As work force ages, oil and gas industry prepares for future

Posted: Friday, November 01, 2002

As the baby boom generation gets older and starts thinking about retirement, the nation's oil and gas industry is worried that its supply of highly-trained workers is running out. Through massive layoffs and consolidation over the past two decades, the industry ruptured its own pipeline of experienced geoscientists, the people in charge of finding oil and natural gas deposits around the world.

So, trying to avert a shortage, companies are recruiting mid-career employees from competitors and establishing mentorship programs that allow younger workers to glean wisdom from their elders.

''The main concern would be losing the experience that the baby boomers will take with them when they do retire,'' said Steve Holditch, 56, a consultant to upper management at oilfield service provider Schlumberger Ltd. ''We're trying to capture all the knowledge before it walks out the door.''

The median age of America's labor force is 40, according to the Labor Department. In the oil and gas industry, the median age is 41. But Holditch, president of the Society of Petroleum Engineers, emphasized that the median is closer to 50 when it comes to geoscientists.

The aging of the industry's work force is one of the lingering consequences of mass layoffs that occurred after the price of crude oil plunged in the mid-1980s and then again in the late 1990s. Tens of thousands of geologists, geophysicists and petroleum engineers left the industry, and many never returned. Industrywide consolidation furthered this trend, creating a generation gap at many petroleum companies.

''They would all love to get people in that five-to-15 years of experience range,'' said Gladney Darroh, founding partner of the Houston-based recruiting firm Piper-Morgan Personnel, which specializes in oil and gas. Darroh said aggressive recruiting has caused salaries in this segment of the work force to rise the fastest in recent years.

The industry's history of booms followed by busts has also led to dramatically lower interest in U.S. petroleum engineering graduate programs, university and industry officials said. Enrollment is nearly half of what it was in the early 1980s.

As a result, there will be ''tremendous opportunities for young people'' as more baby boomers retire, said Ron Robinson, 56, who retired from Texaco Inc. last year to become head of the petroleum engineering department at Texas A&M.

Independent oil and gas company Ocean Energy of Houston started a mentoring program to nurture the relatively few 30-somethings at a company whose average worker is 43. The average age is several years higher for geoscientists.

''Getting the new blood in at the bottom is not as difficult as getting the experienced people in position,'' said Brian Rabe, 52, vice president of international planning and one of 25 mentors at the company.

Rabe tries to pass along the lessons he learned through trial and error. It's the kind of training that cannot be taught by a professor, even at the best graduate schools, Rabe said.

''When you're going to send someone to negotiate a deal, specific technical experience is just not sufficient,'' said Rabe, who believes Ocean will increasingly be forced to find future leaders from outside the oil and gas sector, bringing in more workers with experience in law, accounting and technology.

Indeed, companies have dealt with the shortage of petroleum engineers by hiring chemical, mechanical and electrical engineers and training them in oil and gas. Better technology has also helped, enabling one geologist to do more intensive data analysis in a day than four or five geologists could in the same amount of time just a decade ago.

Anna Rappaport, a consultant at William M. Mercer Inc. who specializes in retirement issues, said the oil and gas industry should work with the baby boomers to find ways of keeping them around longer.

By encouraging employees with the most experience to work fewer hours instead of retiring, companies can ''have these people around to train the younger crop,'' Rappaport said. ''It lengthens the use of their talent.''

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