One of the very few benefits of reaching six decades of shuffling around this earth is the ability to have near perfect 20/20 hindsight. I have found that it still does not give me the clarity I wish for the next 50 years, or even the next 12 months.
Last year at about this time, I looked back and hoped we would be going through an oil price shock similar to 2008; instead it has become apparent that we are facing something different and much more akin to the 1980s.
There are forces that can keep oil prices low for the foreseeable future:
- The remarkable and innovative changes helping North American producers lower their break-even costs for unconventionals.
- The political will of several large national state exporters.
- Weak national economies.
On the other hand it is inevitable that the price will rise again to a very profitable level once the demand/supply curve comes back into balance.
Day of Reckoning?
During the 1980s crisis, the oil industry lost a generation of workers, and our industry is just now struggling with how to fill this huge personnel gap – “The Great Crew Change,” as it’s called.
With massive global layoffs, we as an industry are compounding the problem. In fact, there may no longer be a “Crew Change” but a “Reckoning Day” for some companies – I have heard of companies offering 100 percent voluntary severance, putting all assets on the sale block, as they have given up.
I once was part of a corporate strategy placing all corporate debt on the upstream company and spinning the downstream company off debt-free, expecting the upstream company to sink. We stayed alive for many years by innovation until we were purchased, mainly for our personnel. Many of those employees are still there at what became the eventual parent company.
While we can understand the need to try to survive on a corporate level, these large redundancies will set the industry up for an unhealthy battle for talent when prices recover.
To survive this will not be easy, now or later.
Those of my generation are being moved out; we are the higher-cost employees. Our expertise is and will be needed, but more and more as mentors and as temporary consultants.
For the younger generation, I advise taking or keeping any work you can. Many of my colleagues had to leave in the 1980s but successfully came back; the industry has a way of seeking forgiveness and forgetting the layoffs when they need talent.
The trouble and temptation I see ahead comes with the next boom, when experienced personnel will be scarce. In general, it seems that those who have been able to stay with single successful companies generally do better than people that jump and jump.
There will be large gaps of both tremendous people and skills in the coming years. We will manage it as we always do, in part by innovation, in part by technology and in part by either raiding the best people or by mergers and acquisitions.
After the ’80s crisis came the recovery of the ’90s, during which it was common to find managers in their 30s and 40s. We drilled a lot of dry holes and as an industry we lost much of our map-making skills, but we broke new ground: We moved from silo organizations to asset teams, we embraced workstations and computer modeling, we enabled (or created or discovered – choose your term) deepwater exploration/development and unconventionals.
It will, at times, be painful but exciting to see how the industry rises to the challenge over the next decade with the next generation at the helm.
Birth of the DEG
During the layoffs of the 1980s many (but not all) of those who left the petroleum side transitioned to environmental work, and it was those transitions that led AAPG to form the Division of Environmental Geosciences.
AAPG recognized that the work of the environmental geoscientist is much the same as the work of the petroleum geologist – though, at the time, at a shallower depth.
Today’s environmental geologist is likely to be involved in CO2 sequestration, induced seismicity, monitoring of stimulation and other deep underground geological investigations, as well as efforts related to protecting underground water resources.
Today, as in the past, we will see many of our petroleum colleagues transition to environmental and hydrologic careers and today, as in the past, we will see those companies in general do not offer compensation packages (salaries and benefits) equal to that of the petroleum companies, because the environmental program is seen as a cost to be borne, not as a potential product to be delivered.
Today, as in the past, those who make the transition will find the work just as challenging and just as intellectually rewarding, but you’d better bone up on your chemistry, including partial pressures.
To those who transition, or set themselves up as consultants with an environmental tag, the DEG has been and continues to be here as a professional division of AAPG to assist you with excellent technical content, training and connections.
On a final note, and speaking of transitions: Last month, after decades of incredible service, Norma Briggs retired as AAPG’s staff Divisions manager. Norma has kept the DEG, the Energy Minerals Division and the Division of Professional Affairs on track with meetings, budgets, reminders, gentle nudges, countless phone calls and billions of emails. Her duties are being re-assigned, but she can’t be replaced.
Norma, you will be missed. I know I speak for all of the Divisions in wishing you the best in your transition to the next phase of your life.