By John C. Tobin, Natural Resources Education Program

The Natural Resources Education Program (NREP) is a startup effort aimed at adding natural resources content (geology and technology) to science, technology, engineering and math (STEM) curriculum and civics curriculum (the reality of above-ground issues associated with development) at the 11th and 12th grade levels in Colorado.

NREP wants to help develop “science-savvy citizens”—to use the phrase first heard from Dr. Bernie White of ExxonMobil—who will graduate high school with an appreciation for the role natural resources will play throughout their lives. NREP also wants to encourage these students to consider the natural resources industry as a career.

Workforce Losses

NREP doing its due diligence and verifying whether the recent cutbacks and the pending retirements and loss of managerial and professional staff that could represent over 500,000 years of expertise, in the industry are a cause for concern when it comes to keeping the human capital pipeline primed. This is the “big shift change” that is often talked about.

One issue the industry is experiencing is the “piano player’s dilemma.” Much of the workforce cut in the recent wave of layoffs will not want to return: don’t tell my mother that I work in the oil patch. She thinks I’m a piano player in a house of ill repute.

Needless to say some of this comes from the image of the oil industry, and indeed, all of the natural resource industry. Periodically, this image is further tarnished by the instability of jobs as the industry reacts to the market price for commodities.

So what is a poor piano player to do? At least he had some talents to fall back on. So perhaps he should add to his repertoire and learn more Mozart, Scott Joplin, Jerry Lee Lewis and Billy Joel and keep this other career.

The current price environment is causing industry to rationalize its business model and the makeup of its workforce. Of course, the piano player hopes that this rationalization is done rationally. After all, irrational rationalization starts with right-sizing, which leads to downsizing, resulting in capsizing.

College Applicants, Qualified Students

When I was applying to colleges in 1960, you picked at most three schools because of the expense and time required to apply, and then prayed. Nowadays, electronic applications make it realistic for a student to apply to 50 schools. This spring, the Colorado School of Mines (CSM) received about 13,000 applications. CSM offered 4,000 acceptances, hoping to fill 1,300 freshman slots.

Does this sample of only one school mean that there is more than enough interest in the industry to keep the pipeline full future workers in spite of industry image, layoffs and stories in newspapers stating that even petroleum engineering graduates are having trouble find jobs?

Should NREP focus on AP-type material to give those students better exposure to schools like CSM and give them a head start on college classes?

The 'Manufracuring' Model

Ever since Col. Drake’s first well in 1859, the industry has gone through different eras of operations, driven by various destructive events.

The current oil price collapse and a more enlightened view of demand might have signaled a new era in the natural resource industry. Technology demonstrates that the industry does not have to drill many dry holes. Completing wells and making refracking decisions can be based on specific regional market demand.

This is the equivalent of “just in time” inventory. DUCs (drilled but uncompleted wells) are the equivalent of an industrial strategic petroleum reserve. At least we can hope that the decision is strategic. The mentality of all-out production will have to be replaced with a business model that encourages such approaches.

The “really big shift change” that could evolve, or come in kicking and screaming, might reflect more of this manufacturing business model. In this case the industry would have a smaller corporate core staff that manages projects, supported by a project-specific contract workforce that will be available on call to produce the resource. This scenario will probably require a total workforce of about 80% of the peak shown in the BLS statistics.

The reason for the questions raised here, is that NREP realizes that the evolution of price will drive not only the industry’s workforce needs, but also, it will drive the industry’s interest in financially supporting programs such as NREP.

The following chart gives three scenarios for price:

The lower-for-longer price scenario comes from a “dog-eat-dog” market continuing for the foreseeable future. I am not that pessimistic. However, we must account for such a “black swan” and for completeness this scenario must be addressed; therefore, the 10% probability.

The high-price scenario is a fond wish to return to high prices and unlimited opportunities to spend this windfall. The scenario does carry more weight, 20%, than the low price scenario; but it is still a black a swan, just not quite as black. It represents the “business as (used to be) usual scenario.”

My base scenario of “manufracuring” is consistent with a $40 to $70 price range, and I give it a 70% chance of occurring.

Please note that the “manufracuring” case emphasizes a smaller corporate staff and a larger role for service companies. Is this picture realistic?

What will be the demand for human capital?

Does this analysis represent any level of reality? Can you share any alternative scenarios your firm might be considering? What are your opinions of human capital demand?

Reflecting your views of workforce demand, is there a need for NREP today? With oil prices above $50 as I write this article, should NREP delay its efforts pending some price confirmation of this level of recovery?

From a very narrow and self-centered perspective, it is the industry that will be the primary beneficiaries of NREP’s programs. Therefore, NREP wants to look to the industry for financial support. So be totally candid and brutally honest with your answers, feedback and opinions.

NREP would truly appreciate your perspective.

John C. Tobin is president of the Natural Resources Education Program. He can be reached at