WASHINGTON, DC, July 14 -- Officials from oil-producing states saw a slight increase last year in the number of students entering the US oil and gas business, but the pace was not enough to stem what is expected to be a growing tide of retirements within the industry, North Dakota Gov. John Hoeven (R) told the House Subcommittee on Energy and Minerals Resources July 8.
Helping to avert a looming labor shortage will take a concerted effort by both industry and government, according to some witnesses. But some industry groups told the subcommittee it's an issue industry alone should resolve.
Federal role sought
"There is a growing shortage of qualified workers in the industry today and that dilemma will require the combined efforts of the public and the private sectors to address," Hoeven said on behalf of the Interstate Oil & Gas Compact Commission (IOGCC) in written testimony before the subcommittee.
"Without solving this problem, any plan to increase domestic supplies of natural gas and oil will be difficult to implement. The oil business is well recognized as a boom-and-bust industry. While consumers see its effects in the costs of gasoline and heating their homes, for the people who work in the industry, it has meant loss of jobs," he said.
Since 1982, the industry has lost more than half a million of those jobs, from roughnecks to engineers, according to IOGCC.
The state group blamed part of the problem on industry itself, saying companies need to sell themselves better. Even now, with higher natural gas and oil prices, many former oil field workers are electing to take jobs in industries perceived as more stable or higher tech, the governor said.
"Many jobs in today's petroleum industry are on the cutting edge of technology, innovation, and vitality. The perception that the domestic industry is dying a slow, low-tech death must be countered by the reality of its vibrancy and growth as a technology-rich industry," Hoeven said.
The IOGCC task force recommended the following:
-- Make federal funding available for pilot programs to solve manpower shortages.
-- Assign an individual from an appropriate federal agency to work directly with the IOGCC on a long-term basis to address labor shortage problems.
-- Engage federal field offices to provide on-the-ground assistance in designing effective training and recruiting efforts.
-- Create internships within federal departments for those in petroleum engineering and geosciences graduate and undergraduate programs.
US dominance at risk
Hoeven and other witnesses also cited a landmark 1999 National Petroleum Council study that predicted more than 40% of the industry's scientific workforce would retire during this decade.
Jim Wicklund, managing director, energy and research, Banc of America Securities LLC, quoted from a Society of Petroleum Engineers study that showed 61% of its members were 45 years old or older and that only 15% were less than 34 years old.
"The average age of a geoscientist in the oil industry today is 49 years old. He is a grandfather with two children. He will retire in 10-15 years, taking his expertise and knowledge into retirement with him, with few successors coming behind to maintain our leadership position," Wicklund said.
Wickland warned that unless the government and industry start taking the problem more seriously, the US's prominent role in the oil and gas industry would be jeopardized.
"In order for this intellectual capital to remain in this country, efforts must be made to stimulate interest and participation in the industry and in educational levels across the spectrum. If not, the continued dominance of the US in the oil and gas industry would dramatically decline and the implications for US employment in the energy industry as well as other industries that rely on hydrocarbons as a product feedstock (medicine, plastics, textiles, etc.) would be quite negative," Wickland said.
Training issue a top priority
Anthony Stamato, vice-president, communications, for Midland-based Key Energy Services Inc., said that even if US producers get the public land access they have been seeking for so long, there might not be enough workers to get to the oil and gas.
"Even if we achieve all the required reforms to improve access to the US resource base, service companies like Key Energy still may not have a sufficient number of adequately trained crews to staff the rigs required to keep the oil and gas flowing," Stamato said. "Today, we are experiencing crew shortages in several of our operations in the US; and the prospects for improvement are not great," he said in remarks also on behalf of the International Association of Drilling Contractors.
Yet the situation is far from hopeless, he suggested. While challenges remain, industry and government together have moved forward to address the issue, Stamato told the committee.
He praised a Department of Labor's workforce grant program as a model that could be expanded. Programs are now under way at San Juan Community College in New Mexico, Midland Community College in Texas, and High Plains Technology Center in Woodward, Okla., he said. At each of these schools, DOL provided grant funds, ranging from $1 million to $3 million each; local businesses contributed equipment and funds.
"We like these training programs, they are cost effective, involve the local community, and can give the students a broad set of skills that are very attractive to our business," Stamato said. He urged Congress to give DOL the funds to continue the program on an annual basis.
He also urged stakeholders to build a partnership among industry, government, and Hispanic organizations to improve English language skills in order to enhance the upward mobility of an existing relevant labor pool.
There also should be public-private partnerships to provide grant support for management development programs for potential middle and senior level management, Stamato suggested.
In addition, industry and government should work together to create support services for workers to provide them with some financial stability to bridge the gap between training and employment.
Ted Hess, manager of human resources for Apache Corp., Houston, also cited the 1999 NPC study in remarks before the subcommittee, but suggested that industry should play the leading role in fixing the problem.
"We do not believe this is an area for more government programs," he said. Rather, Congress and the administration should be focusing on ways to craft an energy policy that makes energy markets less volatile.
He spoke on behalf of several trade groups, including American Petroleum Institute, Domestic Petroleum Council, Independent Petroleum Association of America, National Ocean Industries Association, and US Oil & Gas Association.
Hess said that companies generally do not feel the existing skilled personnel shortage is hampering producers from finding and producing oil and gas right now. But industry is worried the problem will become more acute in the years and decades to come.
"Our industry takes this situation seriously and we will continue to do so," he said.
Hess said there was no doubt industry in the past could have done things better to avoid the current situation. But they are working hard to address the problem in a constructive way today, he said.
One thing his company and others are doing is working closer with petroleum degree granting institutions to attract more talented students to the field, Hess said.
Contact Maureen Lorenzetti at Maureenl@ogjonline.com.