The oil and gas industry fretted about recruitment of engineers and scientists while it was scrambling to hire them in the boom years that now are history. Now it’s fretting about the future supply of engineers and scientists as it lays them off by the thousands.
At the RMI Oilfield Breakfast Forum in Houston Apr. 8, RMI Pres. Steve Jacobs asked speakers to identify their greatest immediate worry. Three of the four—chief or high-ranking executives of an oil company, a service firm, and a drilling contractor—responded with, as one of them worded the answer, “keeping talented people.” The fourth speaker, an investment analyst, said his main concern was the economy. When business conditions were opposite those of the present, speakers at industry functions routinely said the same thing.
Talent pool
This is no surprise. In good times and bad, the oil and gas industry depends on its talent pool. That it can’t keep the pool full when commodity prices crash is a painful business imperative. Managers making layoff decisions don’t need to be reminded how much the industry’s oscillating employment record hurts.
But a reputation for cyclicality isn’t the only obstacle companies will face when they resume hiring, especially for entry-level positions, when the business recovers. The industry’s chronic unpopularity is another. And related to that problem is the supposition that oil and gas are yesterday’s fuels. Why would anyone contemplating a career or job change stake his or her future on substances thought to be in their dying years?
In the premise of that question, people knowledgeable about oil and gas markets see fatal flaws. But most people in the US, especially young people who haven’t studied the subject, do not. They read that the world is running out of oil. They hear government officials talk about switching to renewable fuels to cure a national “addiction” to petroleum. The younger ones have been told since grade school that the use of fossil energy warms the planet dangerously, so any alternative must be superior.
The problem has intensified with a recent onslaught of legislative, regulatory, and budget proposals that seem designed to drive oil and gas out of the energy mix and the industry that supplies fluid hydrocarbons out of the country. Denials by the Obama administration that this is the intention don’t align with what’s happening. The plan seems to be to shrink access by producers to hydrocarbon resources on federal land and to sap cash from oil and gas companies to fund initiatives in other areas, including heavy subsidization of noncommercial energy.
As has been argued here frequently, the industry has good reason to resist policy errors like these as the threats to national prosperity that they are. But it has a further reason, related to staffing, to fight the notion underlying these moves that the US can afford to treat oil and gas as fuels approaching extinction: No one wants to feel like a dinosaur at work.
Expectations about the death of oil and gas, deliberate or otherwise, are unreasonable. In its Annual Energy Outlook published last month, the Energy Information Administration projects big changes in the US oil market, most related to conservation and renewable fuel. One major change is the cessation of growth in consumption of oil as use of liquid fuels increases by only 1 million b/d between 2007 and 2030 and as ethanol and other biofuels make up the difference.
Course correction
That’s a noteworthy course correction. It’s also inevitable: Oil consumption can’t climb forever. In EIA’s reference-case forecast, however, the industry still supplies 14.32 million b/d of crude oil to the US in 2030, including 7.37 million b/d from domestic fields.
These numbers do not indicate an industry likely to disappear any time soon. And future policies can’t change them much except at untenable cost. Finding, producing, transporting, and processing the oil and gas that the US will continue to need, no matter what its government does, will require much work for many years. That work, lest anyone forget, must be done by people.
