Seeking intelligent solutions to an aging energy workforce

The oil and gas industry has a problem. Fewer US college students are choosing a career in the petroleum sector, and the current aging workforce is nearing retirement.
Dec. 1, 2011
4 min read

The oil and gas industry has a problem. Fewer US college students are choosing a career in the petroleum sector, and the current aging workforce is nearing retirement. Many have already retired. This is a negative sum game and doesn't bode well for America and our energy supply.

According to the latest data from the Society of Petroleum Engineers, there has been an absolute decline in the ranks of US petroleum engineers over the past 25 to 30 years. The median age of SPE members is in the upper 40s, with 52% age 45 or older. Only 24% are under the age of 35. Within 10 to 15 years, at least half of our most experienced engineering professionals will be retiring, says the organization. This is a worrisome statistic.

Over the past six or seven years, oil and gas companies have begun offering very high starting salaries, often into six figures, to new petroleum engineering graduates starting their career. Other incentives, such as signing bonuses and generous perks, are offered as well. These financial incentives have helped increase the talent pool slightly since 2004, but not enough to accommodate future growth.

One problem is that petroleum engineering is a rigorous subject, and the dropout rate for majors is high. One highly regarded PE program noted that fewer than 15% of entering freshmen who chose a petroleum engineering major actually completed their degree in this field.

There are other reasons for the paucity of PE graduates as well. Despite the obvious fact that we need a steady supply of energy to fuel our economy, many students as well as non-students consider the petroleum industry "dirty" and bad for the environment. Trying to convince students with this perspective that they should choose to study petroleum engineering is akin to asking them to build nuclear weapons or a doomsday machine.

Other students have had relatives employed in the oil and gas industry and saw them lose their jobs when the industry went through one of its periodic declines. Some of them were obligated to make a career change in mid-life and suffered financially from it.

Significant political opposition to the oil and gas sector and an uncertain regulatory regime in Washington are other factors. And renewable energy just looks "sexier" to many idealistic college students who would like to think they can save the world from environmental disaster.

However, the problem is not just a shortage of engineers. Other energy professionals up and down the value chain are retiring as well, and experienced and well-educated replacements are hard to find. This is true of blue-collar as well as white-collar workers.

The shale boom in North America presents the opportunity to create hundreds of thousands of new jobs and a strong tax base for many states struggling through the current economic downturn. Helping to push shale development, natural gas is considered a clean energy alternative to coal-fired power generation plants as well as a possible transportation solution to gasoline and diesel engines.

According to a study by energy professors at Penn State University, the Marcellus Shale in Pennsylvania is pumping billions of dollars into that state's economy while creating tens of thousands of new jobs. As new technology allows the economic development of many other shale plays, other US states could see similar windfalls.

As the Baby Boom generation retires, the talent shortage in the energy industry will worsen if the number of incoming professionals doesn't keep up with the level of those leaving the workforce, said Bruce Bullock, director of the Maguire Energy Institute at the SMU Cox School of Business in Dallas. To help combat this decline, the institute has added a number of programs designed to prepare the leaders of tomorrow for the energy industry. These include executive leadership programs, energy clubs, coursework, and degree concentrations.

Bullock noted that few industries offer such a unique opportunity for individual and economic progress. Companies serve as enablers for their employees to impact and transform people's lives through energy development. They are able to create value for multiple stakeholders – employees, shareholders, customers, communities, and suppliers.

"No other industry combines the business, economic, political, and technological complexities on as large of a scale as the energy industry does," said Bullock. "While we can't prepare tomorrow's leaders with all of the answers, we can prepare them to ask the right question."

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Don Stowers

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