Monday, March 11, 2013

This Is What Shortage Looks Like, petroleum engineering edition

From the pages of Bloomberg, a reminder of what actual shortage in an employment field looks like:
Wages in energy and mining have grown at nine times the rate of all industries since 2008, and starting salaries for petroleum engineering graduates are about $98,000, up 9.7 percent since 2008, according to PayScale Inc. 
The need is acute at the newest chemical, refining and export complexes that serve a shale-drilling renaissance that has given U.S. companies the competitive advantage of low gas prices. As shale projects and their infrastructure multiplies, the ensuing war for talent will double labor costs by 2020 for skilled workers such as geoscientists and engineers, according to NES Global and Piper Morgan Associates.
I'm a little bit skeptical about these numbers, in that NES Global and Piper Morgan are both petroleum industry recruiting/staffing agencies. That said, the article is chockfull of encouraging statements like this one:
“If you can spell ‘shale,’ you can get a job,” Ryan Lance, chief executive officer of ConocoPhillips, said March 5 at the IHS CERAWeek energy conference in Houston.
And this one:
Skilled and experienced workers such as engineers are earning an average of between $183,000 and $285,000 a year depending on the position and experience level and about $120,000 a year after graduating from college, NES data show. Salaries in some fields may double in the next seven years, Groeneveld said.
And here's how you know there's a real shortage in petroleum technology workers -- companies are broadening, not narrowing, their willingness to accept workers from other fields :
Demand for skilled workers is so great that companies such as ConocoPhillips have begun to poach graduates from other fields such as electrical, mechanical and civil engineering and develop programs to train them in petroleum engineering, said Sheila Feldman, vice president of human resources for the Houston-based energy company. 
...Colleges in Texas and Oklahoma are leading the nation in efforts to tailor programs to industry needs, said Dan Clark, managing partner of Energy Headhunter, a recruiting firm in Houston. The fluidity of movement in the U.S., as well as an increasing willingness in the industry to train non-technical graduates for some jobs such as in North Dakota, will help meet the challenge, he said.
There is little doubt in my mind that there is indeed a shortage of classically-trained petroleum engineers in the United States. Strong wage increases*, actual (not projected) spending on petrochemical complexes and the willingness of employers to hire graduates from other fields are all indications that there is an actual shortage of them. Remind yourself of that the next time you hear a politician tell you about scientist shortage and ask yourself -- is the wage increasing? In the immortal words of economist Lindsey Lowell, "have the wage lead the way."

*9.7%! That beats the holy crap out of CPI inflation for that time period (3-4%). For that same time period, the median ACS member lost 7% in salary, I think. 

18 comments:

  1. There was no Petroleum engineer graduated from 1985 to 1990s, they lost a generation of engineers in the field that is why they are experiencing shortage now. maybe Chemists need to disappear for one or two decades to see this kind of demands.

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  2. WOW...new grads get 98K. Earlier on this blog, I saw a job ad. saying something about needing a PhD in chemistry with 10+ years of experience for 90K. This is just sad, I dont mean to be rude or anything, but having an advance degree in Chemistry sure make one feels like a failure.

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  3. It seems whomever is doing the hiring is a fool. Is there that much of a difference in the undergradutate education of a chemical, mechanical, or civil engineer than a petroleum engineer? Probably 60% of the classes are identical, and there is significant content overlap among the remainder. I would be willing to bet that after a couple of years on the job, there would be no difference in performance between a petroleum engineer and a chemical engineer.

    In any case, this is all temporary, and is precisely the type of problem that markets are good at solving.

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    1. When I received a B.S. in ChemE in the early '00s, Dow & Exxon sponsored the career fair and did not send recruiters. The domestic price of nat gas has plummeted and should reduce future demand for more extraction (as biotech knows, investors like a return on investment).

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    2. "Is there that much of a difference in the undergradutate (sp) education of a chemical, mechanical, or civil engineer than a petroleum engineer?"

      Yes, there is. Sure, there are the basic engineering and math courses in all four of these. But for petroleum engineering, there's 3.5-4 years of applied geology classes, and a certain amount of these are consecutive. Kinda like how in ChemE you've got 3-4 years of consecutive chemistry classes in additional to all the humdrum fluid dynamics and thermodynamics courses. They're not really interchangeable.

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  4. No idea who said this, but it's stuck with me since I first heard it: "The boom is just capitalism's way of setting up the next bust."

    I'd add that the bust seems to do a good job of setting up the boom as well:

    http://depth-first.com/articles/2012/12/19/the-manic-depressive-chemistry-jobs-market-a-24-year-perspective/

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  5. Petroleum engineers were all the rage in the 1970's with stories just like the one told here. The oil shocks of the early 70s and late 70s drove up demand for new oil, housing prices in Texas and salaries for PEs who fogged a mirror. Then the price of oil collapsed in the early 80s and these guys were treated to massive lay-offs. Unemployed PEs and new grads could not find employment. The Texas housing market was a disaster with people paying the banks to get out of their underwater mortgages. I knew a CE who bailed out of oil and into pharma at that time. The number of PE graduating contracted from >2000/y to around 200/y. Entire PE departments were shut down in that era. So excuse me for not getting too excited about rapidly training a bunch of PEs. This history is going to repeat itself at some point in the future. However PEs should live it up now while they can. CJ is right this is what a real shortage looks like which is why we will need to import PE talent in the immediate future to saturate the market for PEs.

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  6. The market is cyclical. I bet the people running into this field right now, and graduate 4 years later into a bust market. I think the best bet is just do what you love.

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  7. Damn it, I knew I should have studied chemical engineering instead of chemistry when I had a chance.

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  8. Slate has a great article today on the relationship and consequences of the union of chemistry and chemical engineering. (http://www.slate.com/articles/health_and_science/the_efficient_planet/2013/03/nitrogen_fixation_anniversary_modern_agriculture_needs_to_use_fertilizer.2.html). Given that chemistry is the most industrial of the sciences I think we need to not so much "change our religion" as direct our students towards chemical sub-disciplines that have a future. If the petroleum industry is where the jobs are we cannot continue to feed our students a decades old narrative.

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  9. From a recruiter's point of view - we're seeing salary inflation across all engineering disciplines. I specifically work in the chemical engineering space, but I have seen it for mechanical and electrical engineers as well. Anecdotally, almost every candidate I have worked with in the past 6 months that has been in the 3-15 years-experience range has gotten more than one offer, I've had a couple of candidates get several offers all at once. Last March I placed a ChemE that was 4 years out of school and my client gave him $120K.

    On the chemistry side, I'm seeing more job openings that I ever remember seeing. Like I said, my specialty is chemical engineering but I have been approached to work on several chemist openings by clients I'm working on engineering jobs for. If I could find chemists with backgrounds in personal care, oil field chemicals or agrochemicals, I could place them.

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  10. Dont get attracted to the salary !
    I know people who eventually gave up their job and started working in a consultancy, even as college faculty mainly due to family problems as the job requires long working hours away from home for days.
    You may and you will earn a lot but you will miss on a lot of things as well.

    Consider this field only if you absolutely love Petroleum and yes this industry is very multicultural.

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  11. "“If you can spell ‘shale,’ you can get a job,” Ryan Lance, chief executive officer of ConocoPhillips, said March 5 at the IHS CERAWeek energy conference in Houston."

    Yeah right. There are boatloads of petroleum engineering juniors and seniors at my university (myself included) practically begging for a summer internship and work experience to campus recruiters and companies with no luck. A lot of them are now looking at graduating without any work experience which puts them at a severe disadvantage when looking for a job out of college.

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    1. agree with this insight; not many people end up getting internships for the summer

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    2. What school do you go to? I'm considering doing Petroleum engineering and want to know from actual students how the current job market is as a result of explosion in enrollment in various programs around the country. From what I gather, it helps being in a top notch school such as UT Austin, A&M, Colorado School of Mines, etc. to get internships/jobs. Even though I'm interested in the field, I wouldn't want to go in if there is a difficult time for graduates to find jobs.

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  13. OK guys, so Im on the hinge of beginning a four year degree in PE, better just collect my cards and say forget it? I wouldn't say I am terribly interested in Petroleum Engineering, but who knows, I've never done it. I do speak multiple languages, and am tired of making peanuts. Dangit.

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    1. I think it means that you can't expect the good times to last forever.

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