Energy industry is intent on hanging on to its talent

So much technical talent went out the door during the 1980s oil bust, the oil and gas industry saw recruiting set back for a generation.

Now with oil and natural gas prices languishing amid the worst recession in decades, companies that have toiled heavily to recruit engineers, geologists and other technical professionals hope to avoid a repeat.

“We’re still going to need engineers,” said Elizabeth Costello, head of the college campus recruitment program for Oklahoma City-based Devon Energy.

Oil prices haven’t outright collapsed as they did 25 years ago. But they have fallen to levels that, if sustained, can make costly operations unprofitable, such as Canada’s oil sands, multibillion-dollar platforms in the Gulf of Mexico’s deepest waters, or even technically advanced efforts to squeeze hard-to-reach oil or gas from existing wells.

The 1980s crash forced out at least half a million jobs in the oil and gas industry from 1982 through 2000, according to the American Petroleum Institute. Not only were workers let go, enrollment plunged at engineering schools as college students flocked to other professions.

That blackout led to the industry’s current labor squeeze. The majority of the work force is over 40 — nearly one-third over 50 — and the huge wave of expected retirements in the next 10 to 15 years spawned a recruiting rush to fill the holes.

“There are many folks still around who remember how the oil industry, Chevron included, cut back on just about everything,” Chevron spokesman Mickey Driver said.

“Unfortunately, we had to let people go, including petroleum engineers and geologists. Since then, we have been working hard to regain that talent.”

Now, despite the downturn, companies are striving to keep their gains in skilled help, whether seasoned professionals or college graduates.

Have been around 35 years in the industry (oil sold for $3 per barrel when I arrived) and seen a number of these cycles. I got caught up in one myself in the late ‘90s after 27 years with a major.

I see a couple of major differences now exist as compared to the other times.

1. The workforce is older, much closer to retirement (such as myself). Means they are pretty well paid and may be susceptible to being removed to save larger $.

2. The other is that there are lots and lots of foreign nationals who have entered the domestic workforce. In fact the company I work for probably gets 1/2 of its employees from other than this country. Some are naturalized, while most are not. Don’t know if this will impact any downsizing (i.e. - get rid of the foreigners first?).

The oil industry is an exciting place to work, but one must be prepared for changes along the way....

[Article]

“There are many folks still around who remember how the oil industry, Chevron included, cut back on just about everything,” Chevron spokesman Mickey Driver said.

Chevron was better than most. I was in the industry and saw it all, riding the tiger at an independent, unable to quit my job for over 10 years.

I remember reading Value Line Survey of a Sunday afternoon (I know, I know -- "what were you doing in the library?! -- why weren't you in the office?!") and seeing the bitter comments of the Value Line securities analyst (yeah, it's their turn in the grinder now!) about how Chevron was "hoarding talent" instead of giving up the nourishing body rain that would drive their EPS skyward by .... oh, 40-50 cents per share.

Someone said working for Chevron was like being in the Army -- but at least it was the American Army.

My company did a draconian layoff, took out half our office and shot them, for an EPS gain of 51 cents per share in 1988. What vision .....

I got caught ten years later, when the Asian Bubble collapse took oil back down to $11, and the financial boys in New York made all the E&P executives swear a blood oath, with their jobs stapled to it, that they'd never hire a single warm body again. And for three long years, they didn't. (Oh, one or two, here and there, for non-advertised openings, or going after a particular person for wanted skills, that kind of thing. But no general hiring.)

It was after that that they found young people had better things to do than ride the tiger that would eventually, almost certainly, turn on them and eat them in mid-career. Young people would come aboard a major company from an AAU-listed university, stay two or three years .... and then back to school for a Ph.D. program, or off to one of the state geological surveys. They'd leave, seeing no future in the "dying" industry. And all the hiring surveys conducted by industry and government bore out their judgment; managers and executives remained pessimistic and projected out declining head counts for years to come.

So at least industry is trying to learn, this time. Let's see if the boys in New York, preoccupied by their own disasters for a change, will leave the petroleum industry the hell alone long enough for them to help slow the slide down the back of the Hubbert Peak, at least until scaled alternatives become available (which won't be soon).

For further reading, online book advert re Hubbert Peak (w/ plugs by certified industry Real Guys, incl. Matt Simmons):

http://www.princeton.edu/hubbert/

They blew out most of the last two generations of professionals. The guys they had in the 50's got let out in the late 50's and early 60's when Saudi came in. The guys they hired in the 60's and 70's got blown out in the Big Bust. And now the people they've hired since 2001 are going to be put through the wringer, or else they're going to blow out the rest of the best of the best of the best from the 70's and 80's. The guys who got caught in the big layoff in the late 50's were born in the 1930's -- the Silent Generation. Then the Boomers got it in the Oil Bust, and the X'ers got theirs in the Asian Bubble freezeout. Now the Gen Y bunch are in the press. That's four generations.

And I seem to recall being told that there was still an earlier boom-and-bust, guys being turned out at the end of World War II or a couple of years after that. I'd defer to someone like John Amoruso or Sabin Marshall to know that -- I may see Sabin at a Friends of Archaeology lecture this Sunday at University of St. Thomas. He was president of the Houston Geological Society in 1973, belongs to that older generation of survivors who saw their friends blown out into the streets in the 50's and 60's to become tire salesmen with college degrees. What a waste.

Will the industry change its tiger stripes or just go on eating its young?

I know a reservoir engineer at Conoco who put his name in, volunteered for the axe. Just bought his last house, has his new 'Vette in the garage, and his wife, the financier of the family, has had them in conservative investments, so they sidestepped the October carnage.

Yes, the axe will find lots of unresisting necks this time.

Problem is, as you point out, the government is doing a log-roll, or maybe "death-roll" is more like it, and trying to capture the value of investments and savings to divert to policy goals via reflation. They've been busily driving investors into Treasurys for six-eight months, basically killing the commodities group (and accidentally slaughtering equities -- oh, sorry!), and now suddenly the dollar is back on the down escalator. That's Ben Bernanke capturing value for the Agenda with his printing press.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.