History Matching of Petroleum Engineering Graduation Rates
Is it possible to predict future petroleum engineering graduation rates based on past trends? The answer is no. But this discussion by experts in both analysis and academia shows those trends can offer some interesting insights.
The decline in petroleum engineering student enrollments since 2015 sparked a conversation among a group of prominent SPE members in academia about the future of petroleum engineering education. They began by charting the wide swings in the historical graduation rates of petroleum engineering students, and how that data might predict the trajectory of the current downcycle.
An email discussion among the four members focused on one of several charts created by Tom Blasingame, 2021 SPE president. A summary of their insights follows.
Stephen Rassenfoss, Emerging Technology Senior Editor
Tom Blasingame explained the chart, which led to further discussion.
The “reference” trend shown (red) occurs over the period from 1970 to 2000, which peaked at 1,587 BS graduates around 1984. It is a Gaussian probability distribution fitted to the data provided by Lloyd Heinze, professor at Texas Tech University’s Bob L. Herd Department of Petroleum (solid black line), and data extracted from a 1991 paper by John C. Calhoun, who was then at Texas A&M University and previously served as the 1964 SPE president.
The reference trend is then shifted in time to the period from 2003 to 2033 (green).
The mean and standard deviation of the statistical trends are the same; only the midpoint in time and peak in BS graduates are adjusted for each period. We note an excellent match of the data in the period from 2003 to 2033.
Taking the reference trend back in time to the period from 1940 to 1970 (purple trend), we do not get a reasonable match of the data, with the exception of a slump from about 1951 to 1956. It is difficult to explain this feature, other than to note that in this timeframe the US began to import significant quantities of oil.
Regardless, we note the statistical trend does capture the beginning and end of this distribution, and we recognize that there is no single peak in the data trend from 1940 to 1970.
If we follow the historical trends and the current increase in oil prices and consider the need for oil and gas in the foreseeable future, we predict that the downward trend may stabilize as it did before and level out at the range of 250 graduates a year, while the demand for graduates is much higher.
In this scenario, I consider the following positives and negatives.
- Negative publicity around fossil fuels and social/political pressure to shut down the oil industry will continue, pulling the graduates’ figures down.
- Current energy shortages and price spikes will remind the public that the end of oil and gas is not near, which will start to improve the image of petroleum engineering.
- Deepening global economic crises and rising inflation will reduce people’s buying power and move them from highly idealistic to mostly pragmatic decisions. That, combined with the unmatched salary prospect of petroleum engineers with only a 4-year undergraduate degree, will increase the interest in the PE degree.
- Considering that oil and gas will remain to be slightly over 50% of the energy mix, and that the energy demand will increase by 47% by 2050, we will need to produce roughly 45% more oil and gas than today. Even with the increased efficiency … we will need more petroleum engineers.
This limited supply scenario raises a critical question: Will PE graduates from the peak time reduce the demand for graduates?
Peak periods in BS graduates “feed the machine,” providing a robust global workforce supply of human resources for technical and logistical developments. This supply occurred in the “boom years” of the late 1950s through the early 1960s and the late 1970s through the early 1980s.
However, this time around, some, perhaps even half, of those who received degrees during the peak late 2000s through the mid-2010s period recently left the industry to pursue other careers, though possibly on the periphery of oil and gas. Since so many young and senior professionals left the industry this time, there might not be the same reduction in current graduate demand.
Erdal Ozkan responded to Blasingame’s chart and analysis. A professor of petroleum engineering at the Colorado School of Mines (CSM) and a former SPE technical director, Ozkan’s own analysis led to higher numbers. He questioned whether either method is reliable.
Your treatment of the data may be more sophisticated than mine, but I noticed one major difference. I superimposed the historical data to predict the future. In doing that, I matched the peak period and tried to see where it could stabilize. The result was significantly higher. You matched the downward trends by assuming that the enrollment would end up at the same historical low.
Both approaches may provide some useful perspectives, but at the end of the day, neither captures the effect of the changing conditions of the oil and gas industry
All we can say at this point is there will be oil and gas in the future energy mix. There will be petroleum engineers to produce it. And the current predictions of the petroleum engineering profession by independent sources show reasonable growth potential and much better salaries than the specialists working in the area of alternative energy sources.
Blasingame acknowledged that the available facts are not able to predict rhe future, but can still be useful.
My goal was to understand, in a statistical sense, the shape and character of the individual enrollment distributions during the 1950s/1960s, 1970s/1980s, and 2000s/2010s. The consistency of the statistical trends, particularly the comparison of those three periods, is truly remarkable—virtually identical in a statistical (and visual) comparison.
The steady-state behavior, that is the number of BS graduates in the low period between the spikes, suggests we may have several years of low(er) output of petroleum engineering graduates. However, we can’t use these data to predict the next distributions or to note that these features are always overreactions to the state of the industry in one form or another.
As many note about the present state of the industry, “This time is different.” Petroleum engineering enrollment will need to begin growing soon afer hitting bottom. Although oil and gas production is at/near historical highs, there continues to be attrition from the industry. I believe that this will cause an increasing need for entry-level petroleum engineers in the near term.
While prices are up and oil supplies are tight, Mohan Kelkar, chairman of the McDougall School of Petroleum Engineering at the University of Tulsa, does not see a big enrollment increase ahead.
This time it is more complicated and nuanced. I do not believe that oil prices are going to help us significantly in increasing the enrollment. There are two reasons for this.
Oil companies are not investing significantly in new production; hence, they may not be eager to hire engineers and the demand for new engineers will be suppressed.
A lot of high school students are told over and over again that fossil fuels are not the future and wind/solar are. This is most likely not true; fossil fuel utilization will continue in the future for at least 50 years, but that is not what the news media is suggesting. Unless we do better at recruiting them, the downward trend may continue irrespective of the price of oil.
All the petroleum engineering programs are trying to make changes to reflect the new reality, including making curriculum changes and getting the message out that petroleum engineers play a vital role now and in the future as the energy industry changes.
I do not know if there is a magic bullet. My personal opinion is that we need to attract young engineers by telling them knowledge of subsurface engineering is attractive even in new energy transition ventures such as CCUS, sustainable oil and gas production, geothermal energy, or underground storage.
Have I been successful doing this? Not yet. We need many people trying many different ideas about how to attract students.
Selling students on using petroleum engineering to do something new and different is trending, but Jennifer Miskimins, professor and department head of petroleum engineering at CSM, said that the job opportunities are still mostly in oil and gas exploration and production. She is a member of a CSM group considering the long-term future of the program.
Six years after the record peak in petroleum engineering students graduated, the industry is needing more because so many went into other industries that valued their skills.
Energy transition topics are flashy and play well in the media, but the bottom line is we are still going to need development and production in hydrocarbons and we will need to maintain that workforce.
Oil and gas is likely to be a slow-growth business, but it will still be growing. From a workforce standpoint, we just need to try and match that growth and not get carried away.
I do think we have probably “hit bottom” with the enrollment/graduation numbers (or will in the next year or two), and then we’ll see another upswing. But I personally don’t think it’s ever going to peak at what we saw in the early/mid-2010s (at least I hope as a teacher to never be so outnumbered by students again).
Blasingame acknowledged that digital technology has changed petroleum engineering, but human brainpower remains critical.
Our most important (and urgent) priority must be to continue to attract and retain best-in-class talent in our industry.
Technology has always been an enabler, but it does not find, develop, and produce oil and gas—people do. Ours will always be a people-intensive business, and in my opinion, past spikes in graduates fed the need for petroleum engineers during the low periods that followed.
I do not believe that will be the case for the enrollment spike in the late-2000s/mid-2010s,
and this means enrollments will have to increase once they have bottomed out in the next year or so.
The real question for me—personally and professionally—is how to increase the technical rigor of petroleum engineers and allow the next generation of petroleum engineers to continue to play that critical role.
A Brief History of a Petroleum Engineering Education in the United States by John C. Calhoun. Prepared as a background paper for the Colloquium on Petroleum Engineering Education, Crested Butte, Colorado, July 1991.