Oil and Gas Rush

 

April 2013

Oil and Gas Rush

New extraction techniques are driving growth and demand for engineers while also raising questions.

BY EVA KAPLAN-LEISERSON

Oil and Gas Rush CoverDepending on the speaker, the production of natural gas and oil from unconventional sources using hydraulic fracturing is either the saving grace of U.S. energy, the economy, and manufacturing or a disastrous trend with dire consequences for the environment and communities.

The debate on extraction from sources such as shale is contentious, with heated opinions on both sides and a need for better science and data. But no matter where your opinions fall, what's undeniable is the striking effect of unconventional gas and oil on the U.S. energy picture. This shake-up offers implications for many sectors, including engineering. How are the changes affecting employment and academia?

The Numbers Game
Injecting water, sand, and additives to create fissures in rock isn't a new strategy. But the combination of fracking with long horizontal wells has enabled the release of gas in extensive areas and made wells productive enough to be economical, explains Dan Hill, P.E., head of Texas A&M's petroleum engineering department. The methods have "changed the game" from a focus on finding deposits to how to extract resources, he says.

According to a report on unconventional energy sources from business information and advisory company IHS, U.S. natural gas production has risen 25% over the last five years, largely due to shale gas production. That source rose from just 2% of natural gas production in 2000 to 37% in 2012, according to America's New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy.

The increasing supplies of gas are lowering costs of materials and fuel for manufacturing, leading some to credit the boom for a U.S. industrial revival.

The same techniques causing the natural gas boom are also being applied to oil, especially as gas prices have fallen due to an increase in supply. U.S. oil production reached an average 7 million barrels per day in November and December 2012, the highest volume since December 1992, according to the Energy Information Administration.

But even more dramatic are the predictions for the U.S. to reach energy independence and become an exporter. The International Energy Agency's 2012 World Energy Outlook envisioned a scenario in which the U.S. could become a net exporter of natural gas by 2020 and almost net self-sufficient (balancing imports with exports) by 2035.

Job Prospects
Gas tankAll this activity means a need for workers, including engineers. Despite slowdowns in natural gas production, the oil and gas industry still faces a talent crisis that is driving high salaries and multiple job offers for graduates, according to schools.

Hill, who last November testified on unconventional energy research needs to the U.S. House of Representatives Subcommittee on Energy and Environment, estimates there are "tens of thousands" of engineering jobs directly related to shale and other low permeability developments. He expects job creation to continue, especially as more reservoirs are discovered across the country.

This talent grab is exacerbated by industry history. Azra Tutuncu, P.E., professor of petroleum engineering for the Colorado School of Mines and director of the institution's Unconventional Natural Gas and Oil Institute, explains that in the 1990s falling oil prices led to hiring freezes. In addition, lower student interest in the industry added to the current age gap in experienced workers as older ones retire. About 5?10 years ago "a panic started in the oil industry," Tutuncu explains.

Even before the unconventional oil and gas boom, petroleum engineers were in demand, says the professor. Now, with the need to drill a large number of wells to make unconventional sources profitable, the workforce needs have multiplied, she says. Industry is providing sponsorships for students, the PE reports, and graduates are snatched quickly with "astronomic" salaries.

For example, a Denver news station reported last May on a School of Mines graduate who transformed himself from high school dropout to petroleum engineer with a starting salary of more than $100,000 a year.

The Needs
Jobs are available in a wide variety of areas associated with the booms. Ford Brett, P.E., is CEO of PetroSkills, a petroleum training organization that expects to serve 22,000 professionals this year. He explains, "there aren't just three jobs. There are lots and lots of different kinds of jobs."

In the shale area, Brett sees a couple different areas of opportunity. One, obviously, is in the area of oil and gas drilling, production, and processing. For instance, there's a whole body of knowledge being created in the reservoir engineering aspects of shale plays, he says, such as understanding how oil and gas flow in rock underground. "There's still a lot we're learning about that," he says. But the other is in the area of chemical processing—for instance in the design, construction, and operation of chemical plants.

Staffing agency Aerotek, which serves the energy and engineering industries among others, has seen significant growth in the midstream sector of the natural gas process. According to Stuart Ferguson, director of divisional operations for energy, the most demand is in natural gas transportation, pipeline construction, and design. Hot jobs the company is trying to fill include integrity engineers, pipeline engineers, electrical engineers, and mechanical engineers.

Ferguson says that engineers with manufacturing or chemical processing skills can leverage their experience to transition into natural gas with training. He also suggests job seekers look into areas that support natural gas, such as utilities and power plants.

A&M's Hill also speaks of the need for more than just petroleum engineers. For instance, he notes that mechanical engineering talent is needed for the hardware components of isolating well sections to create hydraulic fractures. Chemical engineers can develop fracturing fluids and work to reduce their environmental effect. Essentially all engineering disciplines can contribute, he says.

Increasing efficiency and bringing down costs of the work is another area where engineers can participate, Hill says, and help jump-start natural gas activity again.

Academia

Texas A&M petroleum engineering students collect rock samples from the Eagle Ford shale information.
Texas A&M petroleum engineering students collect rock samples from the Eagle Ford
shale formation.

Credit: Anton Kamenov, Texas A&M University

Academic institutions are trying to keep up with increases in enrollment driven by students' awareness of opportunities and earning potential in this area. Luis Ayala is associate professor of petroleum and natural gas engineering and associate department head for graduate education in Penn State's energy and mineral engineering department. His response to whether his program has grown as a result of the boom: "Oh my gosh. How can I say this? Yes, yes, yes, yes."

 

It's been a challenge, Ayala says. One hundred undergrads five years ago has turned into almost 500. Graduate enrollment has also tripled. The school is having trouble finding enough faculty, because it has to compete with not only other institutions but also industry for talent.

The school is now attempting to implement program admission criteria. Recruiters are also getting more choosy, Ayala says, with GPA cut-offs for interviews or internship requirements. The students who don't make the cut still eventually get jobs, he says, but the process takes longer.

Shane Hollerich, a Penn State senior in the petroleum and natural gas engineering program, believes that before the boom, many students didn't enter the field thinking they'd have to live in a certain geographic area or that petroleum would run out. Now, more students realize that opportunities will last and are available closer to home, he says.

The student believes the biggest opportunities right now, as gas drilling has slowed, are in production engineering. "Current prices have forced companies to think outside the box to get more recoverable gas using less," he says.

Issues and Additional Opportunities

Source: Lloyd Heinze, P.E., Texas Tech University petroleum engineering professor, and petroleum engineering programs nationwide.

Source: Lloyd Heinze, P.E., Texas Tech University petroleum engineering professor, and petroleum engineering programs nationwide.

View Larger (PDF)

Despite the potential, it's clear that the challenges associated with fracking and drilling unconventional sources are not small.

 

The School of Mines' Tutuncu notes there are "huge technical, environmental, and economic" challenges that need to be overcome to find the best ways to produce from unconventional reservoirs. That means students and professionals need to educate themselves continuously, she stresses, because technology is developing every day. She suggests reading, classes, and conferences.

Anthony Ingraffea, P.E., is a professor of civil and environmental engineering at Cornell University with a background in rock fracture mechanics and hydraulic fracturing, as well as a founding board member of Physicians, Scientists, and Engineers for Healthy Energy.

What engineers should know about shale operations, says Ingraffea, is its scale of both opportunities and problems. "There's nothing small about shale gas development," he says. "There are a large number of wells, the wells are large. There's industry activity over long periods of time. It's very intense, lots of personnel, lots of equipment, supplies, materials. There's lots of waste production. It's big."

Ingraffea is concerned about the global, regional, and local implications of shale gas, such as methane increase in the atmosphere, safe waste disposal, and well leakage into drinking water. His research focuses on leaks of methane and other gasses in addition to well design that can control leakage.

towerThe NSPE member points out that, in addition to the jobs producing unconventional energy, there are also roles for PEs who choose to not be involved. One is to use their professional expertise and knowledge, in accordance with the NSPE Code of Ethics provision stressing practice only in areas of competence, to inform and educate about hazards. Ingraffea gives talks and testimony to help inform the public, regulators, and legislators about risks.

The other option is to get involved in renewable energy alternatives, the PE says. "Design; construction; maintenance for solar, wind, water energy, geothermal, biofuels, these are the areas where there is a tremendous upside potential for employment," he notes.

Ingraffea stresses the Code of Ethics' canon to hold paramount the public health, safety, and welfare and the need for engineers to educate themselves about potential harms of the boom. "Don't be blinded by the gold rush and opportunity for income and jobs," he says. "Be aware that there's always an ethical override to what you can and should do."

David Conner, P.E., is an environmental engineer who sits on the NSPE Board of Directors. With Carollo Engineers, he works with oil and gas companies to permit facilities and equipment and ensure regulation compliance. The work focuses on air emissions reduction, surface and groundwater protection, spill prevention, and remediation.

Conner stresses the need for professional engineers to help the industry deliver unconventional resources in a responsible manner. "Human and environmental health and safety are paramount," he says, as are strong ethics and competency. "Professional engineers are an important asset to any organization involved in this sector."

Ingraffea puts it this way: "The bottom line is there are a lot of opportunities whether you're for it or against it, whether you're trying to stop it or enhance it or work in alternative energy sources. Yes, we need more PEs in all these areas."

 

PE Roles in Shale Gas and Oil

  • Traffic study;
  • Environmental assessment;
  • Cumulative impact study;
  • Site plan review;
  • Stormwater pollution prevention plan;
  • Project noise assessment and mitigation study;
  • Construction activity general permit review;
  • Foundation engineering;
  • Fracking water pond and dam design plan; and
  • Dam permit application review.

Fracking Design and Preconstruction Jobs for PEs

  • Identify and rehab local bridges and roads to support heavy equipment and tanker trucks;
  • Site and design compressor station and processing unit facilities;
  • Site and design under-road, under-rail, and under-waterway pipeline crossings;
  • Site and design well pad access roads;
  • Site and design pads for frack chemical storage and tank storage; and
  • Site and design reserve impoundments for freshwater and drilling waste temporary storage.

Special Inspections and Equipment Monitoring Roles for PEs
Examples of special inspections:

  • Local bridge and road structural conditions;
  • Reserve impoundments for freshwater and drilling waste temporary storage;
  • Compressor station structures, emissions, and noise reduction systems; and
  • Processing unit structures, emissions, and noise reduction systems.

Examples of periodic equipment monitoring:

  • On-pad separators and condensate tank for leaks and emissions;
  • Compressor station and processing unit for leaks and emissions; and
  • Reserve impoundments for leaks and stability.

Source: Presentation by Anthony Ingraffea, P.E., to the New York State Society of Professional Engineers