Petroleum engineering degrees seen going from boom to bust

Until recently, America's energy sector held the promise of a fat paycheck and generous bonus to graduates with a bachelors degree in petroleum engineering. But now students in the discipline are simply hoping to find a job.

Crumbling crude prices have provoked massive job cuts at energy firms, dissuading engineering students from pursuing oil-related studies. And that drop-off in student interest is in turn raising worries of a coming talent drought in an industry already facing a shortage of experienced workers.

"It's going to be a real problem," said Tobias Read, CEO of staffing agency Swift Worldwide Resources. "I think we will find there's going to be a substantial shortage of talent coming into the market."

The roots of the oil industry's staffing problems lie in the last major oil price downturn, 30 years ago.

Following the 1980s oil bust, enrollment in petroleum engineering programs flat-lined for years, setting up a potential jobs crisis known in the industry as "the great crew change" — the point at which most of the skilled workers currently in the industry will retire and leave too few mid-career professionals to take the reins.

During the U.S. shale revolution of the last decade, the tide finally seemed to be turning.

This year, 21 U.S. colleges and universities are expected to graduate a record-setting 11,389 petroleum engineering majors, research by Texas Tech professor of petroleum engineering Lloyd Heinze and the U.S. Association of Petroleum Department Heads shows. That's the highest level since 1983, three years before the 1986 oil crash.

But as oil prices look poised to remain lower for longer, all signs point to declining enrollment.

During Texas Tech's summer registration in 2014, roughly 570 students indicated they were interested in petroleum engineering as a Bachelor's degree, Heinze told CNBC. During the summer of 2015, that number fell to about 260.

That's no surprise in light of dwindling job prospects. In 2014, 95 percent of graduates with a bachelor's degree in petroleum engineering found work in the oil and gas industry, according to the Society of Petroleum Engineers. This year, 64 percent found work.

Department heads report that the rate is slumping toward 50 percent, said Heinze. His best guess is it will soon fall to 25 percent.

Faculty say freshman and sophomore engineering students are now migrating to other disciplines. Upperclassmen, meanwhile, find themselves in a tough spot.

"If you're a junior and you've only got another year or two to finish, you don't really have much choice. You have to follow through," Heinze said.

Those students will not necessarily be left jobless, Heinze noted. They can apply their specialization in subsurface measurements to roles outside the industry, such as the engineering of underground storage facilities or management of water resources in the nation's aquifers.

Still, those jobs may not pay what petroleum engineers usually get. More than 20 percent of graduates from Louisiana State University were commanding salaries north of $100,000 per year straight out of school, said Frederick Thurber, coordinator of academic affairs at the university's petroleum engineering department.

"I've been here 19 years right now, and there's no doubt about it. This will be the weakest hiring season we've seen in quite some time," he said.

That has Thurber concerned about retention rates among the program's best and brightest.

"We will probably lose a number of students, and we hope we don't lose those students with passion," he said.

Some committed petroleum engineering students will likely wait out the oil price slide in a masters program, said Thurber, though advanced degrees are not typically necessary in the oil patch.

Others may settle for lower-paying jobs as engineering technicians or geological engineers, he said. Those are support positions that don't require a petroleum engineering degree and pay roughly half of what top grads could make if better jobs were available.