Oil companies scramble to find engineers

So much for sweating out that first job after college.

Like star athletes, engineering students Julie Arsenault and Emily Reasor are prized prospects for the energy industry, which is experiencing dizzying demand for engineers.

Bustling oilfield activity and retiring baby boomers, among other factors, have petroleum outfits large and small trying to hire thousands of engineers, and experts say the trend is expected to extend into the next decade as worldwide energy demand grows.

"I've talked to quite a few of my peers, and we know we're in a good spot," Cornell University's Reasor said as she and Arsenault, of the Massachusetts Institute of Technology, took part in a week-long recruitment program sponsored by Royal Dutch Shell's U.S. arm. "It's nice to know we're needed."

Management consulting firm Oliver Wyman says roughly eight in 10 global oil and gas companies forecast a shortage of petroleum engineers through at least 2011. The American Petroleum Institute said U.S. energy companies will need at least another 5,000 engineers by decade's end.

In Houston, home to scores of exploration, engineering and services companies, simply check the classified ads: Row upon row of job listings for engineers at ConocoPhillips, Marathon Oil Corp. and numerous others.

Petroleum engineers evaluate potential oil and gas reservoirs, work with geologists and other specialists to understand rock formations, determine drilling methods and then monitor drilling and recovery operations. One of their big tasks is to design methods that achieve maximum recovery of oil and gas.

"I can assure you, it's tight from a supply standpoint, hot from a demand standpoint and lucrative from a job searcher's standpoint," said Cary Wilkins, who leads Shell's recruitment efforts in the U.S. and Canada.

No one in the industry appears to be panicking, but executives acknowledge the hiring challenge and some say it could impede investment in new oilfield projects.

David Pursell, an analyst with Tudor Pickering & Co. Securities Inc., said it's difficult to quantify what a hardship the shortage will be, but it's certainly a consideration when a company considers buying an existing project or starting one anew.

"The first question from senior management is: OK, we've got the asset. Who's going to work on it?" Pursell said. "What you end up doing is stretching your people. You prioritize. So it's not all bad. It forces you to work on your best, most important projects."

Fossil fuels — despite efforts to find and market alternative fuels — will continue to be the world's primary energy source for the foreseeable future, making petroleum and other engineers vital for finding and extracting oil and natural gas from all around the world.

And demand is only going to grow.

The shortage of engineers has been caused in part by the upsurge in exploration and a wave of retirements from baby boomers who have spent 25 to 30 years on the job.

API says low college enrollment in petroleum engineering and other majors that support the oil and gas business also is to blame — in part because of the industry's reputation as an unreliable employer.

After U.S. oilfield employment peaked at 860,000-plus in 1982, companies slashed more than 500,000 jobs over the next 18 years as oil prices per barrel plummeted to the low teens — compared with prices hovering around $70 a barrel today.

Those layoffs, an API report said, "sharply curbed entry into the industry by nearly a full generation."

But college enrollment numbers are improving as the industry aggressively touts the potential for challenging work, exotic postings and starting annual salaries at $70,000 or higher.

The number of undergraduate students studying petroleum engineering at Texas A&M University has jumped from 191 in 2001 to 507 last fall, including 52 students at a new satellite campus in Qatar. A&M's petroleum engineering school, one of the nation's largest, had 1,422 undergraduates in 1982.

"We're talking about energy to the very youngest students," said Margaret Watson of the Richardson, Texas-based Society of Petroleum Engineers. "For a long time, we did a lot with high school students, but we realized we needed to go younger to make sure kids were taking the math and science courses they needed."

Companies are using a variety of methods to grab and retain new talent.

Houston-based Stress Engineering Services Inc., whose ranks have grown from 150 five years ago to 240, instituted in 2005 an Employee Stock Ownership Plan, a stake in the company previously limited to higher-ups.

"It's not only a good way to attract people but also to retain them," said Stress President Joe Fowler. "We don't lose many people."

Shell began its recruitment program, called the Gourami Business Challenge, in Europe more than 10 years ago before exporting it to the U.S. in 2005. This year Shell doubled the number of students involved to 90.

The challenge for Reasor, Arsenault and the others, who represented 36 colleges, was to create and present a five-year business plan for Shell's operations on the fictitious Indian Ocean island of Gourami. During the week, students had access to more than 70 Shell executives.

Shell representatives said Gourami is more an audition than a competition.

"The students are pushed," said Lorie Hernandez, Shell's graduate recruitment and university relations consultant. "Our intent is to look for reasons to hire people."