Monday, November 18, 2013

A fair warning to petroleum engineering students?

I don't think I covered this before, but I found it a very interesting reputed warning to Texas A&M petroleum engineering students:
Dear Admitted Aggie PETE Applicant, 
The Harold Vance Department of Petroleum Engineering, Texas A&M University, is pleased that you applied and were admitted to our top ranked petroleum engineering program. If you pursue a degree in petroleum engineering, our program is committed to providing the highest quality education available. 
Recent data suggests that some concern about the sustainability of the entry level job market during a time of explosive growth in the number of students studying petroleum engineering in U.S. universities may be prudent. 
Our advice is that you become aware of graduation projections and petroleum industry employment outlook for people with petroleum engineering degrees. For example, between fall 2011 and fall 2012, the number of freshmen in petroleum engineering programs in the U.S. increased from 1,388 to 2,153, a 55% jump in one year. Based on the many inquiries and applications TAMU is receiving for the petroleum engineering major, the number of U.S. students in petroleum engineering will probably continue a strong upward trend, as long as the employment market remains stable. These days, a very large number of people are already studying in petroleum engineering programs (see attachment, showing data made available through the Society of Petroleum Engineers, SPE), at a time when: the number of recent graduates, who began their studies several years ago, is already at about historical highs and growing rapidly (see attachment); our program’s board of industry advisors are recommending that we “do not grow” our undergraduate program at this time; and oil and natural gas price projections and expectations of U.S. governmental policy influences are viewed as not particularly encouraging by the U.S. petroleum industry. 
We are not trying to discourage you from a career that we think is among the most fascinating, dynamic, challenging careers that exist. However, we also want you to know that the Aggie PETE program is doing the right thing by providing you with information that could end up being important to your future.
First, does anyone know if this letter is actually true? It's found in a number of places online, but it all leads back to the blog "Cost of College." I suspect that it IS true, in the sense that if someone was e-mailing around a false letter from a Texas A&M department, they'd be quick to respond and deny authorship.

UPDATE: I have confirmed the provenance of the e-mail with Professor Dan Hill, Department Head of TAMU petroleum engineering. 

That said, I think this is a fascinating look at how an academic department might go about expressing its concerns to potential students:
  • They comment on their own internal statistics, regarding admissions. 
  • They look at professional society data. 
  • They talk about their board of industry advisors, and their negative recommendations regarding growing their program.*
  • They look at future projections on their core commodities. 
Looking back on the fat years with respect to organic chemistry and pharma, I wonder if any of these steps were ever taken? Something tells me "no." 

It is important to note, in retrospect, that there are some key differences between academic petroleum engineering and academic chemistry here: I believe that engineers are more comfortable in attempting to predict the future (statistically, looking at trends, etc.) than scientists are. I also think that there is much more alignment between academic engineering departments and their industry alumni. Finally (and most importantly), petroleum is probably one of the most accurately measured commodities in the history of mankind and the cyclical nature of the prices (and its effect on economies and labor markets) is widely understood and discussed. 

Something for industrial chemists and chemistry academics to consider, on that great day when salaries start to rise significantly and chemistry enrollments begin to climb quickly... Oh, by the way, did I mention that the Bureau of Labor Statistics believes that there will be 17% job growth in petroleum engineering between 2010 and 2020. Anyone care to guess what that number might be for chemists? (click on the link to find out)

*It should be noted that there is a potential conflict of interest here, in that it is in the interests of current employees to limit the number of future employees.

44 comments:

  1. I asked my brother, who is in this program, about it and it was news to him. One of the replies in that collegeconfidential link was kind of amusing though: http://talk.collegeconfidential.com/15774871-post8.html

    " Salaries are being driven down by the huge numbers of people, just like you, that read somewhere it had the highest paying starting salary and rushed into the degree"

    This is exactly what my brother did, and I still think it's a good way to pick a major. I doubt the market for petroleum engineers will get that bad in the near future. It just doesn't make sense that a business that pays roughnecks 6 figure salaries would start giving engineers peasant wages (a measly! 80k or below). He hasn't had any trouble getting internships, so far so good

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    1. Huh. OK, that's enough to get me to fire off an e-mail to TAMU and see if they're willing to comment...

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    2. I sent the e-mail to the department head; we'll see if we get a response.

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    3. He confirmed that it was sent in January to Fall 2013 admitted students.

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    4. If you choose a scientific degree only for the salary you are a moron and you don't have the necessary passion to start studying science

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    5. True, a degree in science should be based on your need to feel superior to others and ability to post comments in chat rooms.

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    6. 1. The man in the field pays your potential wages. Digging the hole is what gets the oil not letting of an explosion and timing the echo...
      2. The man in the field endures hardships you will never know.
      3. You endure hardships the man in the field will never know. "Oh no my computer crashed an I lost my simulation - which was based on 17thC math.... which was invented by a guy without a computer". AKA a lot of money to be tutored in running unstable programs only to find out it was all in the help menu
      4. Your training will render you unable to think as any deviation from the norm will be removed by "engineers" and you'll let them because you will fear having to go to the rig and work.
      5. Based on your decision making methods you'll go far have a breakdown and loose it all to a stripper. The stripper who left you, taking your money to have dirty rig hand sex.


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    7. I'm calling your omnipotence out. Your ignorance captured the epitome of sentiments on why you should never choose a major based on salaries that I've seen with new hires in oil and gas the past 4 years. As someone with three engineering degrees (MS Petroleum Engineering, MS Geological Engineering, BS Civil Engineering), I'd like to think I know what I'm talking about.
      Let's fast forward 18 months: The current WTI price is nearly $44/bbl, there have been mass layoffs, rescinded job offers, and hiring freezes enacted in oil and gas. Good luck getting a job as a Petroleum Engineer any time soon. $80,000 is not even close to peasantry wages given that U.S. average household income is $52,000 and most fields of engineering (exception of Petroleum Engineering) at the entry level with a BS pay only a little above this ball park. The unfortunate news for Petroleum Engineering students is that engineering employers have been highly selective in employment since 2008 and really look for candidates with master's degrees now. Petroleum Engineering majors will have a very hard time getting hired to do any other kind of engineering work without another degree in another field.

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    8. I can speak for one specific area - MS-LA-TX Gulf coast. No small or large company is hiring any entry level PE with an MS. IF you are only looking to work for large name multinational corporations (with their names on a gas station) your ability to get an internship with them matters more than a graduate degree. The way to get the internship is through an inside connection like family already working for them. The smaller service companies are still wide open. If you note the dates on this OP you already know that new drilling has slacked off since then but production and RM are still relatively unchanged even over the last 6 years or so. 95%+ of the last class graduating LSU with BS in PE were hired a semester before matriculation and averaged in the $80K per year range. You don't make any reference to where you are so maybe in PA, KS or OH markets are different.

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  2. Those numbers for future employment of chemists... I don't really believe them anyways. You linked to historical BLS projections before and I believe in the early 90s, they were saying we would have 200,000 chemists now. Instead they say there are currently 82000 and they project it to grow 4% (like always...) Just like in previous decades, it's going to be slower than population growth, and in the end, it'll be ~0%. The one statement they had about research being done in other countries will bring it down to 0.


    "To control costs and minimize risks, many of these companies are expected to partner with research universities and smaller scientific research and development (R&D) and testing services firms to perform work formerly done by in-house chemists. "

    I hope professors have the moral decency not to take industrial projects then. If industry refuses to hire their PhD students and wants to use them as cheap labor, then there is no excuse for you to used them as a cheap labor for both yourself and industry. No matter how much a PhD 'costs' in real terms, if the worker who is now doing industrial research is not getting good remuneration, it sounds like a bit of exploitation. This feels wrong. A PhD is not supposed to be about doing contract work at industry for low pay.

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    1. One other aspect of that is self identification. I am curious how they are labeling chemists vs materials scientists, as I usually label myself as a chemist, but really do more materials science work in my day-to-day activities.

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    2. I suspect that they ask which category fits you better, the OES definition of chemist, versus the OES definition of materials scientist:

      MatSci: http://www.bls.gov/oes/current/oes192032.htm
      chemist: http://www.bls.gov/oes/current/oes192031.htm



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  3. "...is not suppose to be about doing contract work at industry for low pay."

    Isn't the goal of any good business to drive down costs and and increase profits?

    I'm being cynical, but using chemistry grad students to perform industrial research seems like the perfect win-win. Win - industry doesn't have to pay the human capital costs. Win - GOV money from grants pays for extraneous costs.

    This could give a whole new meaning to industrial postdoc.

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  4. Natural gas production has already leveled off (more or less flat since late 2011), and oil production growth is slowing. It will also level off within the next few years, and then start declining again. By the time these kids finish school, the boom will be long past and they will be entering a market that inevitably must decline over the course of their career. While I doubt these young folks who enter petroleum engineering programs will starve, they are too late to hit the bonanza.

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    1. "Nobody goes there anymore. It's too crowded." - Berra, Y.

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    2. "Why must it decline?"

      Oil and natural gas do not spontaneously regenerate. They are pumping on a limited supply. As I noted, gas production has already peaked and has been essentially flat for two years.

      http://www.eia.gov/dnav/ng/hist/n9010us2m.htm

      Estimates for future oil production typically have it peaking within the next few years (early 2020's at the latest) and then going back into its long decline.

      http://www.eia.gov/forecasts/aeo/

      Note that the EIA is an industry cheerleader, and if you want to add any grains of salt to the data, it should be on the low side. Also note that the recent booms we have had in gas and oil production have been accompanied by a roughly doubling of real gas prices and tripling of real oil prices. It took a lot of money to cause it to be worth to drill these dregs we are going after. How much money will the next wave cost?

      My point is that by the time these kids graduate four years from now, any shortage is likely to be gone. Supply will have caught up to flattened demand and wages should have settled down to a level consistent with other engineering professions. That's certainly not a bad life, but the gravy train has already left the station.

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    3. That's an interesting perspective, and one that I'd be more than willing to follow up on. Perhaps we should make some sort of a side bet, perhaps for the spring of 2017? (I'd take a Japanese umbrella, if you'd accept a Forest City one.)

      Something that I'm not clear about (probably because I do not follow the huge swathes of peak oil online/off-line literature) -- what is the expected result of oil/gas scarcity on the wages of oil/gas industry workers? I figure that it'll go up, before it would go down?

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    4. And 10 years ago all of the pundits said we had "peak oil" This was also said in the late 1970's. I really question any prediction of peak oil and gas, no matter how good the information could be.

      It could be that petroleum engineers will have fantastic careers through retirement. Who the heck knows?

      The gamble is taking 7-9 years of post-graduate education expecting a field to be as hot as when you started studying/training for it. It may happen (petroleum engineering) or it may not (med chem). Who knows?

      So a PhD is no longer the risk, since there is no stability in employment anymore.

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    5. Chemjobber I believe you owe him an umbrella.

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  5. This past October, I heard ACS President Tom Barton talk at the ACS Columbus, Ohio, chapter meeting. He stated that Chemistry Departments in the US are overproducing chemists and need to cut back sharply. He has a folksy, humorous way of speaking, but his talk was frankly pessimistic.

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  6. Looking back on the fat years with respect to organic chemistry and pharma, I wonder if any of these steps were ever taken? Something tells me "no."

    You kidding? These are lean, horrid, recession years and professors are still talking that bullshit that chemistry is an awesome career.

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    1. Chemistry is an awesome career if you decide to have no roots and you start to apply in laboratory all around the world. Instead if you want a job, buy a home and be a chemist you probably will have the Walter White career before the meth production.

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  7. Where was a letter like THIS when I applied to a PhD in chemistry?

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  8. "engineers are more comfortable in attempting to predict the future (statistically, looking at trends, etc.) than scientists are"

    Engineers aren't scientists now?

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    1. Some are, some aren't.

      Perhaps I am incorrect, but I think there is more training for engineers than for scientists to perform basic trend analysis to perform future budgeting/planning calculations. It's one of the reasons why engineering economics is on the Fundamentals of Engineering exam. There is not a similar set of expectations of scientists.

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    2. I think you are correct that economic considerations are well ingrained is engineer training and rare, if ever, part of scientist education. This probably helps explain why the former have more opportunities to move into business and sales/marketing side than most of the later group.

      The thread creates a question though: do most Engineers actually consider themselves as being scientists? Sure many do applied science and/or work in or with the formally classified areas and colleagues however at the core don't most believe they are separated from scientists where Engineering is a distinct discipline? My brother is an Engineer and I am a Chemist, may be a bit of sibling rivalry involved, but think we have always viewed the other as part of different trees and wonder if he might be insulted if I called him a scientist. I'll have to ask him and if find out he is insulted I can claim didn't think he was suitable to be called that anyway ;o .

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    3. That's an interesting thought. Perhaps instead of people saying "scientists should take business classes" (what the eff does that mean, anyway?), we should say "scientists should take engineering economics classes." (shrug)

      My impression of what engineers think of scientists (apart from looking at paychecks, smiling and walking away) is the cute little comment I saw on an engineering professors door:

      If Science + Common Sense = Engineering

      then

      Science = Engineering - Common Sense

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    4. It's not so much look at the paychecks, smiling, and walking away, as getting out of university 5 years earlier with the same starting paycheck.

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  9. According to Dr. Sheldon Cooper: " Engineering - this is where the semi-skilled workers realize the work of better minds. Hello, Oompah-Loompahs of science."

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  10. On that,

    http://www.onetonline.org/link/summary/17-2171.00
    2010 total position: 30,000
    2010-2020 project opening: 11800

    http://stats.bls.gov/ooh/architecture-and-engineering/petroleum-engineers.htm
    Revised data
    2012 total obs; 38,500 (2012 total employed; 36,410)
    2012-2022 project opening: 9,800

    http://www.forbes.com/sites/lorensteffy/2013/06/25/could-oil-fed-enrollment-boom-lead-to-bust-at-u-s-colleges/

    So if they are asking for 1,000 manpower per year, and the year the number exceeded 1000 was 2011. So if anything the salary should drop in 2012 and 2013, so the unemployment rate for pet should increase and for the graduating class of 2018 (4+1), the employment rate for jobs that req PETE degree will likely be much lower.

    For case in comparison, in 2012 82,920 (52,000 from US law school) passed bar exams but BLS only projected 74,800 over 10 year period, so at the end in 2013 only 56% of the 2012 graduates had jobs that req bar passage. So approximately 25,000 US lawyers from ABA schools were gainfully employed, remove BLS projected new opening 7,500 each year, appr 18,000 of which likely as a result of replacement (but it is more than that since half of the lawyers are solo and self employed, so the replacement likely comes from the other 50%~9,000) So my theory is that graduating at number at double the BLS projection should be reasonable (half from replacement half from new). Anything above will create a saturation.

    So my guess is if the current trend continues, the day of saturation will come about 2-3 years after 2013 class starts to hit internship market and declare that

    http://www.bls.gov/ooh/Legal/Lawyers.htm
    http://www.ncbex.org/assets/media_files/Bar-Examiner/articles/2013/8201132012statistics.pdf
    http://www.abajournal.com/news/article/barely_half_of_all_2012_law_grads_have_long-term_full_time_legal_jobs_data_/

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    1. And it may get even worse since other engineers can qualify for 1/3 of the petroleum engineering openings, so the actual number of grad req should be at 1,400 which was already achieved in 2013. I dont think we will start hearing horror stories until say 2016.

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    2. My suggestion is that unless oil price rises to create enough positions (30% higher at $120/barrel), or they cut the enrollment number to 2012 level, do not major in PETE program.

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  11. From what I have been reading, oil drilling is booming most everywhere and so is the opportunities for employment, albeit not necessarily just for engineers. But it appears that the career field is certainly growing.

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  12. I don't think students pursuing petroleum engineering has anything to worry about for the next 40 years. The petroleum engineering industry is bound to grow further.

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    1. And people will always need new and better drugs, right? With baby boomers getting older (and sicker), the demand will only grow! Chemists in the pharmaceutical industry have nothing to worry about...

      Making 40-year predictions is delusional. You have no idea what technologies are being born...which politicians are bubbling to the surface...which nation will invade the other...what direction public tastes will shift...which managerial fad will come along for cutting costs. Assuming some humility in the face of the unknown is probably warranted.

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  13. hii.. I am going to complete my BE in Mechanical Engineering in May, 2015. I am confused about pursuing MS in Mechanical or MS in Petroleum Engineering. Could anyone please guide me further.

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    1. Hello Vidit,

      I know this is one year old now, but I'd say a PhD Petroleum.

      You can read my comment below for more substance.

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  14. The embracing of climate change is the only logical reason why such degrees like petroleum engineering will be irrelevant in the future .I started my first year as a petroleum Engineer and veered off into IT

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  15. Hello,

    So I know this conversation is over two years old, but with falling oil prices especially now, this conversation is extremely relevant in 2016. It seems now that companies don't really want B.S. or M.S. Petroleum Engineer's anymore to the same extent as they did only a couple of years ago. Of course, oil is boom and bust, but what I have analysed, is that the market is still pretty good for PhD level Petroleum Engineer's and Geologists/Geophysicists. I think this is because research is extremely pertinent at this time. So for any new grads who are having trouble finding a job, maybe a PhD is the way to go.

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  16. Nice post i like this,I need a Mechanical Engineering Jobs if you have any information then please update in your blog.

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  17. where I get the present scenario of Pete PHD? my son got the admit in fall 2016.

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  18. where I get the present scenario of Pete PHD? my son got the admit in fall 2016.

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