The American Petroleum Institute

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2 The American Petroleum Institute The premier national trade association representing all aspects of America s oil and natural gas industry. Represents more than 650 member companies on legislative, regulatory, and other policy issues impacting the industry. Speaks on behalf of the industry in a variety of forums and public events, including the media. Provides services to members at both the national and state level, with 250 staff located in Washington, D.C. and in 33 state capitals.

3 Beyond the Pump: The Importance of Oil & Natural Gas

4 The Workforce Challenge To continue producing the resources that we all need, the oil & natural gas and petrochemical industries will need to fill nearly 1.9 million projected job opportunities over the next 20 years with the best available talent.

5 The Workforce Challenge: Inadequate Talent Supply The inadequate supply of qualified and skilled talent is the second-biggest threat to U.S. companies ability to meet revenue or business performance targets. (Randstad US Workplace Trends Report, SIA, June 2016) 32% of U.S. companies report difficulties filling jobs because of talent shortages The Manpower Group 2015 In 2015, the U.S. graduated just 106,658 engineers surpassed by China, India, and Russia. >30% of American students never graduate from high school

6 The Workforce Challenge: STEM is where the growth is The fastest U.S. job growth rates are in STEM fields: Between 2014 and 2024 STEM jobs will grow 16% ; Non-STEM jobs will grow 11%. 1 Middle skill jobs that require technology grew 2.5 times faster between 2003 and 2013 than middle skills jobs that don t Economic Modeling Specialists International, Change the Equation: STEMtistics

7 The Workforce Challenge: But our students aren t prepared The U.S. ranks 17 th in Technological Readiness SDO Analysis of data from World Economic Forum, 2010, The Global Competitiveness Report , Technological Readiness Index, Top 20 Economies.

8 The Workforce Challenge: Underprepared in STEM

9 The Workforce Challenge: Underprepared in STEM Forty-eight percent of bachelor s degree students who entered STEM fields between 2003 and 2009 had switched to non-stem majors or dropped out by 2009.* *Change the Equation: STEMtistics

10 The Workforce Challenge: Underprepared in STEM Especially for Minorities MORE than 50% of White and Asian American students VS. LESS than 50% of African American and Hispanic students intending to major in STEM fields actually complete a degree in these fields.

11 The Workforce Challenge: Underprepared in STEM Especially for Minorities In , of the 106,658 undergraduate engineering degrees, only 11% were earned by African American (5%) and Hispanic (6%) students.

12 The Workforce Challenge: Underprepared in STEM Especially for Women Women are more likely than men to switch out of STEM majors: 32 percent vs. 26 percent. Change the Equation: STEMtistics

13 By 2030, one in five Americans is projected to be 65 and over; by 2044, more than half of all Americans are projected to belong to a minority group. United States Census Bureau

14 API s goal is to support focused research to gain a better understanding of the challenges, opportunities, and outreach strategies necessary to ensure the workforce needs of the industry.

15 The strength of the ONG workforce relies upon STEM skills. All skilled, semiskilled, blue collar and professional workers require some level of STEM competency. API is fundamentally committed to increasing the number and participation of minorities and women in the ONG workforce.

16 WORKFORCE OPPORTUNITIES Nearly 1.9 million job opportunities through 2035

17 Job Opportunities by Region Mountain West North Central East North Central New England 0.2% 7% Pacific 12% 6% 6% Middle Atlantic 15% 2% 7% South Atlantic 45% West South Central East South Central Period:

18 Thousands Job Opportunities by Region The West South Central Region is projected to see the most growth through the period, accounting for 45% of total U.S. job opportunities. However, other areas such as the Mountain and Pacific regions will also see significant growth. 0 Pacific Mountain West North Central East North Central South Atlantic West South Central East South Central Middle Atlantic New England Period:

19 Thousands Job Opportunities by Region, Occupation Management/Professional Sales/Administration/Service Blue Collar Pacific Mountain West North Central East North Central South Atlantic West South Central East South Central Middle Atlantic New England In all regions, at least 50% of the job opportunities are projected to be in blue collar occupations, many of which will be skilled and semi-skilled. Period:

20 Female employment is projected to account for more than 290,000 of the total job opportunities through 2035 (16%).

21 Minority employment is projected to account for 707,000 of the total job opportunities through 2035 (38%). More than 130,000 for African Americans, and 576,000 for Hispanics

22 Thousands Minority Employment in ,000 73% 1,013,000 % U.S. Labor Force (2014) % Oil and Gas (2015) Hispanic 16% 20% African American 12% 7% % 283,470 7% 93,600 Other Hispanic African American Blue Collar Sales/Administration/Service Management/Professional About 70% of Hispanic workers and 60% of African American workers in the oil & natural gas and petrochemical industries are employed in blue collar jobs. Period: 2015

23 Thousands Job Opportunities by Minority Group 1,200 1,000 62% 1,157,000 The share of minorities employed in the oil and gas and petrochemicals industries is rising combined minority employment will rise from about onequarter of the total jobs in 2010 to nearly 40% by % 576, % 130,500 0 Period: Other Hispanic African American

24 Thousands Job Opportunities by Occupation, Minority Group 1, % 39% Minority workers are projected to fill 46% of blue collar occupations and 25% of management & professional occupations through % 19% % 23% 0 Blue Collar Sales/Service/Administrative Management/Professional Other Hispanic African American Period:

25 Thousands Job Opportunities by Industry Segment, Minority Group 1,400 1,200 1, The petrochemical industry is projected to have the highest share of African American workers (15%). The highest share of Hispanic workers is projected to be in the midstream segment (36%). 6% 30% % 29% Petrochemical 11% 35% Downstream 9% 36% Midstream Upstream Other Hispanic African American Period:

26 The Millennial Workforce Millennials in the Oil & Natural Gas and Petrochemical Industries

27 Analysis Generation comparisons Direct employment Base year estimates: 2015 Forecast period: Nine regions Eight occupation categories Baseline detailed occupations Two minority groups Women Cohort Definitions: Millennials, Gen-Xers, Baby Boomers,

28 BY COMPARISON Millennials Compared to Previous Generations

29 Compared to Baby Boomers and Gen-Xers, Millennials are More Diverse 44% of Millennials in 2015 were Hispanic, African American or another minority group, compared to 33% of Gen-Xers and 22% of Baby Boomers at the time they were first of Baby Boomers Age in % 15% 78% White non-hispanic Hispanic Other Minority 14% 19% Millennials Age in 2015 Gen-Xers Age in % 23% 21% 56% working ages.

30 Compared to Baby Boomers and Gen-Xers, Millennials are Better Educated About 65% of 100% Educational Attainment (shares of population age 25-34) 6% 6% 10% Millennials age had at least some college coursework, compared with 56% of Gen-Xers at a corresponding age and 45% of Baby Boomers. 80% 60% 40% 20% 0% 18% 22% 21% 40% 28% 32% 26% 29% 26% 15% 12% 9% Baby Boomers in 1980 Gen-Xers in 1998 Millennials in 2015 Less than HS High School Some College College Degree Advanced Degree

31 Compared to Baby Boomers and Gen-Xers, Millennials are Less Likely to be in the Labor Force Among all Millennials age 18-24, only 65% are in the labor force compared to 73% of Gen-Xers and 74% of Baby Boomers when they were the same ages. Millennial women who are not in the labor force are much more likely to be in school than women of previous generations. Millennial men who are not in the labor force are no more likely to be in school, suggesting a higher share of discouraged workers among young Millennial men than in previous generations. 100% 80% 60% 40% 20% 0% Labor Force Data: Participation vs. Students (age cohorts) 82% 77% 70% 67% 70% 70% 71% 67% 63% 35% 52% 64% Men Women Men Women Labor Force Participation Rate Students as % of not in Labor Force Baby Boomers Gen-Xers Millennials

32 Compared to Baby Boomers and Gen-Xers, Millennials are More Likely to be in Professional, Technical, and Service Occupations Nearly 50% of working Millennials are employed in 100% 80% Employment Shares by Broad Occupation (workforce age 18-34) 8% 11% 7% 17% 17% 25% professional, technical, and service occupations compared with 33% of Gen-Xers and 30% of Baby Boomers at the same age. 60% 40% 20% 0% 13% 16% 6% 23% 14% 21% 13% 15% 12% 34% 26% 20% Baby Boomers in 1980 Gen-Xers in 1998 Millennials in 2015 Other Blue Collar Clerical Sales Service Professional/Technical Managerial

33 MILLENNIALS IN OIL & NATURAL GAS 2015 Employment

34 Thousands Employment by Generation, Oil & Natural Gas and Petrochemical Industry Employment by Generation % 475,290 39% 542,900 27% 372,250 0 Period: 2015 Millennials Gen-Xers Baby Boomers

35 Minority Millennials in Oil & Natural Gas, 2015 Hispanic Millennials 19.7% 93,500 African American Millennials About one-quarter of millennials currently employed in the oil & natural gas and petrochemical industries are minority workers. 5.7% 27, % 355,000 Other Millennials Period: 2015

36 Female Millennials in Oil & Natural Gas, 2015 In 2015, there were close to 62,000 female millennials working in the oil & natural gas and petrochemical industries. 26% of all women working in these industries were millennials. Period: 2015

37 2015 Millennial Employment by Occupation, Gender Management, Business, and Financial Professional and Related Service Sales and Related Office & Administrative Support Nearly 63% of all millennials working in the oil & natural gas and petrochemical industries are employed in blue collar occupations. Skilled Blue Collar Semi-Skilled Blue Collar Unskilled Blue Collar Period: Men Women Thousands

38 Thousands 2015 Employees by Occupation, Generation Group 1, % Millennials account for 39% of all industry blue collar employees. Though millennials overall have trended away from blue collar occupations, many of these jobs continue to be staffed disproportionately by younger workers % % 0 Blue Collar Sales/Service/Administrative Management/Professional Other Millennials Period: 2015

39 Thousands 2015 Employment by Region, Generation Group Millennials account for the highest share of employment in the West South Central and Mountain regions 36% of oil & natural gas and petrochemical industry workers in these regions are millennials. Millennials Other Pacific Mountain West North Central East North Central South Atlantic West South Central East South Central Middle Atlantic New England Period: 2015

40 Millennials share of employment in the oil & gas and petrochemical industries is projected to rise to 41% in 2025 and remain near that level over the following decade. Period:

41 Management, Business and Financial General and Operations Manager Construction Manager Engineering Manager Cost Estimator Accountants and Auditor Professional and Related Architect Surveyor Top Detailed Occupations Skilled Blue Collar First-Line Supervisors of Constr. & Extraction Worker Carpenter Cement Masons and Concrete Finisher Paving, Surfacing, and Tamping Equipment Operator Operating Engineers & Other Constr. Equipment Operator Electrician Plumbers, Pipefitters, and Steamfitter Derrick, Rotary Drill and Service Unit Operator Engineers (Civil, Electrical, Mechanical, Petroleum, Other) Architectural and Civil Drafter Civil Engineering Technician Surveying and Mapping Technician Geoscientist Geological and Petroleum Technician Service Security Guard Janitors and Building Cleaner Sales & Related Sales Representatives, Wholesale & Manufacturing Office & Administrative Support First-Line Supervisor, Office and Administrative Support Mobile Heavy Equipment Mechanics, Except Engine Industrial Machinery Mechanic Maintenance and Repair Worker, General Petroleum Pump System Operator, Refinery Operator Crane and Tower Operator Pump Operators and Wellhead Pumper Semi-skilled Blue Collar Roustabout, Oil and Gas Helpers, Extraction Worker Welders, Cutters, Solder, and Brazer Inspector, Tester, Sorter, Sampler, and Weigher Truck Drivers Heavy and Tractor-Trailer Excavating and Loading Machine and Dragline Operator Bookkeeping, Accounting, and Auditing Clerk Secretaries and Administrative Assistant Office Clerk, General Unskilled Blue Collar Construction Laborer Fence Erector

42 Oil and Natural Gas Jobs Pay Well (average annual wages) Oil and natural gas extraction Petroleum refineries Pipeline transportation Oil and gas industry average Drilling oil and gas wells Support activities for oil and gas Oil and gas pipeline construction U.S. average $161,674 $131,977 $117,418 $100,088 $98,601 $86,112 $75,999 $51,296 Source: U.S. Quarterly Census of Employment and Wages, 2014.

43 Examples of Oil and Natural Gas Jobs Administrative Assistants $34-$42K per Year Control Centre Operators $60-$68K w/o Bonuses or Overtime Engineering Technology Professionals $67-$157K per Year Geologists & Geophysicists $50-$200K per Year Professional Engineers $50-$215K per Year Seismic Operators $3-$8K per Month Drilling & Service Rig Operators Roughneck - $300 per Day Derrick Hand - $350 per Day Truck Drivers - $350 per Day Mud Logger - $350 per Day Pumpers - $600 per Day Directional Driller - $650 per Day Consultant - $1000 per Day

44 August 2016

45 Takeaways There are significant employment opportunities in the oil & natural gas and petrochemical industries all across the country. Minority groups and women can take advantage of these opportunities API research shows that most simply lack awareness of the available opportunities. The bulk of job opportunities will be in blue collar occupations, mainly in the upstream sector; white collar positions are also significant. Millennial workers are already an important part of the oil & natural gas and petrochemical industries workforce. Their share of employment will continue to rise as older generations of workers retire. Education and workforce training are critical; significant improvement is needed in STEM disciplines, and recruitment should focus on transferable skills.

46 August 2016