This Well’s Nearly Run Dry : Oil Companies Face a Shortage of Technical Expertise

Just when prospects for U.S. oil exploration are starting to brighten, oil companies in California and elsewhere say they face a growing shortage of the engineers and geophysicists they need to get natural gas and crude out of the ground. And there is little chance the shortage will ease soon.

Petroleum engineering faculties at Texas A&M; University and elsewhere report graduates are being aggressively courted by oil companies that offer starting salaries of $45,000 a year, 15% more than in 1991. Yet enrollment in petroleum engineering continues to decline with little prospect of any immediate uptick.

“Our enrollment was 1,600 in 1982, and today it’s 200,” said Larry Piper, senior lecturer and undergraduate advisor at the Dwight Look College of Engineering at Texas A&M.;

The dwindling supply of technical expertise comes as oil exploration in parts of the United States, especially the Gulf of Mexico, is gaining steam because of technological breakthroughs in discovering and recovering new reserves of oil.

The cause of the technical manpower shortage can be traced to the enormous job cuts the oil industry has suffered since the early 1980s and the stigma those cuts have left with career counselors and academics, not to mention affected families. As one industry official put it, sons and daughters of petroleum engineers aren’t going into the business anymore.

How bad were the cutbacks? According to a study by John S. Herold Inc. of Stamford, Conn., the 25 largest U.S. oil companies now employ fewer than 800,000 people--or half their combined payroll before the “bust” hit the industry in 1982.

To be sure, some of those cuts happened as oil companies rethought ill-advised diversification moves, such as Mobil’s abortive acquisition of Montgomery Ward. And some were attributable to the downsizing and restructuring that most U.S. industries experienced.

But much of the blood flowed directly from the oil industry’s technical ranks as lower crude oil prices in the 1980s caused companies to scale back their exploration activities.

According to the American Petroleum Institute, oil exploration and well head production jobs have declined to 321,000 as of June, down from the 754,500 jobs at the 1982 peak.

Merging Powerhouses

To enhance their ability to compete in California’s deregulated electricity marketplace opening up Jan. 1, Enova and Pacific Enterprises, the parents of San Diego Gas & Electric and Southern California Gas, announced Thursday that they will acquire AIG Trading of Greenwich, Conn., for $190 million. AIG is the nation’s 10th-largest natural gas trader by volume.

The two holding companies, which have announced their intention to merge, say owning a sophisticated wholesale gas trading company is essential if they are to succeed as energy retailers.

Utility Bill Connection

The state Senate on Wednesday passed SB477, a bill that will implement the issuance of up to $10 billion in bonds to finance a 10% statewide electricity rate cut and to pay utilities for failed investments in nuclear and alternative energy plants. Passage of the bill, which followed Assembly approval earlier this month, came despite mounting opposition from consumer groups. Gov. Pete Wilson is expected to sign the Senate version.

Current Information

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