'Never in my wildest dreams': Another oil bust cripples workforce today and for the future
Sergio Chapa June 18, 2020 Updated: June 18, 2020 8:19 a.m. houstonchronicle.com
Troy Hilde had a good job working as an engineer for a construction firm when he left in 2019 for the promise of bigger paydays and an opportunity to fulfill a dream to work in the oil and gas industry.
But in April, after working as a hydraulic fracturing engineer for Tomball oil-field services company BJ Services, Hilde was laid off, joining tens of thousands of workers who’d lost jobs in the breathtakingly fast oil crash. Now he’s enrolled in the Texas A&M University MBA program and looking for jobs in other sectors and industries.
“I definitely won’t work for an oil-field service company again,” Hilde said. “If there are downturns every two years, how are you supposed to build a career or start a family? “
Hilde is representative of the kind of loss the industry endures every time oil prices crash. Workers by the thousands are cut, draining the industry of valuable skills and experience while future employees — college students and new graduates — often opt for careers in steadier, and perhaps greener, industries.
“When there are downturns in commodity-driven industries such as oil and gas or mining, two things happen,” said David Foster, a workforce expert with Washington, D.C.-based think tank Energy Futures Initiative. “The newest people leave and the oldest people leave. You end up with a workforce that is concentrated in the mid-40s to early 50s.”
Downturns have hit the oil industry four times in 40 years. The mid-1980s oil collapse saw the industry workforce shrink from 100,000 in 1982 to 25,000 in 1986, according to the Federal Reserve Bank of Dallas. Employment recovered, but crashes followed in 2008 and 2014-16.
Rarely, however, has the industry endured a crash that has unfolded as quickly as this one. West Texas Intermediate, the U.S. benchmark for crude, started the year at $61 per barrel, fell to $20 in March and to negative $37.63 in April. The price has recovered to about $40, but the damage has been done.
The industry shed 26,300 jobs in Texas during April, the largest number of oil and gas layoffs recorded in a single month, Texas Workforce Commission data shows. One-third of those jobs were in the Houston area, according to the Gulf Coast Workforce Board.
Publicly posted employment ads show a shrinking pool of oil and gas jobs. The number of available oil and gas jobs in May had dropped below 1,000 — 76 percent less than at the same period a year ago and 88 percent less than before the 2014-16 oil bust, according to Texas Workforce Commission data.
The types of available jobs also have changed. Open positions for gas station cashiers and auto shop mechanics make up almost one-fifth of available jobs now, according to the commission. In 2014, the top five available positions were managers, petroleum engineers, computer technicians, mechanical engineers and sales representatives.
When the industry begins to recover, it may find that those it cut might not want to return, says Peter Beard, senior vice president of regional workforce development at the Greater Houston Partnership.
“When you get ready to hire folks back, how likely are they to come back to an industry that has cycles to it?” Beard said. “Just as in the construction industry, some people don’t like the cyclical nature of the work.”
One worker who has rejected the boom-and-bust cycle of employment is Raymondville native Santiago Huerta, who lost his entry-level job in 2017.
Rather than return to the oil industry, Huerta now is a foreman with San Antonio wind farm construction company Rangel Renewables, making twice what he earned in the fracking industry. And he’s not alone. A quarter of the roughly 100 people at Rangel’s North Texas job site used to work in the oil fields.
“The difference here with Rangel so far is that they have been consistent,” Huerta said. “It’ll be steady work.”
Baby Boomers, who are over 56 years old and make up 21 percent of the industry workforce in the U.S., according to the Energy Futures Initiative, are pressured during downturns to take cost-saving buyouts. On the other end of the employment spectrum, potential workers in their early 20s, the so-called Generation Z, prefer jobs with tech firms like Amazon or Google, not with a fossil-fuel industry known for producing greenhouse gases, Foster said.
“Recruiting in the fuels industry has become difficult for reputational reasons,” Foster said. “The younger generations have a sharper sense of corporate mission and accountability to sustainability.”
A quick recovery might help buy the industry more time to transform its business and more successfully target younger, prospective workers, said Ken Medlock, an energy industry expert at Rice University’s Baker Institute.
Medlock predicts that large oil majors, companies with their own wells, pipelines and refineries, will emerge as the dominant force in the U.S. shale industry in the aftermath. And those companies, he said, will prize digital skills and automation over physical labor.
“It’s more about the evolution of an industry rather than a once-in-a-generation reaping,” Medlock said.
Part of that evolution is a turn toward renewables such as wind and solar energy. Wind and solar employment opportunities, unlike those in the fossil-fuel sector, have remained steady over the past six years, according to Texas Workforce Commission data.
An opening in the renewables sector caught the attention of Anne Brooks, who had survived the oil industry’s downturns in 2008 and 2014 then rose through the ranks at Halliburton.
She worked 18 years in marketing and other positions for the oil-field services company. Feeling a “change in the air” this year, however, Brooks left Halliubrton just as it announced furloughs in March at its Houston headquarters.
She took a job as senior brand manager at Houston rooftop solar company Sunnova. Brooks sees a bright future for the solar industry — one that complements the oil and gas industry and boosts the economy.
“There is enough room for both renewables and oil and gas,” Brooks said. “A diversified industry will be critical for Houston’s future as the energy transition capital of the world.”
Today’s petroleum engineering students will play a role in that transition, but the industry will have to wait a couple of years to see if they stick around for it.
Nearly 1,400 undergraduate students are enrolled in petroleum engineering programs at six Texas universities, compared with a peak of 3,600 in 2015 and 3,500 in 1983, according to figures from Texas Tech University.
Changes in enrollment usually lag those in the industry by about two years because juniors and seniors usually won’t change majors, said Ramanan Krishnamoorti, chief energy officer and a professor of petroleum engineering at the University of Houston. The school’s oil and gas programs were just recovering from an enrollment dip after the 2014-16 downturn when the coronavirus pandemic hit, he said.
“The oil and gas industry is still a robust place to get started in the energy industry — the skills learned in the industry have great applicability in the overall energy industry and especially in the rapidly growing complementary areas such as renewable energy generation, alternate fuels, carbon management and sustainable energy development,” Krishnamoorti said.
One of those students is Zachary Mangum, who graduated in May from Texas A&M University with a degree in petroleum engineering.
Mangum started his studies during the 2016 downturn and was told that the industry goes through boom and bust cycles every four or five years. But now, he and his fellow graduates are looking for jobs during not only a historic industry downturn but also as the nation’s economy is roiled by efforts to control the spread of the virus.
Normally, 80 to 90 percent of petroleum engineering graduates have job offers by their final semester, but neither he nor the majority of his classmates had jobs lined up, he said. Although he has begun to see petroleum engineering jobs posted again, he hasn’t had any luck. He plans to hone his digital skills and has started looking at engineering jobs with pipeline companies as an alternative.
“I always joked that I would be graduating in a downturn, but I never in my wildest dreams thought it would be this bad,” Mangum said. “It’s only been about a month since I’ve graduated so I’m not in desperate straits yet, but I can definitely feel the pressure mounting to find employment of some kind.”
I agree. I think that young people with the right degrees and especially advanced degrees will find opportunities. When I think about O&G jobs here in Louisiana I think of the generations that have made their way up through the ranks without a college degree: rough necks roustabouts, tool pushers, etc. and how those opportunities have shrunk. It's no longer enough to be a conscientious hard worker with some horse sense in an industry that is evolving to be tech focused. Those jobs are hard to find. Hopefully more young Louisianians will make the commitment to get a college degree and not depend on the old path through the patch to a career that will support a family. I know some in that category that have struggled mightily the last few years.