Aboard the rollercoaster of American oil and gas prices, exciting climbs precede unexpected drops that can take passengers by surprise and leave them unsure of what’s next. The energy industry has become notorious for its historic highs and lows that define pricing trends and reveal untapped opportunities to reinvent the market. Although some current petroleum engineering students worry that declining oil prices will limit their employment options, the sound advice of a veteran energy executive can ease their fears.
“When I was an undergraduate student at TU in the late ’60s, the industry outlook was pretty dismal — so dismal no one talked about ups and downs,” said Bill Scoggins (BS ’70, PhD ’78), former president of the Colorado School of Mines and a retired senior executive of Mobil and ExxonMobil. “There was a much more short-term outlook back then, and there was even talk that the U.S. was running out of oil.”
Although Scoggins wasn’t initially interested in studying petroleum engineering, the late TU department chair, Kermit Brown, persuaded him to enroll in the major for one year and complete a summer internship. The challenge worked, and Scoggins attended TU on a Mobil Honors Scholarship before accepting a full-time position. That subsequently led to a 35-year career that took him around the world as the industry, contrary to the gloom of the late ’60s, grew production, expanding geographically and moving into deeper offshore waters.
During this period, however, oil markets went through several major price cycles due to geopolitical disruptions or supply/ demand imbalances. During the oil price collapse of the mid-1980s, Scoggins was Mobil’s producing manager in Denver.
“While we used all the common tools to cut our expenses — restructuring operations and selling poorly performing assets — we were also forced to just do things smarter and apply technology to be more efficient. We found this opened up considerable opportunities for us in spite of the weak market conditions. And, as the market improved, we were able to grow the business once again,” Scoggins said. “Those were exciting times. When we’d go through another cycle, we had learned to pause and reflect on what was working and what could be changed.”
Through his career, Scoggins notes each market slump typically inspired major industry consolidation only to be followed by new investment thrusts. In every situation, he said, advancements in technology and industry innovations have made robust recovery possible. Deepwater exploration and development and unconventional oil and gas production from shale are familiar examples.
“I’ve seen the booms and busts, and technology has always been developed and deployed to keep up with the times,” he said. “With the right resources and talent, the industry survives. There are so many more tools available today to enable profitable growth and improve performance efficiency.”
Lower prices today are the result of what Scoggins refers to as a relatively small global surplus exacerbated in the United States by the unconventional oil and gas production boom and sluggish global economic growth. And clearly this has caused considerable uncertainty and unfortunate outcomes for many in the industry, he notes.
“As the economy improves, I’m confident the industry will take off again — maybe not at $90 to $100 per barrel but $70 to $80,” he said. “Prices will increase substantially from where they are right now.”
His optimistic perspective not only is an encouragement to former industry peers, but also the students Scoggins has mentored at Mines.
The energy industry is much more multidisciplinary today than when Scoggins arrived on scene in 1970. Whether they specialize in geoscience or electrical engineering, recent graduates are much more diversified in their skill sets and should “look to their strengths.”
“They need to approach the industry with a lot of enthusiasm. You can’t worry about what’s going on in the markets,” he said. “Be confident in the technical skills and education you received, and focus on the job day in and day out.”
Scoggins said the experiences and learning during the first 10 years of an engineer’s career are vital to long-term success. “Don’t put up roadblocks for growth and development: Companies are investing in you during this formative period. Continuing education, whether through your employer or on your own, is also key to staying competitive in the industry.”
Young alumni are most marketable when they can prove themselves as contributing team members who work and communicate effectively beyond their technical discipline and with other company resources such as HR, legal or finance staff. These skills are acquired outside the classroom where new TU graduates are eager to spread their wings. Industry internships during their college years often provide a head start in this regard.
“I’m not concerned about the oil industry’s recent trends,” said Zach Lathrop (BS ’15). “Time has shown these cycles pass and eventually will come again.”
Lathrop grew up surrounded by the oil business outside of Houston and began working for Apache Corp. this summer. Graduating into an environment of instability is discouraging, but he said the phase will prove to be a valuable experience.
“For three-and-a-half years in college, we had nothing to worry about in the job market, but then within a couple of months everything changed,” Lathrop said. “I’m thankful we are able to see this early on in our careers.”
Fellow alumnus Sam Dunne (BS ’15) is a third-generation member of the oil business who is interning at Devon this summer. Unlike Lathrop, he has reservations about finding a permanent position.
“Petroleum engineering became a very popular degree when the price of oil was high,” Dunne said. “Now with lower prices, I’m worried there will be a surplus of engineers and not enough jobs.”
Still, that won’t keep him or any of his fellow graduates from job hunting.
“I’m excited to get out and apply what I’ve learned,” he said. Scoggins, who retired from his Mines presidency in June, admires the students’ positive attitudes.
“The industry keeps evolving. I’m a believer that in the blink of an eye, the industry can reinvent itself and take off in another direction.”