The alarm first sounded about five years ago.
The oil and gas industry was headed for a crisis. Simply stated, energy demands were going up, and workers were on the decline.
The reasons were many. When oil prices peaked in real terms in 1981, the industry laid off nearly 1.1 million employees, driving an entire generation of technicians and managers into other industries and discouraging students from entering the field.
Some 50% of the workforce was scheduled to retire over the next decade, and those long hours in the field and sometimes controversial environmental practices weren’t exactly a magnet for a younger generation driven by a desire for a flexible work environment, an obsession with technology and a passion for alternative energy.
Fast-forward to 2012. Crisis averted? The answer is, yes and no.
Fortune reports enrollment in petroleum engineering at universities nationwide has rebounded, driven in part by the price of oil and the interest in shale exploration and production. But there’s steep competition to hire graduates.
In Louisiana, researchers still are trying to get a handle on the state of the oil and gas workforce. Events such as the offshore drilling moratorium, the slowdown of the onshore rig count and shale plays across the country have caused some professionals to move on to other regions.
“It is a problem, and it’s a growing problem,” says David Dismukes, associate director and professor at the LSU Center for Energy Studies, which is collaborating with other entities on a labor study of the industry. “You saw the bottom fall out in 1986, and a lot of people permanently left the industry. That was a huge group of middle-aged or younger workers at the time that were lost.
“In the 1990s, when prices were low, a lot of companies were struggling to survive and they just weren’t hiring. Their ability to make grants and scholarships for the education of up-and-coming engineers was challenged. So a lot of those chickens are coming home to roost in terms of the next new generation of professionals and engineers and skilled workers that the industry needs right now.”
The Louisiana Mid-Continent Oil and Gas Association is working with LSU and the Governor’s Workforce Investment Council to produce projections of workforce needs that can be shared with four-year universities and vocational technical schools to structure education and training.
“We want to know what the workforce needs of our industry are going to be in five to 10 years so we can start designing the curriculums and putting the limited resources we have in the state into the institutions to actually train those people,” LMOGA President Chris John says. “The fact that the governor’s office is engaging in this project shows some concern about the workforce.”
The industry hasn’t sat idly by. Many companies are reaching as far back as pre-kindergarten and Head Start programs to recruit potential future employees by getting them interested in math and science early on, with current employees acting as mentors and volunteers.
Despite workforce challenges, Baton Rouge’s largest refinery—ExxonMobil—continues to hire nearly its entire operations workforce from Louisiana. The company is second only to state government as the city’s largest employer.
Spokeswoman Stephanie Cargile says ExxonMobil bases its hiring and training on a strategic workforce plan, which takes into account changing demographics to help it stay ahead of retirement, attrition and other trends.
“In the past five years, we have planned for and addressed hiring needs due to projected retirements,” she says. “Currently we expect to continue to hire locally at a steady pace and aren’t experiencing a shortfall of qualified local technical field or professional candidates.”
ExxonMobil takes an active role in the Baton Rouge educational system, preparing prospective future employees for science and industry careers through school partnership programs.
The company supports the Baton Rouge Community College Process Technology Program, a standardized curriculum for a two-year associate of applied science degree that prepares students to work as process technology operators in the Louisiana chemical industry. ExxonMobil employees serve on advisory boards and volunteer in the classroom, and the company hires interns and provides lab equipment.
The eight-year-old ExxonMobil LSU Minority Engineering Scholars Program provides financial support, mentoring and industry exposure to minority students interested in engineering careers. Since its inception, 38 students have taken part in the program.
“Three decades ago, the U.S. ranked third among developed nations for college students earning science and engineering degrees,” Cargile says. “Now, about 20 other countries rank ahead of us in these vital subjects. This is a point of great concern to us.”
ExxonMobil has an active school ambassador program and partners with pre-kindergarten Head Start centers and nine local elementary, middle and high schools to promote math and science learning. The company also plays host to area middle and high school students at the Louisiana Art & Science Museum for hands-on math and science competitions and chemistry demonstrations.
At Scotlandville Middle Magnet, ExxonMobil partners with the engineering program to identify and foster student interest and aptitude in science, technology, engineering and math. Several graduates of that program now work for the company as engineers.
Through the ExxonMobil Foundation, the company has brought programs like the Bernard Harris Summer Science Camp to Southern University and the Sally Ride Science Festival to LSU to increase female and minority interest in math and science. Employees serve as mentors.
“As a company and as an industry, we should work on attracting young people to science, technology, engineering and math careers by better engaging them in these subjects in pre-K and grade school,” Cargile says. “Industry can help achieve this goal by taking an active role in the classroom and by helping provide teaching materials that make learning these subjects more interactive and fun.”
Shell Oil Company has opened its own “university”: The Robert Training & Conference Center, which offers 150 core courses in drilling and well control, production operations and health, safety, security and environment.
The company partnered with LSU and Louisiana Economic Development to create the Center for Petroleum Workforce Development, which educates thousands of industry employees from companies all across the country.
Dismukes says interest in the oil and gas industry as a career choice has been growing. The challenge, he says, is whether that interest is growing at a fast enough clip to replace the retiring workforce.
Another solution for some companies—particularly those that operate internationally—is to hire workers from abroad. While the United States has a meager track record in getting young people into science and engineering careers oriented toward oil and gas, places like India and China have not.
Some are hiring employees who have retired back on contract. Others are turning to machines to do the work.
“If you don’t have labor, automation and other types of technology become more cost-effective,” Dismukes says. “You’ve already seen that on the production side. The number of people it takes to produce a barrel of oil and gas has been falling for the last 20 or 30 years. A lot of that has to do with technology.”
In the end, workers will also likely be pushed to become more efficient, reducing labor demands.
“If you do a simple extrapolation and say, ‘We need just as many people tomorrow as we do today,’ that would be somewhat erroneous,” Dismukes says. “The workers today and the workers yesterday and prior to that have historically become more and more efficient and will likely become more and more efficient as we move forward because these pressures are going to force them to do so.”