Houston's schools adjust to an oil bust, after gearing up for a boom

Educators, students want to be ready for where energy goes next

Avin Pasalar, left, and Matthew Diaz﻿, both 17, are ﻿seniors at the Energy Institute High School, an institution that focuses exclusively on energy.﻿
Avin Pasalar, left, and Matthew Diaz﻿, both 17, are ﻿seniors at the Energy Institute High School, an institution that focuses exclusively on energy.﻿Melissa Phillip/Staff

In 2013, when the energy industry was booming, high school freshman Matthew Diaz knew exactly what he wanted to be: A petroleum engineer.

He enrolled in Houston's Energy Institute, a magnet high school funded in part with nearly $200,000 from the oil industry, in hopes of eventually landing a job that pays an average of $130,000 a year. Then, the oil crash hit, and the attraction faded. Diaz still plans to get an engineering degree but might take it instead to the world of finance - he's interning this summer with a Houston commodity brokerage.

"It has shifted students from being really focused on petroleum to being more generalized into engineering," said Diaz, sitting in the "BP Spot," a green room furnished with a $50,000 contribution from the international oil giant. "So if the oil market tanks all the way to zero dollars a barrel - that's not going to happen, but engineering is still key to everything."

Diaz's assessment is central to how the local education system is reconsidering an industry that doesn't seem as sure a bet as it did five years ago and rethinking how it prepares students for careers so vulnerable to boom-and-bust cycles. Rather than just cultivating a crop of recruits for big oil companies, high schools are equipping students with engineering skills that could take them into a broad range of fields, from wind energy to cyber security to financial services.

That's a safer strategy for young people, who run the risk of getting caught jobless if they graduate into a downturn, as many realized this year after finishing college degrees in petroleum engineering. And it may be more than an economic calculation: Young adults increasingly rank tech companies like Apple and Google as the most exciting potential employers, according to a survey by the National Society of High School Scholars.

That's a problem for oil and gas companies, which will need plenty of engineers in the not-too-distant future, even as they continue to work through layoffs now. And it's not just the inevitable rebound that will drive the need for talent: A wave of people who joined the industry during the boom of the early 1980s are beginning to retire.

But for this generation of prospective hires, there's an additional layer of uncertainty that may discourage bright, young minds from oil and gas.

Over the longer term, technological advances and increased automation could render many engineering positions obsolete as companies find ways to extract more oil with fewer humans, said Chad Hesters, managing director in the Houston office of the global recruiting firm Korn Ferry. He predicts artificial intelligence and increased computing power eventually will take care of a lot of tasks that required college graduates - jobs that are supposed to come back after an oil crash and pay good wages to kids who did what was expected and got a degree in petroleum engineering.

That's something that schools, parents and students haven't yet figured out how to handle.

Petroleum academies

Only a few years ago, the personnel needs of the petroleum industry seemed boundless.

The oil crash of the 1980s - not to mention rising awareness about the role of fossil fuels in climate change - turned a generation of science-minded young people away from careers in drilling and prospecting. Energy companies were having a hard time finding qualified engineers and knew the need would only grow as baby boomers advanced into their 50s and 60s.

In mid-2014, the trade group American Petroleum Institute launched a public relations campaign to change perceptions of the industry, touting job growth projections and six-figure entry-level salaries. A couple years earlier, the Independent Petroleum Association of America - which represents smaller producers - teamed up with another trade group, the Petroleum Equipment and Services Association, to sponsor four "petroleum academies" in Houston and one in Fort Worth to expose young people to careers in energy.

The IPAA said that 1,500 students are enrolled in the academies for the upcoming year but declined to disclose how much it spends on the program.

The most ambitious of academies was Houston's Energy Institute High School, which was the only one to focus exclusively on energy (the others operate as enrichment tracks within a larger traditional high school).

The school was overwhelmed with applications, with more than three kids applying for every available spot. The first classes, chosen by lottery, have enjoyed mentoring opportunities, guest speakers, and visits to corporate campuses of oil and gas company sponsors.

But within a few years, principal Lori Lambropoulos learned through surveys that students were gravitating more toward climate-friendly subjects like algae-based biofuel and super-efficient tiny houses - whether they sensed change in the economic winds or because they thought clean energy is just cool.

For Lambropoulos, the answer to changing interests and job markets was to make sure kids had a broad grounding in math, science, and engineering skills and concepts, which became the Houston Independent School District's approach for all vocational programs.

"We're still going to need engineers, maybe not in oil and gas so much," says Renee Zuelke, head of the district's career and technical education office. "The key for us is keeping it diverse. We're always looking at what's going on in our local economy and building those skills that can't go away, like good math and science."

Milby High School, in southeast Houston, got one of the city's first petroleum academies. Enrollment remained strong last year, with 145 kids participating in the program, but principal Roy de la Garza said he noticed fewer seniors headed to petroleum engineering programs in college. Also, the curriculum shifted after he changed teachers, from focusing specifically on the oil industry to emphasizing a range of engineering skills and types of energy development.

"At the end, they can make a choice," Garza says.

Some schools decided to stop preparing kids for oil and gas careers altogether. Furr High School, in East Houston, had a partnership with Houston Community College that allowed students to get associates degrees in petroleum engineering technology. But Principal Bertie Simmons said the school dropped the program because students weren't finding jobs and because she wanted to focus more on renewable technologies instead.

Need to be job-ready

High schools, of course, have a luxury: They can prepare students for a wide range of occupations, leaving them to choose later. Not so with colleges and universities, which need to focus students in specific courses of study so they'll be job-ready when they graduate. That means the schools have to decide how many to enroll in each degree program.

Starting in the early 2000s, colleges and universities accepted a tidal wave of petroleum engineering students. Nationwide, enrollment in petroleum engineering soared from about 1,300 undergraduates in 1997 to more than 11,389 in 2015, eclipsing the previous high of 11,014 in 1983, according to data maintained by Lloyd Heinze, a Texas Tech professor.

At Texas A&M, petroleum engineering enrollment tripled between 2003 and 2013. Growth was capped in 2013, only because the department couldn't hire enough teachers, said Dan Hill, head of the petroleum engineering department.

Now, another factor is limiting enrollment. The placement rate for Hill's students has declined from 100 percent of graduates finding jobs three years ago to only about two-thirds this spring. Those getting hired aren't making as much, either.

Nevertheless, Hill expects hiring to pick up within the next five years. That's the catch-22 of petroleum engineering education: The best time to start a degree may be at the bottom of an oil price cycle, when students' first instinct might be to run the other way.

Jonathan Holstein was one of those caught at the top. The A&M senior always knew he wanted to go into oil and gas. His dad is an independent driller. He liked science and math, and it seemed like a stable, lucrative career.

"We all came into the program and were pretty well guaranteed a job upon graduation," Holstein says.

But in spring 2015, the bottom fell out - and kept falling until prices hit of $26 a barrel in February, down from more than $100 in June 2014. Now, he and his classmates are preparing themselves as best they can for a harsh job market.

It's an anxiety-ridden existence. Holstein graduates in December and checks oil prices every day. He takes advantage of every networking opportunity, hoping the memory of his face will jump out at a recruiter from a stack of thousands of résumés. If it doesn't, he plans to apply to the Army's Officer Candidate School.

Adding to the uncertainty for Holstein and other petroleum engineering graduates: When companies start hiring again, it's not clear they'll be for the same kind of jobs. Eric van Oort, who heads a technology research group at the University of Texas, says robotics eventually will eliminate the need for people to physically operate drilling rigs in the field. "Those jobs are going to disappear," he said.

Engineering jobs might not disappear, but they will change, van Oort said. They'll focus more on skills needed to operate large, extremely advanced computer systems - skills in high demand across many industries that won't lay people off when oil prices turn south.

"The demand (by energy firms) for people will be very acute very soon," van Oort says. "But you have to see if students are willing to dedicate their lives to this industry rather than going to Google, Tesla, SpaceX, which are quite a bit sexier right now."

At that point, the boom-bust cycle of petroleum education may become more of a problem for the oil companies than the students they're trying to recruit.