$240,000. More than British Prime Minister David Cameron earns per year.
Back in 2013, Oilprice.com published an article about a cook on an Australian offshore platform earning this kind of salary during the heydays in the oil sector. But things have changed in the oil patch.
For many years one of the most lucrative jobs in the already lucrative field of engineering was as a petroleum engineer. While industrial, mechanical, and chemical engineering grads all commanded respectable salaries, usually ranging from $55,000 to $75,000, in recent years petroleum engineering salaries often top $100,000 or more.
The days of that prosperity are ending or at least on hold for now though. Jobs for petroleum engineers are becoming increasingly scarce even for grads from traditionally good universities. Part of the problem is that as U.S. shale oil boomed, so did the number of petroleum engineering grads. There are more than three times as many students graduating today with petroleum engineering degrees as there were in 2008.
In that sense, the petroleum engineering glut is even worse than the oil glut. While the oil markets will rebalance over a period of a couple of years, many petroleum engineers will likely leave or never enter the industry in the first place. Now to be fair, engineering is an extremely useful field and there is considerable overlap between many of the engineering disciplines. My undergrad training and initial work experience is in industrial engineering, which has significant commonalities with mechanical engineering. In the same way, petroleum engineers will be able to get jobs in other technical fields – mathematical and scientific skills are always in demand.
Still, for many students who went to school and took on student loans under the expectation of getting a six figure petroleum engineering job, a rude awakening is likely ahead. Petroleum engineering became a much more attractive field thanks to the shale boom, which meant that these engineers were no longer likely to have to take a job abroad or on an offshore platform. If shale is dead or partially dead, that changes the calculus for many petroleum engineers. To employ a meaningful number of the current stock of engineers, oil prices would likely have to get back to around $70 a barrel which would make shale at least reasonably profitable in many geographies.
Petroleum engineers who do want to work in the oil field need to be looking at older technology rather than new tech for opportunities. While the economics of many shale fields are looking very questionable, many oil companies are now looking at their existing conventional fields and seeking ways to extract as much production as possible from these fields. That means higher demand for traditional petroleum engineering work, and less demand for new specialties like hydraulic fracking. The influx of private equity money into the space is also trending in the same direction – for savvy petroleum engineers, it’s a case of back to basics rather than newer and more expensive techniques.
Layoffs are likely to continue in the oil patch in 2016, and that also means that firms will be looking to hire less fresh faces to the mix. The petroleum engineers who do find jobs in the field are going to be the ones with useful skills (like knowledge of older technology), and those with either good networking connections or stellar academic performance. In the current environment, every big oil company out there has their pick of multiple qualified petroleum engineering candidates. That means that only the best applicants will make it through.
In the end, many different occupations go through surges of graduates and eventually the markets adjust. For instance, there has been frequent concern in recent years about law schools producing too many lawyers leading to difficulty for many grads in getting law jobs. Eventually though, people adjust and industries with a need for smart people take up the slack. Not every petroleum engineer will get a job in the oil patch – many won’t – but that doesn’t mean they won’t get jobs at all.