The English punk rock band, The Clash, posed this question musically in 1982. It is unlikely they intended it as a starting point for a discussion on careers in petroleum engineering. Yet, this was the topic of a SPE young professionals (YPs) meeting at the Asia Pacific Oil and Gas Conference and Exhibition I attended where, like everywhere else, YPs were concerned about the downturn in oil and gas prices and the resulting impact on their career choices.
Interestingly, the title of the session was “Ridin the Storm Out,” another 1980s hit by REO Speedwagon. This title implies a temporary drop in the industry, perhaps like the 2008 Asian financial crisis. In that “storm,” oil prices dropped from more than USD 140/bbl to less than USD 40/bbl; North American rig count dropped from more than 2,000 to fewer than 900.
Mapping rig activity over industry downturns since 1998 shows that the three prior storms were all relatively brief. In each of these downturns, rig activity in the US reached 80% of its prior peak activity within 2 years of the fall. Until late August last year, the current downturn had more or less tracked the previous decline in 2008. Will we recover in 2–3 years as in prior downturns, or will this be like the 1980s? What does that portend for young engineers in our industry? I do not have a magic ball, but I can share some statistics and thoughts.
During the 1980s, rig count dropped from a peak of 4,469 active rigs in November 1981 to 686 rigs in June 1986. The US rig count stayed below 1,300 from 1 March 1986 to 1 February 2005, reaching a low point of 502 rigs in February 1999. This marked the lowest rig count since Baker Hughes began reporting rig counts in the 1940s. This was not a storm. It was an ice age.
Here are a few questions you are probably pondering. Will there be jobs available? What will it be like to work in an environment of constant focus on costs and efficiency? Is this the industry in which I want to spend my career? Wherever I go, students and professionals share this concern.