Fewer Grads + More Jobs: A Winning Formula for Job Hunters
As demand for petroleum engineers begins to rise, supply is dropping fast. It may be a good market for job seekers but things could get tougher for those doing the hiring.
The 2019 graduating class of petroleum engineers will mark the last gasp of a boom before a steep drop in the size of future graduating classes coming out of US universities.
After a class of nearly 2,000 petroleum engineering graduates next spring, the graduation rate over the next 3 years will fall to less than 1,000 per year, according to an annual survey of US petroleum engineering programs by Lloyd Heinze, a professor at Texas Tech University. The survey includes primarily US universities. The numbers are a direct reflection of the sharp downturn in oil prices that began in 2014 and caused large downsizing among oil and gas operators and service companies.
For young engineers looking for jobs after college, it represents a welcome change from the rocky job market faced by graduates after the industry switched into job-cutting mode. For employers used to having their pick of the top students since the bust began in 2015, it could mean being one of several bidders for a shrinking pool of graduates.
Professors on campuses are seeing signs of improvement, but they caution that the evidence is more anecdotal than numerical.
“A good number of seniors have jobs and a lot do not. One thing is that it is a big senior class,” said Karsten Thompson, department chair for the petroleum engineering program at Louisiana State University (LSU). It is too early for hard numbers but “there are more companies on campus with more students having internships and job offers.”
“Internships went quite well this year. It looks like the recovery is under way. Students are much more comfortable,” said Erdal Ozkan, a professor at Colorado School of Mines.
The job market is much improved, said John Lee, a professor at Texas A&M who also sees improved internship opportunities.
The class of 2019 is made up of the last big crop of freshman enrolled back in the fall of 2014 when the bust killed the assumption that $100/bbl oil was a given. The nearly 2,000 seniors in the 2018-2019 class is considerably smaller than the past two, which exceeded 3,200, but it is double the size of three classes that follow.
Texas Tech has 77 seniors now, compared with a peak total of 227 in 2014, and only 43 juniors following them. The junior class is 80% lower than the 2015 peak. That drop is an indication of Texas Tech’s decision not to limit petroleum engineering enrollment during the boom—only a few schools including Texas A&M and the University of Texas capped enrollment—and the quick reactions of a “population of students and parents who were faster to realize the downturn” because so many live in West Texas where the industry is all around them.
Between the boom in the early 1980s—where schools provided a generation’s worth of exploration and production professionals—and the recent boom that produced many more grads, was a long, deep slump.
Now the question facing those running these programs is: how much demand will there be in the future? The upturn has improved the mood in the industry, but oil prices remain uncertain, having dropped sharply in November. Before the bust, companies spent a decade bringing in young engineers as fast as they could train them, anticipating a wave of older professionals leaving the business, which happened during the recent downturn.
For faculty members there was an upside to the downturn. During the recent boom the number of students per teacher ratio peaked at more than 46:1 in US schools. It has since dropped to 14:1, which Heinze said gives faculty time for both student attention plus research work, which is particularly important to faculty seeking to become tenured professors.
“Our ratio had been too high when the big enrollment classes went through,” Thompson said, adding that at this level, “we are not too far from where we want to be.”
During this time of weak job demand, the number of students seeking master's degrees and doctorates has increased, and schools such as LSU have been bringing in a new generation of teachers, preparing for the time when senior faculty members retire. “We have had very strong faculty hiring in the last couple years,” Thompson said.
For companies looking for younger engineers, the market could remain tight for years. “Employers are in for a rude awakening,” Heinze said. If demand for grads grows as the supply shrinks, he said, “it is little bit scary thinking about what may happen.”
But Ramona Graves, SPE’s technical director for academia, sees the bottom in sight and believes that the seeds have been planted for a comeback.
“Every petroleum engineering student will get a job or summer job,” said Graves, a petroleum engineering professor at Colorado School of Mines. Strong hiring demand will convince freshman that might have gone into another major to choose petroleum engineering over majors where demand is not as high. “In 3 years we are going to have too many students” for the jobs, she predicted.
Where is Marietta College?
Heinze’s list of the 20 largest petroleum engineering programs includes some names that could double as trivia questions:
- Where is Marietta College?
- What is KFU?
Marietta, which ranks in the top 10 in 2019 graduates and 15th in enrollment, is named after its hometown in Ohio. It is on the border with West Virginia, putting it in the heart of the Marcellus and Utica plays in the eastern US. It is one of a cluster of schools within those plays, including West Virginia and Penn State University.
KFU is short for King Fahd University. This growing program in Saudi Arabia is appearing on the survey for the first time as Heinze works to expand the coverage outside of the US.
The number of SPE student members— about 73,000 in 2017—is a rough indication of the population outside the US, although student membership does not require one to be committed to a career in the industry.
This wide differential helps explain why he is working to expand the survey internationally. This year, Heinze is gathering data from the small group of international schools accredited by the Accreditation Board for Engineering and Technology, which requires schools to disclose the number of students. It has accredited 31 programs, 20 of which are in the US, but the universe of international petroleum engineering schools is far larger.
“We know of at least 300 schools, but I’m guessing that doesn’t even scratch the surface,” said Tom Whipple, senior professional development manager for SPE. He said that many have tried and failed to do a global survey due to barriers ranging from surveys that went unanswered, to defining which institutions fit into the universe. Programs vary widely from the US model based on differences in local educational systems, funding levels, and whether the institution was created to staff a national oil company.
Still Heinze said there needs to be a better tally of the future supply of petroleum engineers. It is hard to know if there will be enough young engineers to meet the industry’s needs without knowing “how much of the petroleum engineering education population has drifted to outside the United States,” he said.