Industry Overview
Oil and natural gas furnish about three-fifths of our energy needs, fueling our homes, workplaces, factories, and transportation systems. In addition, they constitute the raw materials for plastics, chemicals, medicines, fertilizers, and synthetic fibers. Petroleum, commonly referred to as oil, is a natural fuel formed from the decay of plants and animals buried beneath the ground, under tremendous heat and pressure, for millions of years. Formed by a similar process, natural gas often is found in separate deposits and is sometimes mixed with oil. Finding, developing, and extracting oil and gas are the primary functions of the oil and gas extraction industry. While some of these functions are done by the large oil companies, most are done by contractors working in the support activities for mining subsector, which is included in this industry.

Using a variety of methods, on land and at sea, small crews of specialized workers search for geologic formations that are likely to contain oil and gas. Sophisticated equipment and advances in computer technology have increased the productivity of exploration. Maps of potential deposits now are made using remote-sensing satellites. Seismic prospecting -- a technique based on measuring the time it takes sound waves to travel through underground formations and return to the surface -- has revolutionized oil and gas exploration. Computers and advanced software analyze seismic data to provide three-dimensional models of subsurface rock formations. This technique lowers the risk involved in exploring by allowing scientists to locate and identify structural oil and gas reservoirs and the best locations to drill. Four-D, or "time-lapsed," seismic technology tracks the movement of fluids over time and enhances production performance even further. Another method of searching for oil and gas is based on collecting and analyzing core samples of rock, clay, and sand in the earth's layers.

After scientific studies indicate the possible presence of oil, an oil company selects a well site and installs a derrick -- a tower-like steel structure -- to support the drilling equipment. A hole is drilled deep into the earth until oil or gas is found, or the company abandons the effort. Similar techniques are employed in offshore drilling, except that the drilling equipment is part of a steel platform that either sits on the ocean floor, or floats on the surface and is anchored to the ocean floor.

In rotary drilling, a rotating bit attached to a length of hollow drill pipe bores a hole in the ground by chipping and cutting rock. As the bit cuts deeper, more pipe is added. A stream of drilling "mud" -- a mixture of clay, chemicals, and water -- is continuously pumped through the drill pipe and through holes in the drill bit. Its purpose is to cool the drill bit, plaster the walls of the hole to prevent cave-ins, carry crushed rock to the surface, and prevent "blowouts" by equalizing pressure inside the hole. When a drill bit wears out, all drill pipe must be removed from the hole a section at a time, the bit replaced, and the pipe returned to the hole. New materials and better designs have advanced drill bit technology, permitting faster, more cost-effective drilling for longer periods.

Advancements in directional or horizontal drilling techniques, which allow increased access to potential reserves, have had a significant impact on drilling capabilities. Drilling begins vertically, but the drill bit can be turned so that drilling can continue at an angle of up to 90 degrees. This technique extends the drill's reach, enabling it to reach separate pockets of oil or gas. Because constructing new platforms is costly, this technique commonly is employed by offshore drilling operations.

When oil or gas is found, the drill pipe and bit are pulled from the well, and metal pipe (casing) is lowered into the hole and cemented in place. The casing's upper end is fastened to a system of pipes and valves called a wellhead, or "Christmas Tree," through which natural pressure forces the oil or gas into separation and storage tanks. If natural pressure is not great enough to force the oil to the surface, pumps may be used. In some cases, water, steam, or gas may be injected into the oil-producing formation to improve recovery.

Crude oil is transported to refineries by pipeline, ship, barge, truck, or railroad. Natural gas usually is transported to processing plants by pipeline. While oil refineries may be many thousands of miles away from the producing fields, gas processing plants typically are near the fields, so that impurities -- water, sulfur, and natural gas liquids -- can be removed before the gas is piped to customers. The oil refining industry is considered a separate industry, and its activities are not covered here, even though many oil companies both extract and refine oil.

The oil and gas extraction industry has experienced both "booms" and "busts" over the years, illustrating the cyclical relationship between the price of oil and employment. During periods of high oil and gas prices, the industry expands exploration and production and hires more workers. The opposite occurs during periods of low prices.

Working Environment 
Working conditions in the industry vary significantly by occupation. Executives generally work in office settings, as do most administrators and clerical workers. Geologists, engineers, and managers may split their time between the office and the jobsites, particularly while involved in exploration work.

Opportunities for part-time work in this industry are rare. In fact, a higher percentage of workers in oil and gas extraction work overtime than in all industries combined.

Drilling rigs operate continuously. On land, drilling crews usually work 6 days in a row, 8 hours a day, and then have a few days off. In offshore operations, workers can work 14 days in a row, 12 hours a day, and then have 14 days off. If the offshore rig is located far from the coast, drilling crew members live on ships anchored nearby or in facilities on the platform itself. Workers on offshore rigs are always evacuated in the event of a storm. Most workers in oil and gas well operations and maintenance or in natural gas processing work 8 hours a day, 5 days a week.

Many oilfield workers are away from home for weeks or months at a time. Exploration field personnel and drilling workers frequently move from place to place as work at a particular field is completed. In contrast, well operation and maintenance workers and natural gas processing workers usually remain in the same location for extended periods.

Employment
The oil and gas extraction industry employed about 316,000 wage and salary workers in 2004. Of these, only 4 in 10 workers were employed directly by the oil and gas extraction companies. The rest worked as contractors in the support activities for mining sector, which also included workers who extract coal and minerals on a contract basis. Although onshore oil and gas extraction establishments are found in 42 States, almost 3 out of 4 of the industry's workers in 2004 were located in just four States -- California, Louisiana, Oklahoma, and Texas. While most workers are employed on land, many work at offshore sites. Many Americans are employed by oil companies at locations in Africa, the North Sea, the Far East, the Middle East, South America, and countries of the former Soviet Union.

While slightly more than 50 percent of establishments employ fewer than 5 workers, the vast majority of workers are employed in establishments with 20 or more workers. As more large domestic oilfields and gas fields are depleted, major oil companies are focusing their exploration and production activity in foreign countries. Consequently, smaller companies with less capital for foreign exploration and production are drilling an increasing share of domestic oil and gas. Technology also has significantly decreased the risk and cost for smaller producers.

Relatively few oil and gas extraction workers are in their teens or early 20s. About 56 percent of the workers in this industry are between 35 and 54 years of age.

Degree Paths into this Industry
Professional and related workers account for about 14 percent of industry employment, and managerial, business, and financial workers account for about 12 percent.

A petroleum geologist or a geophysicist, who is responsible for analyzing and interpreting the information gathered, usually heads exploration operations. Other geological specialists also may be involved in exploration activities, including paleontologists, who study fossil remains to locate oil; mineralogists, who study physical and chemical properties of mineral and rock samples; stratigraphers, who determine the rock layers most likely to contain oil and natural gas; and photogeologists, who examine and interpret aerial photographs of land surfaces. Additionally, exploration parties may include surveyors and drafters, who assist in surveying and mapping activities.

Some geologists and geophysicists work in district offices of oil companies or contract exploration firms, where they prepare and study geological maps and analyze seismic data. These scientists also may analyze samples from test drillings.

Other workers involved in exploration are geophysical prospectors. They lead crews consisting of gravity and seismic prospecting observers, who operate and maintain electronic seismic equipment; scouts, who investigate the exploration, drilling, and leasing activities of other companies to identify promising areas to explore and lease; and lease buyers, who make business arrangements to obtain the use of the land or mineral rights from its owners.

Industry Forecast
Although worldwide demand for oil and gas is expected to grow, overall U.S. wage and salary employment in the oil and gas extraction industry is expected to decline by 6 percent through the year 2014, compared to an employment increase of 14 percent in all industries combined.

In general, the level of future crude petroleum and natural gas exploration and development and, therefore, employment opportunities in this industry, remains contingent upon the size of accessible reserves available and the going prices for oil and gas. Stable and favorable prices are needed to allow companies enough revenue to expand exploration and production projects to keep pace with growing global energy demand, particularly by India and China. Rising worldwide demand for oil and gas is likely to cause higher long term prices and generate the needed incentive to continue exploring and developing oil and gas in this country, at least in the short run. Over the moderate term, fewer reserves of oil and gas in the U.S. will cause a decline in domestic production, unless new oil and gas fields are found and developed.

Environmental concerns, accompanied by strict regulation and limited access to protected Federal lands, also continue to have a major impact on this industry. Restrictions on drilling in environmentally sensitive areas and other environmental constraints should continue to limit exploration and development, both onshore and offshore. However, changes in policy could expand exploration and drilling for oil and natural gas in currently protected areas, especially in Alaska.

In addition, environmental emissions standards already in place or planned for the future are expected to significantly limit the amount of sulfur and carbon dioxide levels that can be emitted by power plants. Employment in the natural gas exploration and production industry normally would grow with the increasing demand for cleaner-burning fuels, such as natural gas. However, recent high natural gas prices are limiting demand and causing some planned future power plants to return to coal as a power source, which could hurt the long term natural gas outlook.

While some new oil and gas deposits are being discovered in this country, companies increasingly are moving to more lucrative foreign locations. As companies expand into other areas around the globe, the need for employees in the United States is reduced. However, advances in technology have increased the proportion of exploratory wells that yield oil and gas, enhanced offshore exploration and drilling capabilities, and extended the production of existing wells. As a result, more exploration and development ventures are profitable and provide employment opportunities that otherwise would have been lost.

Despite an overall decline in employment in the oil and gas extraction industry, job opportunities in most occupations should be good. The need to replace workers who transfer to other industries, retire, or leave the workforce will be the major source of job openings as more workers in this industry approach retirement age, and others seek more stable employment opportunities in other industries. Employment opportunities will be best for those with previous experience and with technical skills, especially qualified professionals and extraction workers who have significant experience in oil field operations and who can work with new technology. More workers will be needed who are capable of using new technologies -- such as 3-D and 4-D seismic exploration methods, horizontal and directional drilling techniques, and deepwater and subsea technologies -- as employers develop and implement sophisticated new equipment.

Related Degree Fields

• Geosciences
• Engineering
• Engineering Technology
• Mining Engineering
• Naval Architecture and Marine Engineering
• Petroleum Engineering

Professional Associations

• American Association of Petroleum Geologists
• American Geological Institute
• American Petroleum Institute
• Society of Petroleum Engineers

Note: Some resources in this section are provided by the US Department of Labor, Bureau of Labor Statistics.