Which is most scarce-new proved oil and gas reserves in the U.S., or the people who know how to find and produce them? E&P firms, service companies and energy-related employee-search firms are paying a lot of attention to the demographics of the petroleum industry workforce. They are beginning to figure out ways to compensate for graying employees, the dramatic drop in university enrollments in the geosciences during the past 20 years, and the difficulty of recruiting new talent to an industry with a somewhat tarnished image. "The crew-change discussion was sort of academic two years ago but the feeling now is that the bus has arrived in the station," Steve Holditch of Texas A&M University said during a recent program in Houston. Separately, a six-month employment survey of 22 companies was released in late May by the American Petroleum Institute. It indicated their No. 1 concern is age demographics. The scarcest skills are engineering and geology. Some 77% of the companies surveyed anticipate engineering shortages and 73% project a shortage of geoscientists. The 22 companies represent 17% of the workforce. They included four large service companies such as Schlumberger, eight majors and integrated oils such as BP and 10 large independents such as Anadarko Petroleum and Devon Energy. "Because of the critical and growing role of technology in this industry, these concerns are especially acute with respect to the most technically demanding professions," API reports. The key professions-engineering and geology-comprise nearly a third of the sample firms' workforce. The average age of petroleum engineers is now 51, according to the Society of Petroleum Engineers. About 35% of the membership in the American Association of Petroleum Geologists is between the ages of 45 and 55. The API says nearly a quarter of the employees in the eight most scarce skills, among the 22 companies polled, will be eligible for retirement before 2009. The survey also indicated that during the next five years, the sampled firms expect to hire 22,000 new workers in the eight technical skill categories, with 6,000 expected to be engineers and geoscientists. Shell, a unit of Royal Dutch/Shell, alone has announced its intent to hire 1,000 new engineers worldwide. The sampled firms said they expect to hire more than 5,000 engineers in the next five years, yet as recently as 2003, only 1,500 students were enrolled in petroleum engineering in the U.S., the API reports. "The consequences of these trends are both severe and imminent...posing major challenges to recruiting and managing the technical workforce over the next five years," the API reports. How do we build the next generation of technical experts? Schlumberger is dealing with the coming shortage of engineering professionals in a number of ways. One is to hire more women, although to do so, it has had to recruit in countries not in the West. Some 39% of its new engineers are women. "Twenty-five years ago we started hiring in all countries in a percentage proportionate to the amount of business we did there, so we really know all the universities," said Henry Edmondson, based in Schlumberger's Paris headquarters. "It's in the West that we have this problem. At Beijing University there are 1,500 students in petroleum engineering, geology and geophysics, and the same number in the master's programs-and that's in only one university in China." Retaining employees in the U.S. is another problem for many companies in this heated environment, with many jumping to smaller or start-up firms. "And another thing, once you have a population, you have to keep them motivated," Edmondson said. "You have to provide them a career worth boasting about, and show them a clear path to what jobs they can obtain eventually, and what skills are going to be required." Technical expertise takes years to develop, so Schlumberger is taking advantage of its industry veterans before they retire, enabling them to pass their knowledge to younger employees. "It's like a fine wine. You have to go from being vaguely knowledgeable, to being a technical expert, to being a world expert," he said. The company promotes its best and brightest to become senior advisors, and finally, a Schlumberger fellow, which are recognized and called upon by employees around the world. Finally, the firm is trying to provide a smoother transition for its older employees, so they work part-time as they near retirement, or even after, in order to have enough time to hand over their skills to others.