swt, ipaa, 2005 qad3931x qad2349x the energy talent wedge scott w. tinker bureau of economic geology...
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SWT, IPAA, 2005
QAd3931xQAd2349x
The Energy Talent Wedge
Scott W. TinkerBureau of Economic Geology
Jackson School of GeosciencesThe University of Texas at Austin
International Petroleum Technology ConferenceDoha, Qatar November, 2005
Session: Education, Training, and Cultural Diversity
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Outline
The talent wedge—the gap between demand and supply of
talented people—that is developing in our industry today
is as great an issue, than the demand-supply wedge for
conventional oil.
Coordinated, international action is required.
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Outline
Trends
An IOC Trilemma
Reserves
Technology
Talent
Towards a Solution
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Global Energy Consumption Trends
Energy Information Administration
International Energy Annual 2003
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
% T
ota
l C
on
su
mp
tio
n
% Coal % Gas% Oil
% Hydro % Nuclear % Geothermal, Biomass, Solar & Wind
91% 86%
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QAd3931xExxonMobil, 2005. http://www.exxonmobil.com/Corporate/Citizenship/Corp_citizenship_energy_outlook.asp
The Conventional Liquids “Wedge”
UnconventionalLiquids
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1,800
1,000
600
tho
us
an
ds
1978 19981994199019861974Year
1982
1,400
The Talent Wedge
Decline is enabled by
technology. Logical floor?
Top 25 IOCsNumber of employees
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Employees are Aging just like our Giant Oil Fields!
0
50
100
150
200
250
300
>25 26-29 30-34 35-39 40-44 45-49 50-54 55-59 60+
Age (YRS)
Age Brackets for Geoscientists Worldwide (2008*)
As with aging fieldswe need to discover
New Talent!
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Outline
Trends
An IOC Trilemma
Reserves
Technology
Talent
Towards a Solution
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The IOC Trilemma• The international oil companies (IOCs)
face a significant trilemma.
• Although high oil and natural gas prices in recent years have helped the bottom line, the numbers may mask an unsettling reality.
• The greatest assets of the IOCs
• reserves
• technology
• talent
are all at risk.
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Reserves
• The International Oil Companies (IOCs) combined own only a few percent of the world’s conventional oil reserves.
• National oil companies own well over 90% of the world’s conventional oil gas reserves.
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0
0.05
0.1
0.15
0.2
0.25
0.3
Aram
co (S
audi)
NIOC (I
ran)
INOC (I
raq)
KPC (Kuwai
t)
PDV (Ven
ezuel
a)
Adnoc (U
AE)
Libya
NOC
NNPC (Nig
eria
)
Pemex
(Mex
ico)
Lukoil
(Russ
ia)
Gazpro
m (R
ussia
)
ExxonM
obil
Yukos
(Russ
ia)
Petro
China
Qatar
Sonatra
ch (A
lger
ia)
BP
Petro
bras
(Bra
zil)
Chevro
nTota
l
Reserves(2004 %)
% IOCs
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Reserves
•This helps to explain why many IOCs continue to merge; too many companies competing for limited access to reserves.
•In order to replace reserves, IOCs are forced to explore on Wall Street via acquisitions and mergers. Wall Street has become a mature province.
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Technology• There was a time when the IOCs
conducted breakthrough research.
• In part owing to ever-greater pressure from Wall Street to focus on short-term performance, private sector investment in breakthrough research has been reduced substantially.
• US research labs have closed.
• Service companies now account for an ever-greater percentage of the research and technology investment, but much of it is incremental.
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QAc8962c
NJ
Ma
Washington
Oregon
Nevada
California
Idaho
Montana
Wyoming
Utah
Arizona
Colorado
New Mexico
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North Dakota
Illinois
Louisiana
Arkansas
Missouri
Flor
Maine
Mich
Minnesota
Iowa
Miss AlaGeorgia
Tennessee
Kentucky
S Carol
N Carolina
VirginiaWV
Wisc
IndOhio
Pennsyl
New York
VtNH
CtRI
DelawareMd
Hawaii
Alaska
Unocal
Conoco
TexacoShell
Phillips
ARCO
Marathon
Amoco
Mobil
Chevron
Exxon Prod. Res.
ARCO
Marathon
Amoco
Mobil
Chevron
Conoco
Texaco
Phillips
Unocal
Technology
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* US E&P firms and the US R&D investments of international E&P firms; source Department of Energy, EIA, CERA analysis.** Traditional Oil Field Service companies (Baker Hughes, Halliburton, Schlumberger, Smith, Weatherford); source, company annual reports, CERA analysis.
Source: Cambridge Energy Research Associates, 2005
R&D InvestmentsUpstream Sector ($2004)
0
200
400
600
800
1,000
1,200
1,400
1977 1982 1987 1992 1997 2002
R&
D In
vest
men
t
($, m
illio
ns)
E&P Firms*
Service Companies**
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Technology
• Can a company--or industry--be successful long-term based upon incremental improvement alone?
• Is breakthrough research required to remain relevant?
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Talent• Prior to 1973, oil and natural gas
prices were stable.
• Kids saw energy as a viable career option and enrollments in US geoscience and petroleum engineering programs grew steadily.
• Following the supply embargo of 1973, demand for talent was fierce. The industry, price markets, and universities overreacted; the result was excessive growth until 1982.
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TalentOil and Gas Prices
Historical Oil & Gas Prices2000 Dollars
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
Year
Oil
Pri
ce in
Yr
2000
$U
S
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Gas
Pri
ce in
Yr
2000
$U
S
Crude Oil Wellhead Price(Inflation Adjusted)Natural Gas Wellhead Price
(Inflation Adjusted)
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1,800
1,000
600Nu
mb
er
of
emp
loy
ees
(th
ou
sa
nd
s)
1978 19981994199019861974Year
1982
1,400
Largest 25 Oil Companies
TalentOil Company Employment
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5
AGI, 2003
PetroleumEngineering
TalentEnrollment
GeoscienceUndergraduate
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TalentWhat goes up….• From 1982 through 1999, the industry
and markets again overreacted, but in the opposite direction.
• One million energy industry jobs were lost in the US.
• US Universities enrollments in geoscience and engineering plummeted to 40-year lows and some US engineering and geoscience departments closed their doors.
• In US Schools, an ever-increasing percentage of student enrollments are non-US.
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TalentOil and Gas Prices
Historical Oil & Gas Prices2000 Dollars
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
Year
Oil
Pri
ce in
Yr
2000
$U
S
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Gas
Pri
ce in
Yr
2000
$U
S
Crude Oil Wellhead Price(Inflation Adjusted)Natural Gas Wellhead Price
(Inflation Adjusted)
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1,800
1,000
600Nu
mb
er
of
emp
loy
ees
(th
ou
sa
nd
s)
1978 19981994199019861974Year
1982
1,400
TalentOil Company Employment
Largest 25 Oil Companies
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5
AGI, 2003
PetroleumEngineering
TalentUniversity Enrollment
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000China Natural Sciences
Enrollments
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The IOC Trilemma•One scenario would see IOCs disappearing in a generation because they no longer control the reserves, technology or talent.
•I doubt this will happen.•IOCs will focus on unconventional resources
•Liquids: shale oil, heavy oil, tar sands, coal liquefaction
•Gases: coalbed methane, shale gas, tight gas, hydrates, coal gasification, and beyond
•Unconventionals will represent a substantial component of the fossil fuel future.
•Talent needed!
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QAc9841c
100
80
60
40
20
0
Per
cen
tag
e o
f to
tal
mar
ket
Year
1850 1900 1950 2000
H/C>4 (Natural Gas, Hydrogen, Nuclear, Sustainables)
H/C<1 (Wood, Coal)
H/C~2 (Oil)
U.S. Data: Annual Energy Review 1999 (EIA, 2000)World Data: International Energy Annual 1999 (EIA, 2000)
Global Consumption Trends
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Outline
Trends
An IOC Trilemma
Reserves
Technology
Talent
Towards a Solution
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• We must address the global energy talent pool. Industry, governments, and universities must “align”.
• Annual company investment of < 0.1% (of gross revenue) in upstream research and…
• Continually declining US government investments in energy sciences and engineering…
• …will not attract the most talented students.
Towards a Solution
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Towards a Solution• Students today are bombarded with
“semi-facts” that lead them to believe that the oil and gas industry is dirty, low tech and mature.
• Students interpret mergers, oil and natural gas price fluctuations, decline in research investment, and off-shoring of jobs as an unstable industry.
• Students believe “renewable” sources can replace fossil fuels in the next decade. Much of this “information” is misleading and even wrong. But perception is reality.
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6 00 km0
2 0 0 4 0 0 m i0
Emerging Mitigation Options
Solar (0.2%)
Biomass (3.0%)
1 million kg biomass/km2*16,000 BTU/kg =
.02 Q/4000km2 after loss
To produce 20 Q/yr (20% U.S. Energy with today’s technology)
Pimentel, D. and others (BioScience, September 1994)
1 MW Turbines20% Efficiency20 ac spacing
Wind (0.01%)
Weitz, Physics Today, 2004
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•Establish global partnership that are long term and research based.
•Two way street; balance US and international student enrollments and company employment
•Do not overreact to talent demands (learn from the 1970s)
•Tougher (not easier) enrollment and retention standards
•Break out of the discipline silos: well-designed, integrated research programs
Towards a SolutionUniversities
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• Act for the long term in terms of research (and have the resolve to ignore the Wall Street reaction!)
• Invest substantially in universities in good and bad times. Universities are your seed crop.
•Do not expect impact on quarterly strategies
•Seek to develop research partnerships outside of the standard faculty/student models
Towards a SolutionIndustry
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•Invest in long-term, high risk research
•Support programs that drive commercialization
•Recognize the global nature of the industry in terms of policy (taxes, incentives, etc.)
•Work hard to bring allure and respect back to science and engineering.
Towards a SolutionGovernments
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•Develop a coordinated, accurate, and interesting global message about energy
•The story should include contributions from universities, government and industry
•Find a credible storyteller; there is a good story to tell!
Towards a SolutionProfessional Societies
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SummaryOil and Gas Prices
Historical Oil & Gas Prices2000 Dollars
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
Year
Oil
Pri
ce in
Yr
2000
$U
S
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
Gas
Pri
ce in
Yr
2000
$U
S
Crude Oil Wellhead Price(Inflation Adjusted)Natural Gas Wellhead Price
(Inflation Adjusted)
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5
Summary
AAPG Website
Supply Push Demand Pull
US Undergraduate Geosciences AGI, 2003
1.1 mil
1.7 mil
0.7 mil
Employees Large O&G Co
$10
$80
Oil Price: 2003 Dollars BP Website
US Upstream R&D 2004 Dollars CERA
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Summary
•The best way to build bridges between cultures is to share a common goal.
•Energy is vital to global health.
•Top talent is critical to success.
•We have an opportunity to take a coordinated, global approach to address the energy talent issue.
•The IPTC is a good start!
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From our Gulf to Yours…
Many Thanks!
From our Gulf to Yours…
Many Thanks!
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