The National Academy of Sciences recently released its report “Emerging Workforce Trends in the U.S. Energy and Mining Industries: A Call to Action,” which determines that the demand for energy and mining workers is higher than the current supply – despite offers of high salaries.
The report also concludes the demand for energy and mining workers will continue for many years, and the factors that drive the workforce shortage will grow unless corrective actions are taken.
This report is timely because major provisions of the America COMPETES (Creating Opportunities to Meaningfully Promote Excellence in Technology, Education and Science) Reauthorization Act of 2010 are set to expire in 2013. The Act provides, among other things, funding authorizations for federal physical sciences and engineering research programs, as well as STEM (science, technology, engineering and mathematics) education programs.
The connection between quality of life and energy and mining workers is simple: The nation and the world depend on energy and mineral resources to keep their people and economies thriving, and a skilled workforce is essential to meet the nation’s and the world’s energy and mineral needs.
The National Academies report looks at energy sectors, including solar, wind, nuclear, and carbon capture, use and sequestration. This article will focus primarily on the oil and gas extraction industry.
Accurate data and projections on the energy workforce are necessary to define the scope of labor shortages and requirements for new workers, but consistent and detailed data are lacking. A sample of the data evaluated in the National Academy report shows the inconsistencies and lack of granularity to assess specific oil and gas occupations:
♦ PriceWaterhouseCoopers (2009) estimated the total operational oil and gas direct workforce as 2,123,291.
♦ The Bureau of Labor Statistics (BLS, 2010) estimated the U.S. workforce in oil and gas extraction, well drilling and support activities for oil and gas operations at about 494,200. This number excludes self-employed workers.
♦ A subset of that population – the oil and gas extraction workforce, which includes self-employed workers – was estimated at 158,900 in 2010 (BLS).
♦ The BLS projects future employment in the oil and gas extraction workforce will increase by 23,200 between 2010 and 2020.
♦ The Energy Information Administration (EIA) estimates total employment in oil and gas extraction was 452,891 in 2010 and it is expected to rise to 459,032 in 2020, and then decline to 404,866 in 2030 and 383,205 in 2035, as U.S. oil production starts to decline in 2030 and gas production starts to decline in 2035.
The report finds the most important factor impacting all U.S. industries is that the large cohort of baby boomers are expected to retire in the next decade, and there are too few younger workers in the pipeline to replace those retiring.
Because petroleum-industry hiring was very low from the mid-1980s through about 2000, there also is an extreme shortage of geoscientists and petroleum engineers with 15 to 25 years of experience. This means a significant shortage of knowledgeable and experienced managers and mentors for younger workers.
Finding ways to retain the knowledge and experience of the retiring workers is an important concern.
The report also finds the current pipeline of students with strong STEM backgrounds is insufficient to meet industry needs, and efforts to grow this population are insufficient to meet future industry needs. Although the majority of energy and mining jobs do not require a four-year degree, many do require some education beyond high school; for example, there is a large demand for geological and engineering technicians with a two-year degree or certificate.
One bright spot is that community colleges have rapidly moved to provide two-year industry-focused programs and help funnel students into four-year STEM curricula.
Other workforce issues face the oil and gas industry:
♦ The U.S. petroleum industry faces growing international competition for workers as oil and gas production grows around the world. The problem is amplified because many foreign students in U.S. colleges and universities do not stay in the United States due to the difficulty in getting work visas.
♦ There is a shortage of faculty in geoscience and petroleum engineering. Although the faculty decline has slightly reversed in petroleum in recent years, it is expected to grow as older faculty members retire.
♦ Federal and state governments that provide necessary data collection and regulation are having a hard time attracting and maintaining qualified workers because of uncompetitive salaries, unappealing job locations and cumbersome government hiring practices. This has a negative impact on industry efficiency.
In the short term the oil and gas industry is boosting its workforce by hiring non-U.S. workers, increasing salaries and retention bonuses – especially targeting retention of older workers – and acquiring companies to acquire workers.
For the long term, among its many recommendations, the report encourages efforts to increase participation of under-represented minorities and grow STEM education.
Some of the recommended approaches are:
♦ Increased funding from industry and the federal government for academic research in the geosciences and petroleum engineering is necessary for attracting students and faculty.
Industry-government coordination or partnerships to fund university research programs help make education more relevant to industry while attracting students and faculty. These programs should be expanded.
♦ Several industry-supported educational programs are effective in encouraging minority students to complete high school and college and in choosing STEM careers. Successful programs should be expanded or replicated.
One example is the Cooperative Development Energy Program (CDEP), created at Fort Valley State University (FVSU) in Georgia that targets minority students using mentoring and internship programs starting in the seventh grade. Three years at FVSU are followed by two years at the University of Georgia. The program has graduated 100 students in earth sciences and engineering since 1997.
The AAPG Foundation established the Ike Crumbly-Minorities in Energy Grant in recognition of Ike Crumbly, an AAPG Special Award winner and the founder of CDEP.
GeoFORCE is a slightly younger but highly acclaimed program at the University of Texas.
♦ As health, safety and environmental regulations are moving from check lists to risk-based safety management systems, government-industry collaborations including worker exchanges can help address shortages of government workers and help educate industry workers.
♦ The report also encourages government to supplement non-government efforts to attract a greater number of traditional STEM students to energy and mining careers by showing their importance to the nation and the career opportunities they present.
The National Academy examples and conclusions should help Congress in considering a second, 2013 reauthorization of the 2007 America COMPETES Act.
Among other efforts leading up to the reauthorization:
♦ The Research Subcommittee of the House Committee on Science, Space and Technology reviewed four exemplary industrial and non-profit, philanthropic STEM education initiatives in a March 13 hearing. Example programs by Intel, Honeywell Aerospace, Project Lead the Way and the Museum of Science and Industry mirror existing geoscience programs, while focusing on other technologies.
♦ The Senate Committee on Commerce, Science and Transportation held a similar hearing in September 2012: Five Years of the America COMPETES Act: Progress, Challenges and Next Steps.
♦ As a guide to the present and future role of the federal government in STEM education, the National Science and Technology Council released a December 2011 report, “The Federal Science, Technology, Engineering and Mathematics Education Portfolio.” The report found that in fiscal year 2010 the federal government spent over $3 billion on STEM initiatives – less than 1 percent of all education funding in the United States.
Much of the federal STEM funding targeted economically disadvantaged and minority groups. Federal STEM programs supported: minority-serving colleges and universities, improving curricula and teacher effectiveness for K-12, and increasing students’ knowledge and interest in STEM.
Finally, yet importantly, many non-profit groups and volunteers work to encourage students to choose STEM careers – and support their education. AAPG Foundation provides grants to many STEM education initiatives, and the Youth Education Activities committee coordinates projects and volunteers.
A few example projects are:
Keep up with the GEO-DC office through the GEO-DC blog.
A special Energy Policy Forum on “The Demand Side of the Natural Gas Price Equation” will be held at 1:15-4 p.m. Tuesday, May 21, at the AAPG Annual Convention and Exhibition in Pittsburgh.
Moderator for the event will be Edith Allison, director of the GEO-DC Office in Washington, D.C., and columnist of the EXPLORER’s monthly feature, “Policy Watch.”
The growth in U.S. natural gas production has depressed prices. Although weather and macro-economic conditions influence price in the short term, new markets for natural gas can boost demand over the long term, bringing prices in line with production costs. This forum will explore some potential areas of growth in natural gas demand.
A moderated discussion period will follow the presentations. Panelists include:
u Howard Gruenspecht, deputy administrator, Energy Information Administration: “Projections of Future Natural Gas Demand.”
u Christopher Smith, deputy assistant secretary for oil and natural gas, U.S. Department of Energy: “Expectations for Future Natural Gas Exports.”
u James R. Cooper, vice president-petrochemicals, American Fuel and Petrochemical Manufacturers: “Potential Growth in Natural Gas Demand for Chemicals.
u Paul Kerkhoven, director, government affairs, NGVAmerica: Future of natural gas vehicles.