Many of our best petroleum engineers today graduated as chemical or mechanical engineers. Many of the “practicing” petroleum engineers in the oil and gas industry were trained on the job, by attending industry short courses, or both. Industry will continue hiring non-petroleum engineers and training them because the petroleum engineering departments in the Western world do not turn out enough graduates to meet the demand. Even though we have been seeing a student increase in petroleum engineering since 2004, the numbers have not kept up with the demand.

However, it is important to recognize that the wealth that pays for the entire upstream and downstream oil and gas industry comes from producing oil and gas from reservoirs. It can be argued that the most important discipline to develop and teach is petroleum engineering, because it provides the technology the industry needs to drill wells, evaluate the layers of rock, complete the wells, produce the oil and gas, and handle the product on the lease prior to reaching the pipelines.

Because the reservoir is so important, it is in the best interests of the oil and gas industry to ensure that the schools teaching petroleum engineering remain strong. At Texas A&M University, the state contributes only about 35 percent of the funds we need to run the department of petroleum engineering. The remaining 65 percent must be obtained from gifts, grants, or research projects sponsored by industry or government agencies such as the Department of Energy. And unfortunately, Congress has decided not to continue funding the DOE’s oil and gas research program for the next fiscal year.

The oil and gas industry will continue to need leadership, especially in the coming decade as many of us retire and are replaced by the next generation of professionals. Leadership is “inspiring others to do the right thing for the right reasons.” The question is, how do you know what the right thing is to do? In the upstream business, doing the right thing depends on what the reservoir needs to produce more oil and gas. Thus, energy leadership is based on understanding the reservoir. If the leaders of tomorrow turn out to be MBAs and lawyers who understand taxes and laws but do not understand the reservoir, we will be in trouble.

A CEO of a successful oil company once told me, “The secret of being a good manager is finding a lot of oil and gas.” Thus, if companies can find and produce a lot of oil and gas, then the accountants and lawyers can do their jobs and not interfere with exploration and production. If they don’t, then everyone has to spend more time doing legal and accounting work, leaving even less time to find oil and gas.

Managers in the exploration and production part of the business need to understand the reservoir. However, there are three different types of managers that are important. When one thinks of management, it’s usually in terms of managing people. But projects and technology also need management. A successful E&P company will include excellent project managers and engineers who manage the technology used.

In our department, we focus on teaching technology and to some extent on how to work on projects. One of our main concerns is to teach students how to think, how to learn, and how to conduct both basic and applied research in areas of interest to industry. To enable our graduates to hit the ground running, we also have to teach them to drill, log, and complete wells; analyze log, core, and well test data; analyze reservoir performance; compute reserves; and perform economic evaluation of projects.

The oil and gas industry is growing, drilling more wells and producing more oil and gas today than ever before in our 100-plus years. Consequently, the demand for engineers is increasing. The graph below shows the forecasted student growth in the department of petroleum engineering at Texas A&M; we are growing rapidly, and other universities’ petroleum engineering departments are experiencing similar growth. However, as a result of the high salaries paid in industry, many departments are losing faculty to industry right as the student numbers are surging. Industry wants more graduates but at the same time they are hiring away the professors. This does not make sense.

If industry wants to maintain strong petroleum engineering departments, they can help us hire and retain faculty, support our research efforts, and hire our students for internships. The students who graduate with B.S., M.S., or Ph.D. degrees have no trouble finding jobs.

Another way to strengthen petroleum engineering education is to encourage students to remain for a master’s degree prior to joining the workforce. Without question, the amount of knowledge and the sophistication of the technology we use in the E&P business are much greater than in past decades. The oil and gas E&P business is very high-technology. However, the number of hours required for a B.S. in petroleum engineering at Texas A&M has declined over the past 45 years from 152 to 129 hours. Furthermore, there is pressure on the university to decrease the number of hours to just 120 for all B.S. degrees. Since 1960, there has been a dramatic decline in the number of geoscience, chemistry, physics, and mathematics courses required for a B.S.

It is clear that in terms of hours, a student today would need to have both a B.S. and an M.S. to equal those required for a B.S. degree in 1960.

The bottom line is that more of our B.S. graduates should continue on to graduate school. There is so much to learn; one can not do it in four years. The problem-solving skills of our master’s students are far superior to those of our bachelor’s students. However, industry does not recognize this, nor does it differentiate starting salaries sufficiently to make it worthwhile for a student to continue in graduate school. I did continue on, and I think it was the best thing I ever did for my career.

In summary, here are my main points:
- The upstream oil and gas industry (E&P) needs leaders who understand the reservoir, which is the source of the wealth for the entire industry.
- As the existing departments of petroleum engineering teach the subjects most important to creating the revenue that supports the oil and gas industry and are growing to supply the graduates needed, they need to be supported by the E&P industry now more than ever.
- Since the E&P industry is a high-technology business, more of our B.S. graduates should be encouraged to continue on to graduate school.

Stephen A. Holditch is a professor at Texas A&M University, a member of the National Academy of Engineering, and a former president of the Society of Petroleum Engineers.