November 22, 2005 9:44 AM PST
Image problems lead to worker shortage in oil industry
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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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