Schlumberger warns of looming shortage of petroleum engineers

By Wael Mahdi
Bloomberg News

Oil companies face a dwindling pool of engineers and other technical staff needed for exploration and production, the head of the world’s largest oilfield services company said.

The number of young recruits hired to replace aging petroleum engineers has declined over the last 10 years, as many college graduates choose managerial positions over engineering jobs and other field assignments, said Andrew Gould, chairman and chief executive officer of Schlumberger Ltd.

“The talent gap is still a factor that limits the expansion of the oil and gas exploration industry,” he told a conference in Dhahran, Saudi Arabia, on Dec. 18.

Many young people believe exploration for oil and natural gas is a dying business, Gould said. In fact, engineers with advanced technological skills are in great demand at companies that need to drill deeper and in increasingly challenging conditions now that the era of “easy oil” is over, he said.

Since 2004, Schlumberger has paid its newly hired engineers more than new employees holding management degrees, Gould said.

A shortage of university professors in the necessary subjects exacerbates the problem, said Nigel Middleton, senior vice president for strategic enterprise at Colorado School of Mines in Golden, Colorado.

“It was difficult to recruit faculty for Colorado School of Mines in the last few years, as their pay in the industry is higher than that in academia,” Middleton told the conference.

Schlumberger and other large energy companies are trying to improve their collaboration with academia to ensure an adequate crop of field engineers in coming years.

Larger numbers of petroleum engineers are graduating from schools in China, India, and Indonesia. “They are as good as the ones graduating from the West,” Gould said.

Photo: Anadarko

36 Comments

  1. Mike

    How about demoting some of the managers back into technical roles where they can become useful once again?

    #1
  2. BudaSeis

    Why do I think the story is really “shortage of US engineers willing to work for a pittance forces oil companies to recruit overseas?”

    #2
  3. jake23

    Considering how many boom bust cycles the energy industry has had over the last 30 years is it a surprise that there is a lack of sustained interest?

    #3
  4. Dan

    “Young people think oil and gas is a dying business,” No wonder, Obama & Co. is dead set on killing it .

    #4
  5. JohnGalt

    It’s not just oil and gas. My university has a hard time recruiting enough qualified Americans for a Ph.D. program in the biological sciences, and we pay a modest but livable stipend. We take all the native applicants that we think can do the work, and then fill out the class with motivated foreigners. But multi-year graduate degrees don’t pay off when our economy allows connected people to do joke finance, law and business degrees and make a pile of money for little risk or effort on Wall Street and in self-perpetuating law and consulting firms. Being an engineer or scientist is hard and doesn’t pay that much. Why bother? Those people willing to work hard usually don’t have the academic background to handle the work.

    A knowledge economy needs knowledgable people to do the work, and that means scientists and engineers, along with other creative types. If we don’t figure out how to motivate students to choose this, train them appropriately and reward them, then we’re in deep trouble.

    #5
  6. Kayla Pollard

    Note to potential students:

    An engineering shortage does not exist, except in corporate propaganda where it serves as justification for importing thousands of low-wage Chinese, Indians and Indonesians.

    For any decent job, expect strong competition with dozens of applicants vying for a single position.

    #6
  7. Jake MacButters

    Oh there are plenty of graduate engineers in this country, no shortage at all. Unfortunately they are most like the students of engineering at Texas A&M and cannot even stack logs.

    #7
  8. DarronFreed

    Total BS… They recruit overseas because they can get people for half the price that they can get them for here… Unfortunately, it takes 4 of them to have the equivalent experience / capability as someone from over here, so they are losing money in the process…

    #8
  9. Rancher

    It may not be dying but it is a feast or famine kind of job. You are either going full blast or they are laying you off at the drop of the hat. That is why people who have had experience do recommend the job to their own kids. The oil industry has only their self to blame for the shortage. Treat people poorly and they do not want your job. Ask any older unemployed oil and gas worker. If not laid off they are looking to make a move to a more stable job environment.

    #9
  10. Mike

    I don’t know if I would say they are aas good as American engineers coming out of our Pet E schools. If they are trained properly they can be as good, but there are cultural differences in how things are achieved in an efficient manner.

    The only reason a Schlumberger person is saying they are just as good is that they can pay them far less than a western engineer. That is their bottom line. Schlumberger is as much fault for the industry’s lack of quality people. They let their expereinced people go in order to save money. They like hiring new inexperienced people… it is cheaper and they could care,less about the service they give. What choise does the operator have. All the service end thinks this way.

    #10
  11. jwyoming

    This is about as much balony as we can take. There are plemty of engineers in the USA. The giant corporations wantr to bring in foreign engineers because they can hire them cheaper. Brown & Root for yers advertised for engineers at one of their Houston projects with the stipulation that the hire must speak Hindu. Explain that one to me. Houston by the way is in Texas which is part of the USA

    #11
  12. Hotpuppy

    Young people see Oil & Gas treats it’s staff like expendable resources and laid off tens of thousands when it suited their bottom line. Now they are paying dearly for that. Short Term Focus, Long Term Cost.

    #12
  13. Trail Trash

    Thank goodness for the Chinese, Indians, Indonesians and Africans. They are definitely taking up the slack in the industry. The problem for me is that they have a hard time understanding my Texas drawl. I’m always having to repeat myself. Repeat myself.

    #13
  14. 79AG

    This isn’t a problem with just the oil and gas industry, but many other industries that have been around for awhile, like petrochemical, refining, power, etc… Engineering degrees take a lot more effort to get and too many of the younger people aren’t academically able or willing to put in the work it takes to get one. I’m disappointed to see the number of young people going to college and getting the easy majors, only to wind up working in low paying jobs (if they can find one) after graduation. On the other hand, it’s understandable, but disappointing, to see all of the corporations that ‘import’ so many engineers because of the big cost advantages. I would encourage anyone who wants to work hard and have a challenging, useful career to pursue engineering. There’s always room for good, creative engineers in any industry.

    #14
  15. Yami

    If this is the case, why not go to orientations for those going into college? Or talk to kids at the end of senior year of high school? Or even at career fairs? They could pull in those that go into engineering but don’t have a specific career path in mind.

    #15
  16. Jared

    I just love it. Oil service companys complaining that there is no engineering talent out there.

    translation: There is no more engineering talent out there that wants to make $50,000 dollars a year and work 15 hour days. Only internationals will work for that anymore.

    If they pay them more, more engineers will come I promise.

    #16
  17. bigfishh

    I am an engineering executive and I both employ engineers and hire engineering firms for projects all over the world. Chinese, and most engineers from developing countries, have a big skill/attitude deficit when compared to engineers from North America. Engineers from developing countries like China and India work well in a technician role but lack problems solving and leadership skills. The big attraction is low cost. Engineers from these countries work for wage that is a fraction of what North American engineers demand. Our solution is to use engineering professionals from developing countries for in-country, plant engineering and operations roles and for performing routine jobs like updating as built drawings.

    #17
  18. Dan-O

    Note to parents/kids: You will advance through a E&P company faster with an engineering degree than you will with an accounting/finance/mgmt degree. Plus you will get paid boo-koos more, especially in the first years out of college. I am an accountant and just amazed at the pay and advancement my engineering co-workers/friends are experiencing right now. If I could, I would go back and get my petrol engineering degree.

    #18
  19. RJNelson

    What are you people talking about? As the son of a petroleum engineer I can tell you that they make tons of money. They start off in the $80-$90k and can make as much as $150k a year. My father ended up making $200k a year, his boss made about $300k and the president of his firm made $500k a year along with stock and other compensation that gave him a net worth of around $10 million. There’s still all kinds of money in the petroleum industry. You guys must not be talking to or hanging around the right people.

    #19
  20. Jim

    This is not caused by the universities, it goes to the oil companies who have hiring practices that continue to put American Engineers out of work. While not discussed, all of the oil service companies have agreements with Indian Companies and use these guys instead of the American Engineers. Go to Extended Stay America or Candlewood Suites and note the number of young Indians present. They are not here on vacation. They are replacing Americans and in most cased the results are mixed. Even worse, we are giving them our technology and designs. Ever wonder why so many Indian companies are now players in the oil patch? This is due to the unplanned technology transfer with these cheap Indian Rentaengineers.

    The problem goes to the companies not hiring. The engineers in the oil patch come out of two universities in Texas. However, why bust your butte getting a degree in engineering when hiring is not transpiring. In my case, I retired because of a lack of jobs plus I am friends of several younger engineers who cannot get work because of the hiring companies won’t hire them. The excuse is often “you are too qualified and will get bored with the job” by HR idiots who never worked as an engineer. This translates as we don’t want to pay you what you are worth. It also is often a problem when young inexperienced (& sometimes incompetent) hiring managers are intimidated by the quality, education, and experience of the engineers when they review their credentials.

    Don’t blame people not going into engineering programs or the universities, blame the lack of a long view by the hiring companies. They are the sole blame. Stop a minute and look at the major oil service companies moving offshore. This is the beginning of a huge issue for Americans in the oil patch. I promise whoever is still reading this that technology and innovation has moved at a fraction of the speed as was common in the 1970′s and 1980′s. Most new designs are minor improvements of 20 year old technology. The current company and engineering management is not breaking much new ground. As an example, the current gate valve and ball valve designs are essentially the same as those designed by Aggie, Rice, and University of Texas engineers. There in lies the problem.

    #20
  21. phantom

    Never take what a politician says at face value … the H1B visa employee is not likely to quit over low compensation or poor working conditions … considering wherever they came from is likely worse. These employees can not easily quit their jobs without losing the right to remain on US soil. Many companies use this as leverage against H1B employees to get them to do what they want with out having to compensate them as much as would be required by a US citizen who can go elsewhere for work.

    #21
  22. Charles

    Yet again another story about a shortage of engineering talent! The US has 300 million people and yet colleges cannot graduate enought engineering talent?!? Companies keep sounding this same alarm in order to justify bringing in overseas labor on H1B visas.

    If companies were going to be serious about addressing this issue they would make large investments into the education system (K-12 through university) to ensure a pipeline of local talent is always available. This will happen only when the US government turns off the H1B faucet and forces companies to re-think how they recruit.

    #22
  23. Daniel

    Liars, They just want cheap labor.

    #23
  24. Dollar

    Its the boom and bust nature of the business.

    Back in the 70′s oil boom, everyone and their dog was enrolling in petro engineering, land management, or geology courses. Universities expanded their curriculum.

    I had two cousins who were in school at Univ of Oklahoma studying petro engineering when the bust hit in 1982. One was able to get a job with an oil company and work in South America. The other was forced into a civil engineering job in city government.

    From 1982 to 2002, very few wanted careers in the oil business.

    Even going back to the late 50′s and 60′s, the major oils were laying off petro professionals in droves due to market being flooded by ME oil. Geologists were a dime a dozen.

    This is nothing new.

    #24
  25. lil ol me

    perhaps if new engineers didn’t have to work 3 years in BFE on a rig they might actually be interested. Most of these compnies have a policy that says beginning engineers with a Batchelors degree go to the field 1st. Makes it tough to even get them to talk to you.

    Heck, a cubicle seems luxurious in comparason.

    #25
  26. houtexanfan

    I love when it comes to O&G, everyone is an expert. Yet most know nothing of which they speak.

    #26
  27. Sprocket1962

    Utter Rubbish!!! Mother Schlumber hires everyone and their bridge-partner at a drop of the hat and then lays them off at the smallest downtick in business. I love the Oil Patch but have gone thru my fair share of downturns and layoffs. Thankfully, I have a stable job now with a great boss, who, incidentally worked many years for Schlumber before he went to work for my firm. Gould is absolutely the WORST person in the world to be the mouthpiece for the Oil Patch. SLB and BHI couldn’t care less about stable, decently-paid engineers.

    #27
  28. soccerdoll

    My Daughter just graduated with a petroleum engineering degree and found a job. Most of her December 2010 class from texas tech got jobs. Not sure about the ME’s, EE’s, etc. No one wants to train: so companies hire expereienced or very inexpensive foreign engineers. I have worked in the O&G industry for 30+ years and there is still a gap in the need of technical personnel needed to replace upcoming retiree’s, so the road is going to be bumpy in the next 5 years. We need to shut down the visas.

    #28
  29. Majito Querido

    pure garbola…so the us young believe this but overseas punks not? hogwash

    #29
  30. EA

    “Since 2004, Schlumberger has paid its newly hired engineers more than new employees holding management degrees, Gould said”…..?????

    This is not true. I work with Schlumberger. Come and see how some new engineers are been paid especially in Africa. They tell you that you are HCR(Home Country Resident)meaning you are assigned to your own country and pay you less but still sends you to a different country for more than a year or two and keep on paying you a cheap local salary and tell you “you are under training or better you are an FET/FST (Field Engineer Trainee/Field Specialist Trainee). That statement made by Andrew Gould in that conference is not true !! Contact insiders especially those from Africa and Asia and you’ll know that statement made by Andrew Gould is not true.

    #30
  31. tk

    The writer provides no statistics to flesh out the article, it’s simply a mouthpiece for Mr. Gould/Shlumberger to justify giving away American jobs.

    #31
  32. wearblackhelmets

    Haliburton & others would have plenty of people if they would quit practicing age discrimination. Also, be real. They can pay people from the other countries less.

    #32
  33. Sir Edward

    I went to an oil & gas job fair last week and one interviewer told me that I wasn’t qualified. So I asked him for some advice on what it would it would take to get on with his company…he told me to go and work for a supplier for 2-3 years and then come back….I countered and said wouldn’t it be good if I were just hired on and learned the trade for 2-3 years with his company(?) instead…nope, they didn’t have time or a program for that….he wished me well on my future endeavors….I thanked him and wished him well on his employee search….DON’T START CRYING THE BLUES IF YOU’RE NOT WILLING TO INVEST IN FUTURE EMPLOYEES!

    #33
  34. herman

    scholarships. money talks.

    #34
  35. Houstonite

    I believe Mr. Gould was speaking not about the U.S. oil industry, but the global industry in general, and about graduate engineers, not midcareer engineers. I have over 20 years in the oil industry and would agree with Mr. Gould; there is a shortage of engineering graduates interested in a career in the oil industry. The big companies will continuously hire new graduates, a practice that allows them to shape an engineer to conform to their culture, technology, practices, etc. I think the oil industry would hire more US graduates if there were more. But it is a global market. US graduates do have to compete with graduates in other countries. That’s not to say the industry wouldn’t hire midcareer, but in a downturn they’ll reduce or stop recruiting midcareers while they continue recruiting graduates to avoid having generation gaps in their ranks. Graduates these days are not attracted to an “un-green” industry or one they perceive to be sunsetting. When I graduated everyone thought the oil industry was going to die out; it was the same story. As for the boom-bust cycles of the oil industry, I don’t see that as terribly unique to the oil industry. Many industries boom and bust. That is life for most of us. Nobody has a job for life anymore.

    #35
  36. 8yr veteran

    As the name implies, 8yr veteran of this industry. Working downtown in an unidentified building on Louisiana St. The real problem isn’t lack of talent or qualified people. The problem is sorry managers that won’t get out of the way. There’s no one in the pipeline to “replace” these baby boomer managers who don’t want to retire. Where’s the incentive to stay in a job that requires you to work tons of hours with no chance to advance? Also, who wants to work with people that are 20 yrs older than you? This may sound like age bias but its true people. The few motivated members of my generation works to live, not lives to work. We like camaraderie after work. We don’t want to hear about your stupid grandkids. Lets just get the well procedures out the door and execute. When we’re waiting on a drilling rig, lets do studies. It’s the baby boomers fault. You need to make arrangements (i.e. let the younger guys start “officially” calling the shots) move on so we can move in or we will end up with no one manning the wheelhouse.

    #36