The Challenges Facing America’s 21st Century
Oil and Gas Workforce
Lane Sloan
Anybody associated with the energy business
for any length of time knows that there are
booms and bust periods that present significant
challenges for this long-cycle industry. And
while this is a hugely capital intensive business,
it’s the people who drive the business with their
talent, knowledge, and skills that are crucial
to its success. Unfortunately, the volatility
of the business can wreak havoc with the
“people pipeline”—the entry and subsequent
career development of highly skilled workers,
managers, and executives.
A history of price volatility
The past is rarely an accurate predictor
of the future, but lessons can always be
learned. The last major upturn in the energy
industry emanated from the restrained supply
environment caused by the Arab oil embargo
of 1973. Bullish forecasts that foresaw crude
oil prices rising to $100/bbl brought on a
ballooning of the workforce in the second half
of the 1970s and early 1980s. People in the
upstream part of the business were in high
demand, with bonuses, cars, and even country
club memberships being handed out to lure top
performers away from the majors.
The up-cycle came to a grinding halt when
crude prices dropped to less than $10/bbl by
mid-1986 as the Saudis abandoned their role
as the swing producer. The prolonged down-
cycle through the 1990s didn’t really recover
until 2002. It was a devastating period for
talent management and skill-pool development
as ongoing workforce reductions and
restructurings created lopsided demographics.
The U.S. oil and gas workforce of over 850,000
in 1982 fell by some 500,000 by 2000. This
devastating reduction was traumatic both for
those who stayed and for those who left. The
industry veteran who recommended that a son
or daughter pursue an oil and gas career was
the exception rather than the historic rule from
prior generations.
Demographics a cause for concern
With signs of a cycle upturn, a number of
us began to sound the manpower warning
alarm, such as my 2002 article in World
Energy magazine, “Energy Careers in Crisis?
A Time for Renaissance.”1 At the time, the

demographic issues were clearly alarming; the average age of
the energy worker was around 50, and it was possible that half
would retire within a decade.
Recruiting the best and brightest to rebalance the workforce
was difficult in view of the industry’s negative environmental
image and concerns about cyclic hiring and firing. On top of
that, the number of universities offering petroleum-engineering
courses fell almost in half since the upbeat early 1980s.
Additionally, America’s youth were avoiding science, technology,
engineering, and math courses—essential skill competencies for
this highly technical industry.
With such a prolonged down period, oil and gas management
developed a conservative mindset that hampered proactively
rebuilding the workforce pipeline. Over the next several
years, oil and gas workforce conferences transitioned from
(a) debating whether the industry had a workforce dilemma,
to (b) addressing what to do about the impending brain drain,
and then to (c) evaluating who had the best staff recruiting,
development, and retention practices.
Prices are everything in the fortunes of oil and gas companies,
and they rose to surpass the long-foretold $100/bbl mark,
reaching almost $150/bbl in mid-2008. With the price rise came
unprecedented starting salaries for new petroleum engineers,
some approaching $100,000 per year, coupled with lucrative
starting bonuses.
The mind-boggling collapse of the global financial system in
the second half of 2008 clearly took a toll on crude oil prices,
which fell to levels approaching $30/bbl by January 2009.
However, prices rather quickly rebounded to the $70–$80/bbl
range by the third quarter. A decade ago, if one had forecast
today’s price range, it would have been considered optimistic,
but now there are underlying worries about volatility and
direction. On the workforce side, there is a clear divide between
those companies hunkering down and trimming staff and those
cautiously staying the course with their staffing strategies.
Clearly, the past several decades have been fraught with
workforce challenges in the oil and gas industry. Many of the
people issues identified in the late 1990s are still with us in
terms of lopsided demographics and an impending crew change
over the coming decade. Moreover, the propensity of the current
U.S. Administration to promote “green jobs” over “brown jobs”
is certainly troubling for the oil and gas industry.
Guest Essay
Leadership during a “phase change”
As we try to envision America’s oil and gas workforce chal-
lenges of the future, it appears that a pretty wild ride is likely.
First and foremost, we are entering an energy “phase change”
as described in the book, Terra Incognita: A Navigation Aid for
Energy Leaders, which I co-authored with Chris Ross.2 Energy
supply was the driver as in the last upturn, but this time, we
are in a period of increasing energy demand from developing
countries. China and India together have almost 2.5 billion
people, twice the number of the OECD nations. And they are
going through the industrialization process that the developed
countries pursued in the last 150 years.
Michael Economides points out in his book Energy: China’s
Choke Point that “in the United States there are more than 110
cars per one hundred people; in China it is still fewer than ten
cars per hundred people.” 3 Not surprisingly, energy demand is
forecast to double over the next 50 years.
How will we meet this burgeoning demand? Many of us
believe it will take a portfolio of energy sources, as was noted in
the National Petroleum Council report of 2007.4 This is a phase
change. Higher prices will certainly facilitate development and
use of alternative energy choices. Oil and gas undoubtedly will
play a major role for decades, but hydrocarbon market dynamics
will change.
There will continue to be a shakeout of business models for
the oil and gas industry as well as the overall energy industry.
Even today, the super majors hold less than 10% of world
crude oil reserves, which will be under continuing pressure in a
higher-priced environment as oil-rich countries seek to capture
more of the margin. The national oil companies in developing
countries will continue to compete fiercely with their American
and European counterparts to fuel their countries’ economic
growth. And the role of service companies will become even
more blurred competitively with traditional E&P operators in
seeking business from oil-rich nations.
What does all this mean for the 21st century oil and gas
workforce? Quite bluntly, these business-model dynamics will
put a premium on business and leadership skills.
Meeting future energy requirements will involve more than
just recognizing the need for a portfolio of energy sources.
There will be many changing dynamics in the interplay of
energy sources in a complex network of intersubstitutability.
We also need to recognize the complexity of meeting U.S.
International Petroleum Encyclopedia v
Guest Essay

needs for affordability, national security, and

environmental protection. For these reasons,
energy-industry leaders must also possess
deftness in energy policy as well as the ability
to persuasively articulate for the public the role
of oil and gas in America’s energy portfolio.

Technology, geopolitics,
and environment
A first vital aspect of this energy-demand-
driven world is that technology will be a critical
success factor. There is a competitive race
under way across the globe for breakthroughs,
particularly in “clean” technologies. At the
same time, a rejuvenation of R&D in the
oil and gas sector will continue the search
for next-generation technologies for finding,
recovering, and transforming hydrocarbons.
New skills sets from the molecular revolution
in nanotechnology and biotechnology should
be part of the energy technology renaissance.
This technology thrust may well reshape
workforce requirements, because the demand
for specialized researchers and engineers is
likely to grow. PhDs may again be as popular
as they were in the 1970s.
Second, the “clash of nations” will continue,
putting a premium on energy security.
Availability and affordability of crude oil in
particular will be a continuing subject of
news and commentary. As the world economy
rebounds and scarcity economics comes back
into play, the volatility of oil prices will
increase as rather inelastic supply and demand
curves rub up and down. Likely disturbances
throughout the world, but particularly in the
Middle East and Africa, will exacerbate price
movements, causing difficulties in planning.
In this volatile price world, well-thought-out
staffing strategies may separate the winners
from the losers. Hiring and then firing in
this up-and-down world is not likely to be a
winning formula.

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Third, environmental concerns about greenhouse gases likely
will not go away, despite the December 2009 “Climategate”
scandal about the e-mails of global climate-change researchers.
Green will still be “in,” imposing a new twist on the oil and
gas industry’s reputation problem in the competitive hunt
for new talent in the United States. But as the late Nobel
Laureate Richard Smalley often highlighted in his talks on
the crucial challenges facing the world in the 21st century,
energy is the biggest because it is integral to the solution of
every other challenge.5 The energy industry must develop
smarter messaging. It should stop differentiating “green” jobs
from “brown” jobs and talk instead about “energy” jobs that
can contribute to meeting this global challenge. At the end
of the day, it will be energy engineers—with specializations
in different aspects of the energy equation—who find the
solutions needed.
Education gap
Unfortunately, North America may find it difficult to grow
its own talent. The percentage of U.S. undergraduate degrees
awarded in science and engineering is well under 20%. This
compares to about 50% in China and to about 66% in the global
trendsetter nation of Singapore. Most of us are familiar with the
statistics from 2006 indicating that China graduated 650,000
engineers and India 500,000, compared to 70,000 in the
United States. The oil and gas industry may well need to bring
in technical talent from abroad, as well as to outsource some
activities. This will likely lead to a commoditization of general
engineering skills. People with very specialized capabilities and
with project management and leadership talents will be the
most sought-after with attractive compensation packages.
Evolution in power, transportation markets
In transportation markets, high oil prices coupled with
energy security concerns will continue to spur development
of alternative fuel sources. These will include compressed
natural gas, biofuels, and GTL products. In addition, we can
expect continuing evolution of hybrids and electric vehicles.
Nevertheless, getting the right talent into the oil industry,
which supplies 97% of U.S. transportation fuels, will be
essential to help avoid gasoline prices of $5–6/gal. Expect
petroleum engineers, geologists, and geophysicists to be in
demand over the short- and mid-term.
Guest Essay
The U.S. power generation market will be a rollercoaster
ride as old coal-fired and nuclear plants are replaced with
alternatives: next-generation coal and nuclear facilities; renewable
wind, solar, and perhaps ocean-wave energy; and natural gas
combined-cycle plants. Balancing costs, time-to-build, and
climate-change concerns will bring on chaotic change. At times
of such major transformation, leadership is even more critical.
This is a gigantic talent development challenge for the energy
industry overall. The interplay of natural gas in both power
and transportation markets in the United States will require
significant business and leadership skills in the oil and gas
sector as highlighted earlier.
Training the next generation(s)
One key question: Is the Gen Y generation ready to meet this
challenge? They certainly think so! This confident group has
high expectations and strong demands for personal flexibility,
and they perform well when goals and pathways are made
clear. The sophisticated staff development processes discarded
by many companies in the 1990s will need to be recreated.
But Gen Y also will need the wisdom that can be imparted by
baby-boomer mentors who worked their way up the hierarchy
and weathered both up and down business cycles.
Smart human resource strategists will also figure out other
innovative ways to capitalize on the knowledge and experience
of retiring alumni. Expect to see new mechanisms created
that enable retirees to continue to share their experience and
provide tactical help without taking on the full burden of their
former jobs.
Developing the oil and gas workforce pipeline also requires
a long-term focus, addressing the next generation of students,
currently in school. No longer can the oil and gas industry
concentrate just on universities with recruiting programs,
scholarships, and internships; that will be too late in the
educational cycle.
More effort is needed to develop the so-called “STEM” skills
(science, technology, engineering, and mathematics) in grades
K–12. This will lay the foundation for later university training
of the geologists, engineers, and scientists that are the core
human resource in this technically savvy industry.
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Guest Essay
Significant efforts are already under way to try to shape the
future workforce. For example:
• The Energy Collaborative of the Greater Houston
Partnership has a very progressive Workforce
Development Committee, focused particularly on
K–12 initiatives.
• The Independent Petroleum Association of America has
sponsored three impressive Petroleum Academy programs
at the high school level in Houston and is now branching
out to Fort Worth.
• The American Petroleum Institute has supported the
Rockies Energy Workforce Collaborative task force
that links common interests and goals of the energy
industry, education, and state workforce systems in
Colorado, Montana, New Mexico, North Dakota, Utah,
and Wyoming.
As these examples make clear, the industry must work together
to solve the upcoming talent development challenge.
A growing number of oil and gas companies, both operators
and service suppliers, have recognized the need for thoughtful
staffing and development strategies that put responsibilities
with the senior leadership team. Several conferences and
workshops in 2009 showcased some of the best practices
in this regard. These strategies emphasize adaptability and
accountability and also recognize that this is a short-, mid-, and
long-term challenge not unlike capital investment. They look
beyond their own company to recognize that the industry must
pursue collaborative initiatives.
Beyond the classroom
A massive advertising campaign has been undertaken over the
past several years by the oil and gas industry in the United States.
It seeks to protect the industry’s interests from punitive legislation
but also aims to build company and industry reputations with
workers of today and potential workers of tomorrow.
But also there needs to be a more concerted focus on
educating youth.
• Can a television program be developed (perhaps modeled
after crime-scene investigation dramas) to show the
excitement of solving global energy challenges?
• Can we make high school students aware of the incredible
sophistication of technology used for hydrocarbon
development—that their joystick skills from computer
games have application in advanced drilling?
viii International Petroleum Encyclopedia
• Can the oil and gas industry use evolving social
networking channels to inform young people about
energy careers?
At the same time, my own experience tells me that the best
medium for effective communication is often face-to-face.
Talking directly with middle and high school students can clear
up misperceptions about the industry through personalized,
open, two-way dialogue.
Extraordinary demands on leaders
The challenges facing America’s 21st century oil and gas
workforce will be daunting in this rapidly evolving energy
world. The current dominant role of oil and gas likely will give
way to the next energy phase, in which we develop multiple
networked energy sources in response to high energy prices,
energy security concerns, and global issues of environmental
impact and economic sustainability.
As highlighted in Terra Incognita, “change of a scope and
magnitude that are difficult to grasp will make extraordinary
demands on the next generation of energy leaders. The leaders
of the future will be called upon to originate, capture, and
implement a series of massive growth projects. They will face
great uncertainties about the demands of society, the course of
geopolitics, and the progress of technology.”2
References
1: Sloan, Lane. 2002. Energy Careers in Crisis? A Time for
Renaissance. World Energy, Vol. 5, No. 2, pp. 151–154.
2: Ross, Christopher E.H., and Lane E. Sloan. 2007.
Terra Incognita: A Navigation Aid for Energy Leaders,
PennWell, p. 485.
3: Economides, Michael J. and Xina Xie; 2009, Energy:
China’s Choke Point, ET Publishing, p. 16.
4: National Petroleum Council (Washington, DC). Hard
Truths: Facing the Hard Truths about Energy: A Comprehensive
View to 2030 of Global Oil and Natural Gas, p. 5.
5: Smalley, Richard. 2005. Future Global Energy Prosperity:
The Terawatt Challenge. MRS Bulletin, Vol. 30, p. 412.