It seems bad right now. The COVID-19 pandemic has crashed demand, pushing oil prices to their lowest levels in decades. The number of operating oil rigs in the U.S. has shrunk dramatically. Many workers have lost their jobs.
And yet there is reason to be optimistic about working in the oil and gas industry—reason to stay in the field through these turbulent times, and even lean in by pursuing an advanced petroleum engineering degree.
First, let’s talk about money. According to Indeed.com, the highest-paying engineering job in the U.S. in 2020 was petroleum engineer, with an average annual salary of $94,271.
PayScale pegged the average petroleum engineer salary even higher, at $101,575 per year. Meanwhile, according to the U.S. Bureau of Labor Statistics, the median pay for petroleum engineers was $137,720 per year in May 2019.
It gets even better with an advanced degree. At Mines, the average starting salary offer for 2018-19 graduates with a master’s degree in petroleum engineering was $128,333—$40,480 higher than the average offer for those with bachelor’s degrees.
Despite the doom and gloom, the oil and gas industry isn’t going away any time soon. In fact, it’s probably the industry best equipped to recover from a slump, given that it’s gone through many booms and busts.
“A post-COVID world will happen and people will travel again, entirely new business models will emerge (think domestic manufacturing), and perhaps most importantly, people will look to the basic industries of energy, agriculture and manufacturing to provide energy, food and products securely and with innovation,” said Tom Blasingame, the incoming 2021 president of the Society of Petroleum Engineers, in an interview with the Journal of Petroleum Technology published in September 2020.
Best-case scenarios have oil prices recovering to pre-COVID levels in 2021 or 2022. Prices may even spike, according to McKinsey & Company due to shortages caused by the lack of investment in discovering, extracting and processing oil today.
That said, the oil and gas industry does face significant challenges outside of its cyclical nature.
One long-term issue, in a certain light, can be seen as a good problem to have—demand that will continue to grow against what is currently a limited supply.
Blasingame says that a hydrocarbon-based economy is sustainable for the next century or more, and that current oil and gas reserves should last about 50 years more at current consumption rates.
However, despite the dip caused by the COVID-19 pandemic, demand is expected to continue growing. Some forecasts project peak consumption by 2030; others predict demand will plateau after 2050. OPEC, in its 2019 World Oil Outlook, expects global oil demand to continue growing, reaching 104.8 million barrels per day by 2024, up 6.1 mb/d from 2018.
According to Pierce Riemer, director general of the World Petroleum Council, meeting demand will require plenty of investment and venturing into more challenging and costlier areas, “such as the ultra-deep waters, ultra-deep reservoirs, unconventional resources, and inhospitable environments like the Arctic, remote deserts, jungles, mountain ranges and conflicted areas.”
Deloitte, in its 2020 Oil and Gas Industry Outlook, says these “stranded assets” is not the main risk to oil and gas companies. “The real challenge is that the oil and gas companies of today, many of which aspire to be the broad-based energy companies of tomorrow, will need to figure out how to produce more oil and gas (and increasingly power) year after year while also being carbon-conscious and addressing stakeholders’ sustainability concerns.”
These challenges mean petroleum engineers have a significant role to play in the energy transition.
“Energy transition is just that—it’s a transition, not a switch, and it will take decades to accomplish,” says Professor Jennifer Miskimins, head of the Petroleum Engineering Department at Mines. In addition to the move away from coal to cleaner-burning fuels such as natural gas, “petroleum engineers develop skills in fluid flow in porous media—rocks—that also lend themselves to other areas such as geothermal energy, carbon dioxide sequestration, etc.”
“Having an advanced degree in petroleum engineering will help set students up to be part of the solution to all of these areas,” adds Miskimins.