November 22, 2005 9:44 AM PST

Image problems lead to worker shortage in oil industry

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November 21, 2005
DOHA, Qatar--Who wants to work for an oil company? Apparently not too many college students.

Oil and gas companies are in the midst of a personnel crisis, according to several speakers and attendees at the International Petroleum Technology Conference taking place in Doha, Qatar this week.

Global enrollment in geosciences and other university majors relevant to the oil industry is dropping at the same time that the demand to devise new fuels and refining processes is rising. In the U.S., enrollment in geosciences hit a peak of 35,000 students in 1982 but now meanders around the 5,000 level, according to Scott Tinker, director of the Bureau of Economic Geology at the University of Texas.

"It is now around 1965 levels," he said. While enrollment in these programs is rising in China and a few other nations, it's mostly below the level required in nations where oil is being produced.

The picture is even worse at the graduate level. In 1982, about 4,000 Ph.D.s and master's degrees were awarded in geosciences in the U.S., and nearly half the recipients went into the oil industry, said Raul Restucci, executive vice president of exploration and production in the Middle East at Shell. Now only about 400 to 600 advanced degrees are handed out, and only 20 percent of recipients go to work for oil companies.

"The industry is having a real tough time filling jobs," Restucci said. "People availability will be a key constraint for a supply side response to increasing demand. In Houston, half of the work force will retire in the next 10 to 12 years."

The industry, of course, can blame many of the problems on itself. Since 1982, when the oil shocks of the '70s were subsiding, 1 million people in the industry have been laid off, according to Tinker.

The problem is further compounded by a tarnished public image.

"How are you going to get young graduates to join who think of it as something they don't want to be associated with?" asked Patricia Caswell, CEO of the Victorian Association of Forest Industries and a former environmental activist. "Look to yourself as leading yourself out of your own problems. You should be looking for solutions to the CO2 in the atmosphere way before everyone else."

Restucci agreed. "We will not be able to recruit and retain people if people do not see us as a high integrity industry," he said.

Diversity is not too hot either. At Total, a French oil company, the overall work force has become somewhat multinational. However, 81 percent of the senior management positions are held by French citizens, said Francois Viaud, senior vice president of human resources of exploration and production at Total. Women represent only 5 percent of senior management and 17 percent of managers.

"This is not acceptable anymore," Viaud said.

The average age at the company, he added is 45. Only 11 percent of Total's employees are under 30.

The company has launched a diversity hiring effort. Managers are given targets, but not quotas, to hire more women and multinationals, Viaud said.

During various panel sessions at the conference, several Middle Eastern attendees complained about the lack of representation of local employees at international oil companies. Several executives acknowledged that companies have looked too close to home when hiring, but the picture is a bit complex.

For one thing, Middle Eastern nations did not try enough in the past to create a system to produce qualified students and employees. Instead, the local governments sometimes pushed oil companies to effectively create make-work jobs.

"Many years ago we told them they were an employee and they did nothing," said Abdullah Bin Hamad Al-Attiyah, Second Deputy Prime Minister and Minister of Energy and Industry for Qatar. "They just sat there and got...a salary."

The local university system is also not as robust as those found in Europe and the U.S. To address this, Qatar opened Education City. Under this program, U.S. universities, including Texas A&M, have opened full-fledged branch campuses in Qatar that seek to recruit and educate students in the region. Though students can spend semesters studying at the main campuses in the states, they can also graduate by spending all four years in Qatar.

Fatih Birol, chief economist for the International Energy Agency, offered suggestions for resolving the staffing crisis. It starts with money.

"If there is significant demand in the market, and that translates to increased salaries, it will provide a signal to students," he said.

When it comes to environmental problems, "If windfall profits were to translate into real investments, it would effectively improve the image of the companies," Birol said.

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Corrections on your Dubai story
Hello!

Read your fairly extensive report on Dubai.

When I came here, like everyone else, I had those myths of 'sand-camels-sheikhs-oil-draconian laws' in my head. Courtesy: overdose of Hollywood stereotypes; U.S news channels and from people who have never been to the Middle East in their life.

Having lived here for more than two years and worked as a Technology Editor, seeing things first hand let me clarify a few things:

1.) Dubai is not an island nation. Infact, its not even a nation. It's just one of seven cities (or Emirates) in the United Arab Emirates with a population of 1.2 million. Its not an island. It has a coast-line, though.

Secondly, Dubai unlike other Gulf cities has very limtied oil reserves. I have read its around 8-10% of the revenues. Most of it comes through trading, toursim and import-exports.

2.) There are no personal income taxes (at this stage). However there have been media reports that they could be levied in the future. Other taxes (airport tax, sales tax, service tax etc) exist. There have also been reports, that VAT (value-added tax) could be imposed soon. Inflation is also pretty high. Oil prices have just been increased by 30%. And no, you don't oil in every backyard.

3.) The information on 'getting arrested' seems a bit exaggerated Mike.

There are tens and thousands of friends/colleagues who are single, and of the opposite sex who share a flat/villa. This is because its a company accomodation, or they don't have a budget to take their own apartment.

There are hundreds of pubs, night-clubs etc in Dubai, just like any other big city. Social life is excellent, if you have the money and the right company.

The city is quite liberal, compared to other cities in the Middle East. Freedom of press, is much more relaxed now than a few years ago.

Like any city in the world, there are certain local customs/traditions, implied through laws, we need to respect. That doesn't make a city bad.

4.) Yes, there are continued reports about Asian labour exploitation. Labour laws apart, the blame should be on greedy contractors, who exploit workers in 12-14 hour shifts in the heat. Things are changing, but slowly.

Compared to the Chinese/Asian sweatshops where we all get our 'cool-new sneakers; smart-phones, and those ipods and WiFi notebooks' from, Dubai is not such a bad deal.

Despite its share of issues, I think its a good city to live in and changing for the better (hopefully).

M.
Posted by maddyreddy (1 comment )
Reply Link Flag
Why?
Spend 7 to 10 years getting an advanced science degree only to go to work and be told what to do by some pin-head business major who could not pass general chemistry. Worse yet, you can make 3 times the money shilling stocks on Wall street. Science Degree = lots of hard work, low status, and mediocre salary.

The reason that we have the number of science majors we do is that many come from other countries where such degrees are seen as an critical part of the company and not just another asset to be bought and sold like so much machinery.

So, why so few geo-science degrees, gee I wonder?
Posted by Mister C (423 comments )
Reply Link Flag
aggreed!
I aggree.

I went to school to become an engineer, just to find out that I would be stuck behind a desk in a dusty office for the rest of my life. Also, a low paying job IMO. I spent 6 YEARS of my life and 50k on a degree just to find out that selling cell phones makes me more juice than anyone that is in the engineering field.

I went from a 40k per year job to a 125k-250k per year job, just by working for Cingular!

I do however know a gentalman that works for BP in Long Beach and he makes around 250k-300k per year. Not bad.
Posted by XxXBoodroXxX (4 comments )
Link Flag
The Truth Leaks Out
>Fatih Birol, chief economist for the
>International Energy Agency, offered
>suggestions for resolving the staffing crisis.
>It starts with money.
>
>"If there is significant demand in the market,
>and that translates to increased salaries, it
>will provide a signal to students," he said.
>
>When it comes to environmental problems, "If
>windfall profits were to translate into real
>investments, it would effectively improve the
>image of the companies," Birol said.


There is no shortage of Petroleum Engineers.
There is only a shortage of Petroleum Engineers
who are willing to work for cheap. This whole
thing is just propaganda from lying crooks at
the oil companies who want to hire cheap slave labor
to read the seismic tracings.

Want more talent? How about, when there is a big
spike in the price of oil, you give all of the
employees a bonus of $100k each. What's that?
You _do_ have a bonus plan. . . but it's only for
the executives?

We call that a bogus plan.

Time to call my congressman again, to talk about
how we need a big, fat windfall profits tax. . .
Posted by (139 comments )
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