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Workers Smell Money in the Oil Patch Again

Demand drives prices up, which spurs investment, which creates more supply: barrels, Btus... and employees. The energy industry will find itself seriously short of a variety of skilled and professional employees for quite some time, but the supply response is ratcheting up in a number of ways.

While they've antagonized consumers, high energy prices also have captured the attention of students seeking careers and workers looking for steady employment at a living wage or better. Initiatives have been launched by industry and educators to bring members of both camps to the oil patch. And they're coming.

Normally the University of Texas sees eight to 12 incoming freshmen pick a geosciences major during their first year at the university. That number is up to about 140 this year for a number of reasons, one of them being a greater awareness of energy and the cost of natural resources, says Clark Wilson, chair of UT's geological sciences department and professor of geophysics.

The growth is reminiscent of that experienced by the department during the 1980s. However, the university and its faculty are going to keep a better handle on expansion this time. "Twenty years ago we didn't have any controls or filters on our enrollments..." Wilson says. "We were up to 800 [students] by 1984, well beyond what we can reasonably do." This time around about 400 undergraduates will be the target.

As graduation draws near, the UT students will have a large audience of prospective employers. About 30 companies came to campus to recruit last year, Wilson says. Spring saw an increase in recruiting activity. While the majors always have been a strong presence, smaller companies are getting more active. And prospects are better for students who only have bachelor's degrees where once employers were looking for a master's or better, Wilson says. This is particularly true at smaller companies where advanced training is more likely to come on the job.

While the industry's next generation trains, experienced technical employees often are having their pick of industry jobs today.

Jeff Bush founded Denver-based and upstream-focused CSI Recruiting about six years ago after a recruiting career in information technology/telecommunications, so he knows what a boom looks like. "The highest demand right now is in the engineering skill sets, so that would be reservoir engineering, production and operations engineering, drilling engineering. All of those skill sets are extremely high in demand as companies are trying to exploit the assets they currently have or are in the process of acquiring new assets," he says.

Just as companies have found with drilling rig day rates and oilfield services, costs are up for employees, too. Bush says it's now necessary for companies to review compensation packages every six months or so as salaries continue to rise. "This sort of pricing environment is a double-edged sword. When we give [companies] an answer, it's always a higher number than we gave them last time," he says.

But companies making a hire can be reasonably certain that person will stick around for the next decade or so, at least in the case of older professionals with 20 or more years of experience. These people take a certain amount of pride in sticking with a company, Bush says. Younger workers, those with up to five years of experience, are more "opportunistic" in their career strategies.

For those who change jobs, less often is it for a desire to relocate than in past years. Most of those who want to live in Denver, for instance, already do. Houston still is the undisputed industry capital with the most job placements, Denver is second with the Dallas-Fort Worth area at No. 3. The Oklahoma City-Tulsa area is holding steady. Job changers are looking for career advancement/a change in title, projects they're interested in, etc., Bush says.

Highly trained technical employees aren't the only ones benefiting from the boom times. The industry's desperate need for skilled workers in the field has boosted wages and created job opportunities where little might have been on offer before. The Rocky Mountains and central Arkansas are just two regions to witness new initiatives to train workers for the oil patch.

Since opening in March 2005, the Rocky Mountain Oil and Gas Training Center in Casper, WY, has trained 582 individuals from 42 states and produced 485 graduates ready for work as floor or rig hands. All graduates get jobs -- 100% -- says Chris Corlis, director of training for the Wyoming Contractors Association, which manages the center. The center is supported about 50% by the U.S. Department of Labor and 50% by the energy industry. This year's budget is about $2 million, and that could grow to $3 million or $4 million next year, says Corlis.

Those who leave the center for work on the rigs tend to stay on the job, too. After 90 days, 85% are still showing up for work; after 180 days, 73% still return, exceptionally high retention rates when compared with the industry at large where rates can be 20-30%, says Corlis. Veterans make up about 60% of the workers trained at the center. "The drilling contractors really like the veterans because they've got discipline; they've got teamwork; and they're used to working away from home in difficult conditions." A much smaller segment of trainees is those displaced by Hurricane Katrina, about 2%.

The center was launched with two goals in mind. One was to reduce the accident rate on rigs in the Pinedale field and the Pinedale Anticline. The other was to recruit all the workers needed to drill some 3,000 wells necessary to exploit the natural gas resource.

"What is unique about the center is that it not only offers entry-level training of safety and equipment for floorhands, it also offers CDL [commercial drivers license] truck licensing, heavy equipment operation, mobile crane operation and safety supervisor operation," the center's CEO, Charlie Ware, told the Interstate Oil and Gas Compact Commission in September 2005. "The facility is housed on 76 acres of property in Casper with administration and classroom facilities, an operational 500-hp drilling rig... and the ability to house 60 students on campus."

In Arkansas, where the prolific Fayetteville Shale play has sparked an industry renaissance and is driving up state revenue (see NGI, May 15), the University of Arkansas Community College at Morrilton (UACCM) recently got approval for an associate of applied science degree in petroleum technology. Among other programs reviewed in developing the degree was the Rocky Mountain Oil and Gas Training Center. Fayetteville player Southwestern Energy Co. pledged $200,000 to develop the program.

"Plans for the petroleum technology degree began when UACCM was approached by representatives of the oil and gas industry regarding the development of credit and noncredit training to prepare students for the employment wave expected to accompany the expanded gas exploration and drilling," UACCM said.

Southwestern subsidiary Desoto Drilling is running four rigs in the Fayetteville and has four contracted with third parties, says Alan Stubblefield, Southwestern Energy Production Co. senior vice president. He said Desoto has about 100 people working and about 30% of these have less than one year of experience. "It's been a challenge for us," Stubblefield says. "At the same time we've been very fortunate in that we've got a real attractive program for them to come to work for Desoto Drilling."

For one thing, wages are probably as high as they've ever been, Stubblefield says. For another, Desoto's rigs are newly built and fit-for-purpose for the Fayetteville, meaning they're more worker-friendly than what is typically found in the oil patch. Additionally, for the 50% of Desoto workers who commute from outside of Arkansas, the company has gone out of its way to set up pleasant living quarters, Stubblefield says. "Clean sheets and three square meals a day."

Clearly, state and local governments have stepped up to train energy industry workers for the economic development benefits. The energy industry clearly has an interest in promoting training and education of a desperately needed workforce. However, whether the boom times last remains to be seen. T.K. (Terry) Young, president of the Society of Geophysicists and head of the geophysics department at the Colorado School of Mines, remembers what happened to his former students after energy prices tanked in the 1980s.

"Our students are aware of the reality concerning the treatment of human resources by the industry in the last 20 years," Young says. "Therefore there's been some caution about going into an industry that historically has been cyclic, that's gone through boom and bust, hire and fire. Because of that recognition there are some students who say, 'Well, I don't really want to do that.'"

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