Professional Stability…What You Can Do To Survive

Abstract

Published in Oil & Gas Executive, Volume 1, Number 2, 1998, pages 34-39. Our industry is, and has been, in turbulent times. When we talk of turbulence, we generally are referring to the downside of the peak in industry employment that followed the collapse of oil prices (Fig. 1). During 1982-92, the upstream oil and gas sector lost more than 50%of the jobs that were created in the preceding 10 years. For me, however, it was equally turbulent on the front side of the peak. I was hired into Chevron's La Habra, California, laboratory in 1973, the first hire after nearly 4 years of a hiring freeze. The boom, related to the rise in oil prices, followed almost immediately. I worked in an exploratory research group that was looking for new ways to recover oil from old reservoirs. We had lots of wild ideas, and money for equipment and new laboratories was abundant. I then worked as a petroleum engineer in the Los Angeles basin doing million-dollar workovers to rejuvenate old wells. The rates of return were often more than 50%, and payout periods were less than 6 months. We had very clear guidance from senior corporate management: if we didn't spend our entire budget, they would find people who could. It was a time of double-digit pay raises - sometimes at 6-month intervals - and even "special" incentive payments. Oil was forecasted to be U.S. $50/bbl in a few years. Before 1982, turbulence was created by too few resources chasing too many opportunities. After 1982, turbulence was created by the opposite condition - too many resources chasing too few opportunities. This led to excessive costs, which meant jobs had to be eliminated. Fig. 2 illustrates how severely the oil price collapse affected jobs in a number of industries during the 10 years following the peak, with the most severe effects in the oil and gas industry. It is particularly instructive to look at employment in the Fortune 100 oil and gas companies during the last 25 years (Table 1). In 1973, 14 oil and gas companies were in the Fortune 100 and accounted for nearly 700,000 jobs. Of those companies, 11 were in the top 50.