University of HoustonUniversity of HoustonBauer College -- GEMIBauer College -- GEMI

Building the Energy

Workforce of the Future

Building the Energy

Workforce of the Future

Arthur L. Smith, CFAJohn S. Herold, Inc. Chairman & CEO November 3, 2005

Arthur L. Smith, CFAJohn S. Herold, Inc. Chairman & CEO November 3, 2005

Greater Houston Energy Education Collaborative

G.H.E.E.C.

Let’s Place Today in PerspectiveLet’s Place Today in Perspective

Very Difficult 1998-99Very Difficult 1998-99 Strong Wellhead Prices for Oil & Strong Wellhead Prices for Oil &

Natural Gas Natural Gas Phobia of another Price Phobia of another Price

Meltdown (2001)Meltdown (2001) Malaise in Energy ConvergenceMalaise in Energy Convergence Profound Cynicism among Profound Cynicism among

Energy Investors Energy Investors Continuing ConsolidationContinuing Consolidation But many new Start-UpsBut many new Start-Ups Great Opportunities!Great Opportunities!

Oil Prices (nominal dollars) and JSH Top 25 Headcount 1974 - 2004

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

The Occupational HandbookThe Occupational Handbookis Wrong about Oil & Gasis Wrong about Oil & Gas

Petroleum Extraction is Petroleum Extraction is NOTNOTa Sunset Businessa Sunset Business

The Outlook is BrightThe Outlook is Bright

DOL is extrapolating yesterday’s job DOL is extrapolating yesterday’s job market in its current assessment that market in its current assessment that “employment in the oil & gas extraction “employment in the oil & gas extraction industry is expected to decline 28% industry is expected to decline 28% through the year 2012” . . . “while overall through the year 2012” . . . “while overall employment will increase by 16%.”employment will increase by 16%.”

The petroleum sector “real world today ‘is The petroleum sector “real world today ‘is very strong – and likely to get even very strong – and likely to get even strongerstronger

Exxon Mobil

1. Humble Oil & Refining 2. Standard Oil (NJ) 3. Socony Vacuum 4. Superior Oil 5. Anglo-Iranian Oil 6. Standard Oil (Ohio) 7. Pan American Standard Oil (Indiana) 8. Dome Petroleum 9. Atlantic Refining 10. Richfield 11. Sinclair 12. Supron Energy 13. Union Sulfur & Oil 14. Anderson Pritchard 15. Royal/Dutch Shell 16. Shell Union (Shell Oil) 17. The Texas Company 18. Tidewater 19. Pacific Western-Getty 20. Skelly 21. Gulf 22. Standard Oil (CA) 23. Standard Oil (KY) 24. Cities Service 25. Occidental 26. Phillips 27. Aminoil 28. General American Oil 29. Continental Oil 30. Union Oil 31. Pure Oil 32. Sun Oil 33. Sunray-Sunray DX 34. Midcontinent 35. Texas Pacific 36. Kerr McGee 37. Plymouth Oil 38. Ohio Oil 39. Texas Oil & Gas 40. Amerada Petroleum 41. Hess Oil and Chemical 42. Total Petroleum 43. PetroFina 44. Fina Inc. 45. Elf Aquitaine

1950 1960 1970 1980 1990 2000

ExxonMobil

Amoco

Atlantic Richfield

Allied Chemical/Signal Union Texas (IPO)

BP

RD/SC

Getty Texaco

Chevron

Occidental

Phillips

ChevronTexaco

ConocoPhillipss

Unocal

Amerada Hess

USX

TotalFinaElf

Marathon

Sun Oil

Conoco

Kerr- McGee

Oryx

Sunoco

(Marathon)

PZL

British Petroleum

(Conoco)

BP Amoco

Dupont

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000

ExxonMobil

Conoco Phillips

Royal Dutch/Shell

BP

Chevron Texaco

Occidental

Sunoco

Unocal

Ashland Oil

2004

1982

Alminex Ltd.Amarex, Inc.Amerada HessApco OilAsamera, Inc.Austral OilAztec Oil & GasBanff Oil, Ltd.Belco PetroleumBP Oil & GasBritish Col. Oil & GasButte Oil & Gas Canadian Exports Oil/GasCanadian GridoilCanadian HomesteadCanadian Ind. Gas & OilCanadian SuperiorCentral-Del RioCleary PetroleumClinton OilConsolidated Oil & GasConsolidated ProductionContinental Oil Co.CreoleCrestomont Oil & GasCrystal Oil & LandDome PetroleumEason OilEmpire State Oil Co.

Equity Oil & GasExchange Oil & GasFalcon SeaboardFelmont OilForest OilGeneral American OilGeneral Crude OilGreat Basins PetroleumGreat Plains DevelopmentGulf Oil CanadaHamilton Bros. PetroleumHelmerich & PayneHome OilHudson's Bay Oil & GasHusky Oil, Ltd.Imperial OilInexco OilKathol PetroleumKewaneeKirby PetroleumLouisiana Land & Exp.LVO Corp.Mesa PetroleumMidwest OilMission Corp.Noble AffiliatesOcean Drilling & Exp.Pacific PetroleumPan Ocean Oil Company

Pauley PetroleumPennzoil UnitedPetrofina CanadaPubcoRanger OilReading & BatesReserve Oil & GasSabine RoyaltyScurry-RainbowShenandoah OilSignal CompaniesSinclair VenezuelanSkellySouthern Natural GasSouthland RoyaltySouthwest Gas Prod. Co.Superior OilTexas American OilTexas Int’l PetroleumTexas Oil & GasTexas Pacific Oil Co.Tipperary Land & Exp.TransOcean OilUnited Canso Oil & GasWebb ResourcesWestates PetroleumWestcoast Production Co.Western DecaltaWilshire Oil of Texas

86 INDEPENDENT E&P COMPANIES86 INDEPENDENT E&P COMPANIES

JSH CoverageJSH CoverageJanuary 1970January 1970

JSH Coverage--January 1980JSH Coverage--January 1980INDEPENDENT E&P COMPANIES INDEPENDENT E&P COMPANIES

45 Survivors45 SurvivorsEquity Oil & Gas Pauley Petroleum

Amarex, Inc. Pennzoil UnitedAmerada Hess Petrofina Canada

Felmont OilAsamera, Inc. Forest Oil Ranger Oil

General American Oil Reading & Bates

Great Basins Petroleum Sabine Corp.Belco Petroleum Scurry-Rainbow

Gulf Oil CanadaHamilton Bros. Petroleum

Butte Oil & Gas Helmerich & PayneHome OilHudson's Bay Oil & Gas Southern Natural Resources

Canadian Homestead Husky Oil, Ltd. Southland RoyaltyImperial OilInexco Oil

Texas American OilTexas International Petroleum

Kirby Petroleum Texas Oil & GasConsolidated Oil & Gas

Louisiana Land & Exp. Tipperary Land & ExplorationMesa Petroleum TransOcean Oil

United Canso Oil & GasWebb Resources

Crystal Oil & Land Noble AffiliatesDome Petroleum Ocean Drilling & Exp. Westcoast Production Co.

Wilshire Oil of TexasEnergy Reserve Group

Conoco, Inc.

JSH Coverage 1990 & 2004JSH Coverage 1990 & 2004INDEPENDENT E&P COMPANIES

Nov 2005 – 4 Nov 2005 – 4 SurvivorsSurvivors

Jan 1990 - 14 Survivors

Pennzoil

Amerada Hess

Forest Oil Ranger Oil

Reading & Bates

Imperial Oil

Louisiana Land

Mesa Inc.

Noble EnergyWilshire Oil of Texas

SONAT

Home OilHome Oil

Amerada Hess

Equity Oil & Gas

Forest Oil

Helmerich & Payne

Imperial Oil

Noble AffiliatesEquity Oil & Gas

OXYMORONSOXYMORONSJSH FavoritesJSH Favorites

26 Members & Growing26 Members & GrowingAssociationsAssociations

Society of Petroleum Engineers Society of Petroleum Engineers (SPE)(SPE)

Houston Geological Society (HGS)Houston Geological Society (HGS) Independent Petroleum Association Independent Petroleum Association

of America (IPAA)of America (IPAA) American Petroleum Institute (API)American Petroleum Institute (API) Women in Energy NetworkWomen in Energy Network Houston-Galveston Area Council Houston-Galveston Area Council UH-GEMI Energy Students UH-GEMI Energy Students

AssociationAssociation Texas Oil & Gas Association Texas Oil & Gas Association State of Texas Industry State of Texas Industry

Cluster/EnergyCluster/Energy Engineering Council of HoustonEngineering Council of Houston

SchoolsSchools

Texas A&MTexas A&M San Jacinto CollegeSan Jacinto College Rice UniversityRice University UH- Cullen College of UH- Cullen College of

EngineeringEngineering UH- Global Energy UH- Global Energy

Management InstituteManagement Institute Environmental Institute of Environmental Institute of

Houston (UH-Clear Lake)Houston (UH-Clear Lake) Houston Community College Houston Community College

System (HCCS)System (HCCS) HISD HISD San Jacinto CollegeSan Jacinto College Texas Southern UniversityTexas Southern University HUNSTEMHUNSTEM

OrganizationsOrganizations

INROADSINROADS Offshore Energy CenterOffshore Energy Center Junior AchievementJunior Achievement Education Foundation of Harris County (EFHC)Education Foundation of Harris County (EFHC) Watson WyattWatson Wyatt

Greater Houston Energy Education Collaborative

G.H.E.E.C.

G.H.E.E.C. MissionG.H.E.E.C. Mission

ToTo RAISE AWARENESSRAISE AWARENESS and and HEIGHTEN HEIGHTEN INVOLVEMENTINVOLVEMENT of all students into energy-specific of all students into energy-specific education education

ToTo LEVERAGE ACTIVITIESLEVERAGE ACTIVITIES of its key constituencies of its key constituencies to have greater impact on achieving the fundamental to have greater impact on achieving the fundamental missionmission

To become theTo become the LEADING ENERGY EDUCATION LEADING ENERGY EDUCATION COMMUNITYCOMMUNITY that leverages off Houston’s energy that leverages off Houston’s energy know-how and is a role model for initiatives in other know-how and is a role model for initiatives in other communitiescommunities

If you are worried about the If you are worried about the “Graying” of the Oil Industry“Graying” of the Oil Industry

Greater Houston Energy Education Collaborative

G.H.E.E.C.

Petroleum EngineeringPetroleum Engineering

Starting Salaries are Rising Sharply

2005 Graduates

Engineering

Business

Geosciences

Greater Houston Energy Education Collaborative

G.H.E.E.C.

Leverage StrategyLeverage Strategy

Consensus for a flexible, solution-Consensus for a flexible, solution-driven collaborative that provides driven collaborative that provides opportunities for:opportunities for:

NETWORKINGNETWORKING and sharingand sharing LEVERAGELEVERAGE off each otheroff each other Providing critical mass for organizationsProviding critical mass for organizations

toto INCREASE IMPACTINCREASE IMPACT and influence and influence results (e.g. leveraged marketing)results (e.g. leveraged marketing)

Greater Houston Energy Education Collaborative

G.H.E.E.C.

3 Task Force Groups3 Task Force Groups

ContentContent – Capability Framework – Capability Framework

MarketingMarketing – Promotion of Workforce – Promotion of Workforce Challenges and Solution-Oriented programsChallenges and Solution-Oriented programs

PolicyPolicy – Impact Educational Public Policy – Impact Educational Public Policy

Greater Houston Energy Education Collaborative

G.H.E.E.C.

Showcase Of the Showcase Of the ProgramsPrograms

Jeanne Perdue (Jeanne Perdue (Society of Petroleum EngineersSociety of Petroleum Engineers))

Brenda Wiser (Brenda Wiser (American Petroleum InstituteAmerican Petroleum Institute))

Kristina Hardwick (Kristina Hardwick (Offshore Energy CenterOffshore Energy Center))

Jennifer Anderson (Jennifer Anderson (Junior AchievementJunior Achievement))

Greater Houston Energy Education Collaborative

G.H.E.E.C.

Greater Houston Energy Education Collaborative

G.H.E.E.C.

August 12-16th,August 12-16th, 20052005

August 26th, 2005August 26th, 2005