Glut of Oil Jobs Could Dry Up Fast

Farooq Tareen holds a master’s degree in petroleum engineering, and while he has long dreamed of working in the oil industry, he’s also afraid of the business. Sure, the money’s good and it’s exciting to hunt for elusive crude, but what about when everything goes bust?

Tareen remembers how hard it was to find work in the oil patch when he finished his studies at the University of Oklahoma in 1999. At that time, prices were deep in the tank, the latest bust in an industry known for its dramatic swings.

Now crude prices are on the high end of the spectrum, and things are booming--the number of U.S. jobs in oil and gas extraction is at its highest level since 1998.

Where is Tareen? He’s working at a medical-imaging software company in Toronto.

“They’re hiring left, right and center,” he acknowledged warily. “But I’m sure oil prices won’t stay like this forever.”

When the price of crude plunged in the mid-1980s and again in the late 1990s, the industry responded by laying off tens of thousands of highly paid workers like geologists, geophysicists and petroleum engineers.

Many of those workers never returned to the industry, executives say, leaving the companies short of new employees to step into the shoes of an aging work force.

“They are leaving the industry and going back for law degrees and MBAs with the mind-set that ‘I want to get rich even quicker,’ ” said John Schiller, executive vice president of operations for Ocean Energy Inc., based in Houston.

And times could get worse--enrollment in U.S. petroleum engineering graduate programs is about half of what it was in the early 1980s, though those numbers have increased slightly in the past two years.

Already, exploration and production companies such as Ocean, Anadarko Petroleum Corp., Apache Corp. and Barrington Petroleum Ltd. are raiding each other for workers, said Schiller.

Geologists or petroleum engineers fresh out of graduate school are earning as much as $60,000 a year, and some companies are sweetening their offers with flexible work schedules and more stock options.

“Beginning packages for students coming out of name universities are a good 25% to 30% higher in the past two years,” said Gladney Darroh, founding partner of the Houston-based recruiting firm Piper-Morgan Personnel, which specializes in oil and gas. “But if oil goes to $12 a barrel, you’ll see it come to a halt.”

(Crude-oil prices are about $28 a barrel; natural gas, above $5 per 1,000 cubic feet.)

Tareen, 31, learned about the cyclical nature of the business the hard way.

In July 1999, he was offered a research position in Canada by a Houston-based oil services company. Four months later, with crude hovering around $10 a barrel, the offer was rescinded--a painful possibility Tareen hadn’t considered.

“You can say I was naive,” he said.

Unsettled by that experience, Tareen returned to school to get a master’s in computer engineering. Now he’s set his sights on the fast-growing field of petroleum engineering software development.

Companies have dealt with the shortage of petroleum engineers by hiring chemical, mechanical and electrical engineers and training them in oil and gas.

Although workers are needed, rapidly advancing technology has eased the demand. Executives say one geologist can do more intensive data analysis in a day than four or five geologists could in the same amount of time just a decade ago.

That improved efficiency has fueled concerns about long-term job security even among candidates with stellar credentials.

But current high prices are spurring drilling activity in the United States.

There are about 1,200 rigs actively exploring, according to Baker Hughes Inc., compared with 488 in April 1999.

The number of U.S. jobs in oil and gas extraction, which includes drilling crews, was 324,000 in March. Seasonally adjusted, that’s the highest level since November 1998, but lower than January 1991, when the figure stood at 403,000, according to the federal Department of Labor.

The increase in jobs shows no sign of slowing down.

Devon Energy Corp., an independent oil and gas producer based in Oklahoma City, Okla., needs to add 50 geologists and geophysicists to its work force of roughly 1,800 people, according to Marian Moon, the company’s human resources manager.

At Houston-based EOG Resources Inc., where the average geologist is 47 years old, demand is so great that “If we had a number of first-class candidates, we wouldn’t turn down any of them,” said Maire Baldwin, vice president of investor relations.

And university professors training the next crop of oil hunters say they’re getting more calls from companies trying to find out about promising students, with or without experience.