U.S. oil companies and automaker share a lot of history, with the fuel of one helping power the international growth of the other. Plenty has been written about how Detroit lost its innovative edge. That wouldn’t seem to be true of the U.S. oil business. Just think of the pioneering deep water oil technology developed in the Gulf of Mexico that was created in Houston. But as I was gathering facts for a story recently about training the next generation of technical E&P technical people, I started wondering how long this reputation can last. I was gathering numbers for a story about the push to fill all the engineering and geoscience jobs that will be vacated when Baby Boomers retire in the next decade or so. This White Paper done in 2007 for a larger study put together by a group put together by the U.S. Department of Energy makes these points: http://downloadcenter.connectlive.com/events/npc071807/pdf-downloads/Study_Topic_Papers/23-TTG-Human-Resources.pdf -- The number of people working in the industry is one third what it was in 1980s – dropping from 1.5 million to around 500,000. -- Between 1982 and 2004, the number of Bachelor of Science programs in petroleum engineering decreased from 34 to 19, BS enrollment in these programs decreased from 9,492 to 1,702. --The immigration laws limit the U.S. industry’s ability to import talented people. Based on my reporting I’m not predicting a disaster when this great shift change hits. Based on what I’ve observed the programs companies have to speed the careers of these newcomers I think they can train the next generation of leaders in time. Particularly because I think that the assumption that everyone will retire en masse at age 60 or 65 doesn’t have to come true. The investment losses that spawned jokes like, the market turned by 401k into a 201k, are going to motivate people to work longer. And a lot of the engineers and geologists I’ve met seem really interested in their jobs and would likely continue if they were offered to chance. But will that enough to keep our edge? The chair of the biggest petroleum engineering program in the county, Tad Patzek, chair of the petroleum engineering and geosystems department at the University of Texas at Austin is worried U.S. companies are not doing what it takes to stay on top. “It used to be there were more oil companies and more research staff and it almost all went away. Now the majority of them have lost of ability to frame issues and ask questions in best possible way. They don’t have the influx of creative, deeply thinking employee who are asking those questions that greatly contributed to their success.” When asked if we are still the country that clearly leads in oil exploration technology his answer is: “Not at all. we are being undercut every day,” said Patzek. After decades of cost cutting here, and big spending increases by national oil companies like Saudi Arabia’s Aramco and Brazil’s Petrobras, he’s seeing a possible shift in leadership. “My deep concern is the Saudi Aramcos and Petrobras and Gazproms will be, or are doing the cutting edge research and hiring some of the best researchers,” Patzek said. He praises the undergrads coming out of engineering schools. But he talks a lot more about those special talents able to change the game. And he’s passionate about building up financial support for graduate programs, as well as demand for those staying on to earn advanced degrees. At the moment the industry is focused on getting through the next three months. With prices down the cycle of cost cutting talk is getting loud again. Companies that relentlessly cut costs through much of the ‘80s and all of the ‘90s are now feeling the same pressures again. "Just last year -- with the historical boom -- they woke up to the need to hire lots of engineers. Most of our workforce is almost ready to retire we’ve been having discussion with various industry representatives for the last 20 years and nothing was ever done. The situation got somewhat better in 2008, but the chance of it getting better in 2009 is slim.” Granted this is the view of one man who’s point of view is in academia. But there have been plenty of U.S. industries that declined because they failed to maintain their technological edge. In this case we’re seeing technology leaders in the oilwell service business taking a big step out of the country, with corporate headquarters in Switzerland and Dubai. While I’d like to think our entrepreneurial energy will put us at the center at the next new thing in energy, should we be worried about a decline in our status as an oil technology center?