Six months ago, a degree in petroleum engineering was a ticket to a job with a six-figure salary. Now it’s looking like a path to the unemployment office.
The oil crash that’s forcing companies to slash billions from their budgets and cut tens of thousands of workers is derailing an industry campaign to attract top college graduates. It comes at a time when the future of drilling is increasingly tied to new technology that lets companies pull more oil and natural gas from the ground, faster and cheaper.
Young people who swarmed to newly designed energy programs at schools from Texas to California are now questioning whether they can count on crude for their future, according to interviews with students, counselors and company officials.
“It’s time for me to do a reassessment of how I plan to begin my career,” said Vince Miller, a senior at Ohio State University studying chemical engineering and president of the school’s Society of Petroleum Engineers chapter. Miller spent the summer working as an apprentice field engineer at a drilling site in North Dakota, and has watched anxiously since then as jobs evaporated.
Rohail Ullah, a sophomore majoring in petroleum engineering at Texas Tech University in Lubbock, Texas, spent part of his winter vacation talking with family and friends about whether the oil business was still the right choice as crude prices plunged 44 percent in the fourth quarter.
“What was going through my mind was: Is this going to give me the opportunity that I’m trying to seek?” he said.
Enrollment in engineering programs aimed at the oil industry soared during the past decade -- jumping by more than 70 percent at Texas A&M University -- as the shale boom brought explosive growth to energy companies across North America. In the past five years, engineering rolls doubled at Colorado School of Mines, according to school data.
Competition for scientists and engineers drove up salaries, with top-ranked new graduates making as much as $130,000 a year.
“It’s one of the highest paying careers right out of college,” said Waleed Akram, a junior studying petroleum engineering at Texas A&M, who’s not yet ready to turn his back on the possibility.
Historically conservative companies like Exxon Mobil Corp. strove for the “cool factor” by flocking to social media, opening Twitter accounts and even creating “Vines” -- the micro-clip videos that have become an essential part of teenagers’ Internet language. Baker Hughes Inc., the oilfield service company, developed a drilling-inspired smartphone game modeled after Candy Crush.
Despite these efforts, the oil bust has brought back the jolting reality of a volatile, commodity-based business, said Amy Myers Jaffe, executive director of energy and sustainability at the University of California at Davis. In a tight competition with Silicon Valley for the best and brightest, any disadvantage can hurt, she said.
“A lot of top candidates will go into other industries and they won’t be able to get them back,” Meyers Jaffe said. “If you’re good at math and science and you’re seeing that there’s going to be more jobs if you major in computer science, then you’re going to pick computer science.”
The 59 percent collapse in crude prices since June has sent oil companies into a downward spiral. The Standard & Poor’s 500 Oil & Gas Exploration & Production Index fell by 32 percent over the same period as investors anticipated losses and oil executives began planning for the worst.
More than 30,000 layoffs have been announced across the industry as companies slash budgets, according to a tally by Bloomberg News. Exploration and production spending is expected to drop by more than $116 billion, a 17 percent decline, because of falling crude revenues, according to an estimate from Cowen & Co.
The steep declines have recalled the workforce decimation of the 1980’s oil bust that spooked a generation of college students. An era of stagnation followed as stripped-down companies trying to rebuild were thwarted by a shortage of skilled workers.
That shortage persisted right up to the current crash, as Halliburton Co. Chief Executive Officer Dave Lesar cited recruiting as his number-one challenge in an October interview. He described the industry’s need for top math and science professionals as “acute,” and said Halliburton was on track to hire 21,000 people in 2014.
With engineers and geologists in short supply, Lesar said he was willing to be flexible.
“In my view, a bright kid is a bright kid,” he said. “Instead of finding a geologist, you find a geography major. If you can’t find a physicist, you find a math major.”
Now, geology and physics graduates are worried their high-paid, globe-trotting days are over before they even started.
By December, after oil prices collapsed and a planned merger with Baker Hughes was announced, Halliburton said it would have to lay off 1,000 workers in the Eastern Hemisphere; This month, Baker Hughes said it would cut 7,000 jobs this quarter, Schlumberger Ltd. is eliminating 9,000 positions and Halliburton said it expected comparable reductions.
There’s little hard data available on how many students may be switching their interests. But “there’s definite concern,” said Priscilla G. McLeroy, director of undergraduate advising for Texas A&M’s petroleum engineering department. McLeroy has received a surge of e-mails from students about to start looking for jobs.
Engineering students Akram and Ullah both said they’re worried about their prospects as oil prices remain below $50 a barrel -- less than half its $107 peak in June.
“If it continues to be that way, I might even think about making the move over to the mechanical department,” Ullah said, though he said he’s still passionate about finding a position in the oil industry, if he can.
As layoffs mount, graduates at the very least will face higher competition for fewer jobs.
Some students were lucky enough to secure job offers last fall before it was clear the oil-price declines were going to be so severe or long-lasting. Those who didn’t must set their sights elsewhere, looking at smaller names and broadening their search from oil drillers to other companies in the sector, said Jean Manning-Clark, director of the career center and employer relations at the Colorado School of Mines.
“They’re having to work harder and they’re having to look for alternatives,” she said.
Even amid the cutbacks, oil companies aren’t abandoning their recruiting efforts, mindful of how hard it is to get the ball rolling again. Exxon is continuing its marketing blitz targeting young people, including a social media and website campaign called “Be An Engineer.” And it hasn’t stopped its campus visits, said Scott J. Silvestri, an Exxon spokesman.
“More engineers and more kinds of engineers are really needed to address future challenges, which is why we support this,” Silvestri said.
Business schools that offer energy-oriented tracks are rethinking how to market themselves as they see students pivot away from oil. Duke University’s Fuqua School of Business added an energy and environment track to its program in 2010, as the shale boom picked up steam. The 30 or so students in its graduate program that had been aiming for jobs in the oil industry are now rethinking, said Dan Vermeer executive director of the school’s Center for Energy, Development and the Global Environment.
Vermeer says Duke’s program prepares students for careers across the energy industry, and many will look for jobs in renewable energy and electricity as well as oil.
“It’s not going to be as robust as it might have been a year ago or two years ago, but I do think we’re buffered to some extent from the market volatility by having these types of students that are sort of cross trained,” he said.