Dealing with the energy manpower shortage

The oil shocks of the 1970s and 1980s and the subsequent collapse in world energy prices from 1984 to 1986 resulted in a major retrenchment of the energy industry. The domestic industry alone lost more than a half million jobs in the mid-1980s. Since then the energy industry has experienced substantial volatility in energy prices that has posed special challenges to maintaining a stable workforce. While technology had made the workforce more efficient, it does not completely compensate for the need for core talent. This became especially clear as a boom cycle began and the energy industry found it difficult to meet the demand.

The Interstate Oil and Gas Compact Commission first warned of the shortage in its 1997 report, “National Geosciences and Engineering Manpower Issues for the Petroleum Industry.” In 2001 the IOGCC published “Human Resources: The Missing Piece of the Energy Puzzle,” to bring attention to the declining numbers of petroleum professionals. 2003 IOGCC Chairman Gov. John Hoeven of North Dakota formed the Petroleum Professionals Blue Ribbon Task Force to follow up on the growing concern. IOGCC issued “The Petroleum Pros,” with guidelines for the federal government, state government and industry to follow to help combat the decline of petroleum professionals.

The task force found a complex network of challenges that were synergistic with the original focus on a shortage of qualified professionals and a skilled workforce. Almost every aspect of the industry was downsized. The task force also made note of the significant changes to the domestic industry. Shifts in environmental policy and domestic access challenges encouraged the major and super-major operating companies to shift their investment emphasis to other regions of the world with large reserves and less environmental and legal regulation.

Recommendations

The task force concluded that the solution to its charge of regenerating the workforce required a national effort in three areas:

• Federal Government – research and national outreach
• State Government – education of the public and state stakeholders
• Industry – on the ground focus and involvement

The task force developed templates of recommended actions for each area, calling on government, agencies, academia, operating and service companies and non-governmental organizations to join together to improve the workforce situation.

Federal Template:
The federal government is the largest resource owner and chief regulator and as such must commit its infrastructure and financial resources to assure that a long-term focus is developed and maintained.

State Template:
The states have critical roles in managing regional energy resources, providing regulatory structures and providing funding for all levels of professional and vocational education and research infrastructure.

Industry Template:
Industry must work with the other stakeholders to develop and deliver a long range plan, providing data, technology and training/internship opportunities as well as funding.

Progress

During his second chairmanship of the IOGCC in 2007, Gov. Hoeven decided to take it one step further and issued, “Petroleum Professionals Blue Ribbon Task Force: A Follow Up Report.”

Since the final report was issued by the task force in 2003, significant progress has been made. Enrollments in petroleum-related majors at America’s colleges and universities that had been shrinking for many years have increased. According to the updated report, the number of bachelor’s degrees awarded in petroleum engineering has grown from 260 in 2000 to 322 in 2005; however the number of geology degrees awarded has fallen slightly from nearly 3,500 in 2000 to 3,300 in 2004.

Most encouraging is the evidence of public-private partnerships at every level. The task force recommendations for establishing internships, scholarships and other programs designed to attract young people to petroleum science careers has especially taken root in all areas. The states also have sought to streamline and encourage production through regulatory and incentive structures, as well as providing funds for research and professional and vocational education.

The task force also recognized that it would be the industry’s role to commit both funding and to initiate action collegiately within the industry and in outreach to the other sectors. The task force called upon the industry to provide the data, technology and training opportunities on a larger scale to stimulate the development of the workforce for the future.

Looking Forward

The federal sector is not only the largest resource owner and chief regulator, but a significant beneficiary of our nation’s energy resources. Afflicted by political cycles in the same way the industry is afflicted by market cycles, it must craft a consistent public policy cognizant of the impact of a dynamic domestic energy industry on jobs, tax revenues, balance of trade, the federal deficit and also securing the supply of energy to meet our nation’s needs over the long-term.

The state sector must continue to provide the educational, research and business infrastructure required to support a healthy energy industry. Together with other stakeholders, it must take the lead in encouraging and developing robust education programs and collaborative initiatives in workforce development. The industry sector as well as continuing to support and partner with entities in the other sectors, must step forward to give voice to its needs and potentials in securing the future of our nation, and our states’ precious oil and natural gas.

Much has been accomplished in recent years and much more has been learned about the nature of the challenges still facing the industry and the country. The workforce issue must be understood in the context of the macro environment. The domestic oil and natural gas industry must also be understood in this context. It is up to industry and its related professional organizations to take on this task and communicate it effectively to our nation and our nation’s leaders.

About IOGCC

The Interstate Oil and Gas Compact Commission is a multi-state government agency that promotes the conservation and efficient recovery of our nation’s oil and natural gas resources while protecting health, safety and the environment. The IOGCC is the only organization of its kind representing the governors of 38 oil and gas producing states (30 member states and eight associate states).

Chartered by Congress in 1935, the organization is the oldest and largest interstate compact in the nation the IOGCC also enjoys an excellent reputation on congress, thanks again to the long history of its involvement in providing information and advice to the country’s top decision makers. The organization also has forged successful relationships with a number of federal agencies.