demand for new petroleum engineers will continue to exceed supply for a number of years, Miskimins predicts.

“I just talked to a company looking to hire twice what it hired last year. Maybe five or 10 years from now a balance will finally be there, but right now companies are upping their hiring numbers,” she says. “The industry is handicapped in a lot of places. We are handicapped sometimes by a lack of equipment, but manpower is another area where we are handicapped.”

Looking Ahead

Olson says a large number of companies, from majors to small independents, recruit on the UT-Austin campus. He says 110 petroleum engineering students received their bachelors’ last year, and 95 percent either took jobs or went on to graduate studies.

“The top students are getting multiple offers and signing bonuses. It seems pretty good,” Olson assesses. “A lot of our students are here because they have a family connection with the industry. We try to make them step back, saying they need to enjoy what they are doing, so that even if they do encounter hard times ahead, they are willing to stick with it.”

Undergraduate enrollment in petroleum engineering at Montana Tech has leveled at 375, Schrader reports. Two years ago, the program moved into a new building designed to handle the increase in students, and the school is looking into expanding faculty as well.

UT-Austin also is looking for more teachers and lecturers, Olson says. “Across the country, basically there are 19 university petroleum engineering programs, and a lot of them have been pushing industry hard to get help finding lecturers and experts to teach certain courses that are more practical,” he points out. “A lot of the petroleum engineering departments are trying to hire new faculty. Part of the problem is it’s really hard to get good people because we are competing with industry, which pays a lot more than we do, but we have had some recent hiring successes, and we are optimistic there are more good candidates out there for us to find.”

University planners have to balance expansion plans with the reality that the oil and gas industry could again suffer through a downturn and drag down enrollment, Olson cautions. “UT-Austin is actively trying to get those classroom numbers a little more under control, although I think industry would prefer for us to keep taking as many as we can,” he says.

Information For Students

The universities receive direct feedback from oil and gas companies regarding their needs, Miskimins says. Two avenues of communication are industry advisory boards, with different sectors laying out their needs regarding new technologies and techniques, and company recruiters, who ensure new hires are up to speed on their companies’ expectations.

“In general, we are a discipline that is very tied to industry in research areas, so we get a lot of informal feedback in that way, too. In a way, you follow the money. If companies are willing to sponsor research in a certain area, that is an area in which they want their employees to have training,” she reasons.

Schrader says professors at Montana Tech typically meet with the advisory board twice a year. “They usually are some fairly long meetings,” he reports. “The big agenda items are how graduates are doing and what (companies) would like them to know. We try to respond as best as we can.”

UT-Austin has a similar advisory board, and Olson emphasizes it only provides recommendations.

“The board members don’t tell us what to do in our curriculum, but they say these things are happening or this is important; we present what we are doing and they give us feedback,” he imparts. “This is a research university, and we all are involved in whatever is the hot new topic, so faculty members keep up with what the technology is doing through their research programs. A lot of that research knowledge propagates into our teaching.”

Olson adds professors typically emphasize fundamentals over specific topics in their lesson plans, pointing out that however current a piece of software taught may be, in five years it likely will be out of date. The teachers maintain students need to understand the fundamentals behind the technology more than the technology itself, Olson says.

Schrader reports her academic experience shows that approach pays off for graduates.

“The feedback I have gotten from people who have been successful is they enjoy their jobs and work hard,” she says. “There is not a sense of being overwhelmed or not knowing what they need to know. Also, the companies do a nice job of bringing new employees along. Some will move new hires through a variety of positions. They may have picked the graduates based on their coursework, but they let them do some of the day-to-day work in a number of areas before they settle down.”

Student associations, such as university chapters of SPE and the American Association of Drilling Engineers, provide another conduit of industry information for prospective petroleum engineers, Olson says. “About every week, one of the organizations will have a meeting, and students get a 30-40 minute presentation about a company or on some technical topic,” he says.

Industry Support

Welch says Chesapeake partners with more than 45 U.S. colleges and universities, working through student organizations and career service departments to help educate students about industry and employment opportunities. The company also interacts with faculty and staff through visits, on-campus job fairs and information sessions, he says.

Chesapeake’s scholarship program is another component of its student outreach, Welch reports, with the company providing more than $2.5 million a year in scholarship support. “In addition to financial support, scholars near the Oklahoma City corporate campus have the opportunity to be paired with a mentor at Chesapeake,” he says. “The mentor partners with the student for the school year, offering opportunities to visit corporate headquarters, discuss careers and advise about post-graduation life.”

Chesapeake also offers a summer internship program to connect with students interested in the industry, he reports. More than 150 students participate in the company’s intern program each summer, Welch says. In addition to work experience, he says Chesapeake offers educational and social activities geared toward encouraging career development.

Olson says in addition to oil and gas companies contributing $350,000 annually to UT-Austin’s petroleum engineering scholarship program, they provide grants and financing for research equipment and technology upgrades. “The companies are very responsive when we say we have this teaching need or we desire to get this piece of equipment. There also are some very loyal alumni,” he applauds.

Abusalbi says business needs determine the direction and level of university involvement for Schlumberger. Under corporate oversight, Schlumberger manages university relations on a regional basis to best match the local talent pool and demand. The company’s support ranges from computing and laboratory equipment to software and associated training, he says.

When setting joint research goals with its university partners, Abusalbi says Schlumberger challenges the institutions to develop the game-changing equipment and techniques that hold the potential to revolutionize the industry. The projects may target more efficient drilling techniques, or advances in data visualization or processing, he offers.

In addition to direct support of university programs related to petroleum engineering and sciences, Schlumberger helps develop the next generation of faculty members by hosting post-doctoral students wishing to gain industry experience. The program allows them to spend as long as two years in a company position before returning to the lecture halls, Abusalbi says. The company also provides technology advisers as visiting scholars, lecturers and adjunct professors at a number of institutions.

Chesapeake’s Welch adds his company is looking to hire petroleum, mechanical and chemical engineers for its field training program, although it also needs civil, environmental, electrical and computer engineers for other departments.

“Chesapeake’s entry-level engineers participate in a field-training program that lasts 12-18 months,” Welch says. “Every entry-level engineer works with a team of experienced engineers, so he or she is able to contribute in a supervised setting from day one. The training rotation is designed to give the new engineer training in every area of exploration and production before transitioning into a specific discipline, such as drilling, reservoir, operations or facilities.”

Petroleum Academies

In addition to nurturing the immediate class of college students, the Independent Petroleum Association of America is encouraging the next generation, says Doris Richardson, director of the association’s Education Center. She says IPAA began its petroleum academy, a high school-level engineering, geoscience and global energy management program, five years ago.

“I am a retired educator and also have been in the industry. I understood the need, based on our aging workforce issues,” Richardson says. “The solution was to allow students to know the dynamics of our industry at an earlier age, before they got to college. We have five academies now–four in Houston and one in Fort Worth–and our first class graduated last year.”

Public schools support this program because it makes mathematics and science more meaningful and relevant, Richardson asserts. “It is amazing to me that the school districts do not have a clue about how much math and science is used in our industry,” she reflects.

The oil and gas industry supports IPAA’s effort by providing guest speakers, participating in the program’s board of directors, and providing scholarships and interning opportunities, President Barry Russell says.

“One of the things about which I am gratified with the academies was the idea of working with the public schools, having a blending of offerings such as lectures and field trips, and providing an upgrade in the curriculum to help these students,” Russell praises. “IPAA has been really excited that the Houston Independent School District now calls this very multifaceted program one of the best in the country.”

Russell adds the petroleum academies are only one facet of IPAA’s educational initiatives aimed at high school students. Other components include teacher training at educational and professional facilities, a young professionals guest speaker career series, Junior Achievement leadership training, academic competitions, and field trips.

More than a dozen companies host students in IPAA’s intern program, Russell reports, through which participants shadow workers in several disciplines and jobs.

“At the conclusion of the program, we have a banquet and the students talk about their experiences,” he says. “There are kids who say they never had a vision of what they could do, but the combination of more technical skills and seeing the everyday work process at oil and natural gas companies really makes them think this is something they can do.”

Richardson points out in many cases the companies are very impressed with their visiting students, and stay in contact with them in hopes of hiring them after they complete college. She says that in addition to the program’s emphasis on science and mathematics, the high school students also receive nontechnical lessons.

“Every six weeks, I require our little scientists, who usually would much rather be in their cubicles, to give PowerPoint presentations, or participate in panel discussions and debates on the hot topics in regard to our industry,” she reports. “We really are preparing the leaders of tomorrow with this program.”

Editor’s note: The photograph of the Santa Rita No. 1 well on the University of Texas at Austin campus is courtesy of Marsha Miller/University of Texas at Austin.

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