It’s been a tough 18 months if you are in the energy industry.
For many of us baby boomers and Gen X’ers, we’ve seen this type of commodity price decline many times in our careers: oversupply leads to a surplus of products, the price drops and companies produce barrels at break-even or a loss and then, unfortunately, organizations cut staffs.
Of the five times I can recall this happening in my career, this downturn has a few extra twists that make this time different.
The most obvious is that exploring and producing in North America has changed: unconventional resources cost more to produce due to the reservoirs and the multiple wells needed to maintain a production plateau.
As prices continue to decline, producers will stop drilling and the production decline will be much more dramatic once wells come off their peak production.
Once the decline starts it will take a much greater effort than in the past to build production levels up again. This will require more staff in all the operating companies.
Below is a general look from the U.S. Energy Information Administration (EIA) of the global production and consumption issues. This oil glut started in the first quarter of 2014 and will continue through 2016 before production decreases and consumption overtakes production at about 96 million barrels of use per day.
Second, for most of the professionals who are 55 years of age or older – the baby boomers, people like me – who might have continued to work for three to five more years, are being early-retired, and I believe many will not return to the workforce when the prices recover. Many will opt to leave the industry.
A third consideration is that consumption of oil will continue to grow, even with the “green” energy challenge of the COP 21 United Nations climate forum last December in Paris. As the EIA chart shows, world oil usage moved from 88 million barrels per day in 2011 to 96 million barrels per day by the end of 2017.
People need energy and we will need to provide petroleum and natural gas for decades, so the light at the end of the downturn is that Young Professionals will be in great demand in a renewed and different-looking workforce – a much younger workforce.
The challenge for YPs, then, is how to survive the current downturn and be better prepared for the jobs once they become available in a year or two from now.
As professionals you should all be lifelong learners, thus it should be your job during the downturn to upgrade your technical, business and professional skill sets. Yes, it may take some investment to take courses, but in future job interviews it will also show your commitment to your profession.
Next, I can’t emphasize enough that you should all be volunteering. Your volunteer experiences provide you a professional network that will be highly valuable to you in the future. It also provides leadership opportunities for you to:
- Work with others without financial remuneration.
- To learn project management, supervision and time management skills through early volunteer leadership positions.
- Work with diverse groups of geoscientists, many of whom might be older than you, so it can be considered as training for future first-line management.
There are other constructive pursuits while underemployed, like spending some quality time each day learning as much as you can about the related disciplines like land, joint ventures and contracts, as well as building your understanding of health, safety and environment in the workplace; find online drilling, completions and production courses – some at very low or no cost – to upgrade your understanding of the areas of your business.
And when the downturn ends, (it will end) and your résumé will show that you used your time wisely – you built new technical and business skill sets and you exhibited your commitment to your profession.
On a sad note, Toby Carleton, AAPG’s president in 1993-94 and Honorary member passed away on Feb. 6, 2016. As a young AAPG volunteer, Toby was the first president that I served with, when I met him on my first assignment on the Advisory Council in 1995.
Toby was a thoughtful, gentle, genuine geologist who had a great passion for AAPG. Through the years, he always had time to stop and chat about AAPG, the industry and his farm out in west Texas. He will be missed by many members. May he rest in peace.