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  2 Mature Sectors INTRODUCTION The sectors of oil and gas, nuclear energy, and mining (including nonfuel and coal mining) have been in existence for a long time and are well established. Therefore, although these industries continue to change, they are well understood and considered to be mature. These mature (but changing) sectors are the subject of this chapter. The discussion of each sector begins with an introduction, with the exception of the mining sector which begins with a discussion of the significance of minerals. Following then is a detailed discussion of each industry, often with an industry overview and profile, market trends and projections, occupational categories, career pathways, employer needs and challenges, workforce education and training, possible solutions, potential impact of innovation, conclusions, and recommendations. This chapter also highlights examples of very effective educational programs that are addressing workforce issues. These programs primarily target minority sectors of the young population—a pool that traditionally has not been tapped, but which is needed for the future workforce. These approaches could have application across the energy and mining sectors, and they serve as examples for industry, academia, and government to consider and emulate. Recommendations of importance for each of the mature industries in this chapter, along with the information and data to support them, are provided within their respective chapter sections. In addition to these industry-specific recommendations, a set of Shared Recommendations that, as their name implies, apply across the industries in the chapter are presented at the end of the chapter. Since no one source of complete workforce data exists, the committee relied on data from a number of sources. As the most objective and officially vetted and accepted data available, the committee used data from the federal government wherever possible. Bureau of Labor Statistics (BLS) data were used for all of the mature industries. In addition, data from the Mining Safety and Health Administration (MSHA) and National Institute for Occupational Safety and Health (NIOSH) were used for the mining workforce, and data from the Energy Information Administration (EIA) were used for the oil and gas extraction and coal mining workforces. However, the government data do not provide a complete picture of the workforce within the industries of interest in this study. Therefore, in each industry, the committee also drew upon other sources of information in order to gain a more complete picture of the associated workforce and its issues. As noted in Chapter 1 and discussed in detail in Appendix B, this report primarily uses workforce data from the BLS. However, there are limitations to using BLS data (primarily associated with the North American Industry Classification System (NAICS), the standard industrial classification system used by the BLS and other federal statistical agencies). Because the mature industries have existed for some time, NAICS codes exist that relate to these industries. Unfortunately, with the exception of nuclear electric power generation, the NAICS codes of relevance are not all uniquely mapped to each one of the mature industries. However, 20 Prepublication Version 

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MATURE SECTORS 21 NAICS categories match fairly well with the mature industries with only a modest amount of overlap. Workforce information, data, and projections from sources other than the federal government are discussed as appropriate in each of the mature industry sections. There are variations among data from different sources, and these differences are noted in the discussions. Some general points should be mentioned. Workforce estimates and near-term projections related to the oil and gas workforce from several studies are given. Nuclear Energy Institute (NEI) workforce estimates for the nuclear power industry, as well as NEI long-range workforce estimates (based on a potential industry scenario), are provided. Also, workforce projections for coal mining to 2030 from a study by the Virginia Center for Coal and Energy Research are given. The projection timeframes vary among the different data sources. Industry market trends and projections also provide insights into possible workforce trends. The EIA is the source of energy statistics from the U.S. government, so EIA data are used to describe market trends and projections to 2035 for oil, gas, and coal production, and for nuclear power generation. Another source of trend and near-term projected trend information for oil and gas production is noted. The data included in this report were collected by different entities for different purposes using a variety of methods and workforce definitions, making direct data comparisons difficult and imprecise. Additional information about these data can be obtained from their associated referenced sources. OIL AND GAS Introduction A big crew change is underway in the oil and gas industry. A “big crew change” refers to a rapid shift in industry demographics, triggered by mass retirements of baby boomers, resulting in a shortage of experienced technical talent. Industry Overview and Profile The oil and gas industry satisfies more than 60 percent of the total U.S. energy demand and more than 99 percent of the fuel used in U.S. vehicles (PriceWaterhouseCoopers, 2009). In 2010, domestic oil and gas production totaled more than $244 billion (EIA, 2011c), and the industry has seen a renaissance of new drilling and production. Driven largely by technology associated with newly found shale reservoirs, deep-water discoveries, and heavy-oil development, the decline of the past several decades has been arrested for the foreseeable future. The nation depends on foreign sources for 49 percent of its 19.2- million-bbl/day consumption of liquid fuels. On the other hand, 89 percent of the 24 trillion cubic feet of natural gas consumed in the United States is produced within the continental United States (EIA, 2012a) Production Regions of the United States Hydrocarbons are produced from 22 states. Well over 80 percent of hydrocarbon production is from onshore operations. Large additional resources have been estimated by the Prepublication Version 

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22 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES   U.S. Geological Survey (USGS) to exist in the undrilled outer continental shelf regions of the eastern United States, offshore California, and eastern Gulf of Mexico, where a drilling moratorium currently exists. Industry Size, Employment, and Structure Based on 2007 data, the total operational oil and gas workforce has been estimated to be 7,818,437 workers (2,123,291 direct and 5,695,146 indirect and induced),1 according to one source (PriceWaterhouseCoopers, 2009). This number encompasses all types of employment, from oil and gas well drilling to petroleum and petroleum products merchant wholesalers to gasoline stations—a far broader footprint than is the focus of this study. The BLS also reports oil and gas workforce data. (A discussion is provided in Appendix B.) Table 2.1 shows BLS employment data for 2010 for the NAICS industry codes that are unique to oil and gas. The exploration and production (E&P) technical workforce (known as “upstream”) is estimated to be 494,201 workers. The “midstream” technical sectors of pipeline construction and transportation total around 250,608, and the “downstream” technical workforce is 72,689 workers in refining. Altogether for these NAICS industry codes, the total employment is 817, 498, with the vast majority in the private sector (an additional 7,699 workers, not shown, are in the local government sector)—see Table B.12. The data in Table 2.1 are from the BLS Quarterly Census of Employment and Wages (BLS, 2011d) and include employees of oil- and gas- producing companies as well as service companies that work on a contract or fee basis. However, these data exclude self-employed workers and unpaid family workers, leading to an undercount. This factor contributes to a portion of the difference between the BLS total and the PriceWaterhouseCoopers (2009) total (which covers a much broader view of the overall oil and gas industry). Table 2.1 also shows average hourly earnings, indicating that jobs in these sectors pay well. However, a BLS estimate for a 2010 employment level that includes self-employed, wage and salary, and unpaid family workers is available for the oil and gas extraction sector only, through the BLS Employment Projections Program. Therefore, this more complete level of 2010 employment for this NAICS code is given in Table B.14 (158,900, compared to 158,423 from Table 2.1, which is based on the BLS Quarterly Census of Employment and Wages). Unfortunately, estimates of self-employed and unpaid family workers are not available for the sectors of drilling oil and gas wells and support activities for oil and gas operations.                                                              1 Indirect impact is jobs, labor income, and value added within other industries that offer goods and services to the oil and gas industry. Induced impact is jobs, labor income, and value added coming from household spending of income earned directly or indirectly from the oil and gas industry’s spending.  Prepublication Version 

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MATURE SECTORS 23 TABLE 2.1 2010 Upstream Technical Oil and Gas Employment (yellow), Midstream Employment (green), and Downstream Employment (blue). Private Sector Average NAICS Private Sector Hourly Code NAICS Title Total Employment Employment Earnings 211 Oil and Gas Extraction 158,423 158,423 $35.94 213111 Drilling Oil and Gas Wells 74,491 74,491 n/a 213112 Support Activities for Oil 201,685 201,685 $24.43 and Gas Operations 2212 Natural Gas Distribution 115,138 108,605 $31.49 23712 Oil and Gas Pipeline and 92,319 92,039 $24.51 Related Structures Construction 32411 Petroleum Refineries 72,689 72,689 $36.66 333132 Oil and Gas Field 59,602 59,602 n/a Machinery and Equipment Manufacturing 486 Pipeline Transportation 43,151 42,265 $33.61 Total Upstream 494,201 Employment Total Midstream 250,608 Employment Total Downstream 72,689 Employment Total 817,498 NOTE: Earnings information includes overtime. SOURCES: BLS (2011d [employment]; 2012a [average hourly earnings]). Table B.13 provides a BLS historical view of the average annual U.S. oil and gas employment by NAICS industry code for 2005-2010. Over this period, employment in these oil- and gas-specific NAICS codes grew by almost 140,000, with an annual growth rate of 3.8 percent. The growth was concentrated in 2005-2008, with an annual growth rate of 9.2 percent. The largest growth was in support activities for oil and gas operations, with an annual growth rate of 6.7 percent for 2005-2010. Employment over this same period grew in all of the oil and gas NAICS codes except for natural gas distribution, in which employment remained basically the same. Tables C.11 and C.12 in Appendix C show average annual oil and gas employment for 2005-2010 for the private and local government sectors, respectively. Table C.13 provides key demographic information for the oil and gas workforce by Census industry for which information is available. The data show that relatively few women are employed in oil and gas compared with the overall U.S. workforce, and a sizable percentage of the workforce is Hispanic/Latino. A key point to note is that the oil and gas workforce is relatively old compared with the overall U.S. workforce. This important issue is discussed more fully below. (Table C.14 maps U.S. oil and gas NAICS industries to Census industries.) Prepublication Version 

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24 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES   Industry Occupations Table C.15 of Appendix C provides 2010 employment estimates for the 20 largest private- sector occupations in the oil and gas extraction NAICS industry code. These occupations account for more than 50 percent of this industry. (Similar data for natural gas distribution and pipeline transportation are given in Tables C.16 and C.17.) Salaries for skilled oil and gas workers are relatively high. BLS data indicate that the U.S. employed about 1.48 million engineers in 2010. Petroleum engineers numbered 30,880 (2 percent of the overall engineering population), and received the highest salaries, with an annual mean of $138,980 (BLS, 2011b, Code 17-2171). The average annual pay for petroleum geoscientists is given in Table 2.2. As indicated, salaries have been increasing over time. The increase has been driven mostly by the demand for energy and mining commodities, along with the associated price increases over the same period. Table 2.2 also shows how experience is prized and rewarded. TABLE 2.2 Historical average salaries for petroleum geoscientists. SOURCE: Nation (2012). Used with permission from the AAPG. Oil and Natural Gas Market Trends Over the past 50 years, U.S. oil consumption has almost doubled, from 10 million bbl/day in 1960 to more than 19.2 million bbl/day in 2010 (2 percent per year). Currently, the United States is the largest consumer of oil in the world, but countries such as China and India are on growth trajectories that show rapid increases in consumption (EIA, 2012c). In 2003, China became the fastest growing consumer of oil, surpassing Japan, with consumption in 2011 estimated to be about 10 million bbl/day. This new demand has created an economic global shift in the price of oil beginning around 2005. For 2010 through 2011, the U.S. gross domestic product (GDP) grew 4.6 percent (BEA, 2012), while the GDP in China and India increased dramatically by 11.6 percent and 10.7 percent, respectively (IMF, 2012). Large populations such as China and India with growing GDPs are expected to keep worldwide oil demand and prices high for the foreseeable future. Prepublication Version 

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MATURE SECTORS 25 The U.S. Oil and Gas Exploration and Production Revival The U.S. oil and gas industry is experiencing a revival as a result of strong prices and new technological advances. Except for the 2008 economic downturn, oil prices have remained above $30/bbl, averaging well above $70/bbl, and they are increasing (EIA, 2012h). Natural gas prices have been above $3.00 per thousand cubic feet and have averaged above $5.00 per thousand cubic feet since 2003 (EIA, 2012e). However, with the advent of new shale gas drilling and excess supplies, natural gas prices have softened. The strong demand for oil and gas at higher sustained prices has created new opportunity, with boom effects being experienced in the onshore regions of the country that have not been seen since the 1970s. The resulting explosion has created demand for workers and equipment. Demand for onshore equipment has tripled since 2000. In the offshore areas, where the number of deep-water projects has been increasing rapidly, the number of floating production and storage and offloading vessels (ships that are used in the development of deep-water oil fields worldwide) is on a 57-vessel backlog (IMA, 2011). The trend in U.S. onshore and offshore rig counts (EIA, 2011c) is an indicator of activity. The number of onshore rigs has grown rapidly in response to drilling in the shale plays across the country. The total U.S. rig count is 2,008 units according to Baker Hughes (2012), with more than 98 percent of the rigs drilling onshore. Oil and Gas Market Trends and Projections The Oil Production Boom U.S. oil production peaked in 1970 at about 9.5 million bbl/day, when total imports were 1.4 million bbl/day. Total U.S. oil demand in 1970 was 10.9 million (EIA, 2011c). Prior to the embargo of 1973, U.S. oil production supplied about 87 percent of U.S. demand. Since then, U.S. and Canadian oil production has steadily declined. In 2008, U.S. production dropped to an all-time low of 5 million bbl/day, while demand was about 20 million bbl/day. Domestic production was about 25 percent of U.S. demand. According to Fowler (2011), BENTEK Energy anticipates a production turnaround, and U.S. oil production in areas including the West Texas Permian Basin, South Texas Eagle Ford Shale, and North Dakota Bakken Shale having an increase of slightly more than 2 million bbl/day from 2010 to 2016. Due mainly to improved technology associated with horizontal drilling in oil shale and unconventional reservoirs such as the Bakken formation, as well as improved oil-sands production in Alberta, Canada, oil production in the United States is expected to hit levels not seen since 1990, and production in Canada also is expected to be at an all-time high. Figure 2.1 shows the historical and expected future trends in U.S. and Canadian oil production. Projections from the EIA also indicate increases in domestic oil production through 2030 and domestic gas production through 2035 (see Table 2.3). The EIA projections for oil production are not as optimistic as the BENTEK Energy projections. Prepublication Version 

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26 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES   FIGURE 2.1 Historical and future U.S. and Canadian oil production. NOTES: Excludes natural gas liquids and other liquids. The decline in oil production that has been the norm for the last 40 years is expected to reverse as a result of production increases from the shale reservoirs and heavy-oil production. SOURCE: BENTEK Energy. TABLE 2.3 Domestic Oil and Gas Production (EIA Reference case) Annual Growth 2010-2035 2009 2010 2015 2020 2025 2030 2035 (%) Crude oil and lease 5.36 5.47 6.15 6.70 6.40 6.37 5.99 0.4 condensate (million bbl/day) Natural gas plant 1.91 2.07 2.56 2.91 3.01 3.05 3.01 1.5 liquids (million bbl/day) Dry natural gasa 20.58 21.58 23.65 25.09 26.28 26.94 27.93 1.0 (trillion ft3/year) a Marketed production (wet) minus extraction losses. SOURCES: EIA ( 2012a, Table A11, pp. 153-154; Table A13, pp. 157-158). The Bakken and Eagle Ford Shales With expected production increases, due mainly to unconventional projects, the demand for a qualified workforce is very strong. Two examples are the Bakken Shale and Eagle Ford Shale formations. The North Dakota Petroleum Council reported to the committee that it had conducted its own workforce study in 2010 and determined that 7,000-10,000 workers would be needed per year to develop the Bakken Shale formation in North Dakota alone. The Bakken Shale is located Prepublication Version 

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MATURE SECTORS 27 in northwestern North Dakota and northeastern Montana. The local Job Service North Dakota Web site2 listed more than 1,600 oil and gas jobs available at the time of writing and the North Dakota unemployment rate was under 3.2 percent when the U.S. national average was over 9 percent. Similar demand for workers extends into Montana and Canada (Ness, 2011). A similar story is being played out in the Eagle Ford Shale of South Texas, where large multinational companies have been acquiring acreage for the high liquid and gas yields expected from this reservoir. Depending on the depth of this formation (which in turn determines the maturation of the hydrocarbons found in it), the reservoir can produce either black oil, condensate, and/or gas. Wells that are entirely drilled as horizontal with multistage fracturings (“fracs”) have reported flows of more than 1,000 bbl/day, with the potential of accumulating 600,000 bbl over their lifetime. Other oil shale development projects similar to the Eagle Ford Shale (Fayettville, Niobrara, and Woodford Shale, and others) will take tens of years to develop, requiring a workforce that includes truck drivers, welders, and field workers as much as it does a petroleum geologist or engineer. Developing a pipeline of workers through education will be a key to ensuring that these workers are available in the future. The Boom in Natural Gas The shale gas plays3 that recently have come to the forefront have largely developed as a result of horizontal drilling and new fracturing (“fracking”) techniques. These technologies have unlocked more than 1,000 trillion cubic feet of potential new gas reserves. With the United States consuming approximately 24 trillion cubic feet per year, these gas volumes represent a long-term energy solution, provided the industry can overcome environmental and socioeconomic concerns about the extraction technology. The expected domestic production of huge amounts of natural gas will have a major impact on electricity generation, where currently 45 percent is generated by coal, 20.3 percent by nuclear energy, and 23.4 percent by natural gas. Producers are finding that natural gas in the $4-5 per million cubic feet range can be profitable and they are selling long-term contracts to the power generation industry. In some cases, companies such as Natural Fuels and Seneca Resources are becoming vertically integrated to take advantage of the synergy between upstream and downstream activities. With combined-cycle efficiencies that can reach 60 percent, coupled with a smaller CO2 footprint, natural gas will be used over the life of an expected 100+ years of reserves. The relatively low cost of gas will affect future power generation by all sources. The largest resources are in formations such as the Marcellus, Haynesville, Eagle Ford, and Utica shales.4 With production quickly ramping up, these reservoirs are expected to represent 49 percent of the total U.S. gas production by the year 2035 (EIA, 2012a). EIA projections for domestic gas production are shown in Table 2.3, above. Figure 2.2 offers an historical view of production by formation type and projections to 2035.                                                              2 http://www.jobsnd.com/.  3 A play is a set of oil and or gas accumulations in the same region that share similar geological and temporal properties.  4 A map of the potential U.S. shale gas basins is available at http://www.eia.gov/oil_gas/rpd/shale_gas.pdf.  Prepublication Version 

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28 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES   FIGURE 2.2 EIA historical and future production trends for gas by reservoir type. SOURCE: Newell (2010). Employer Needs and Challenges Oil and gas employment projections are limited. BLS projections for 2020 for the private sector are available for only a subset of oil and gas NAICS codes. The available projections are shown in Table B.14 in Appendix B, and they indicate that employment in the oil and gas extraction industry is expected to grow by 23,200 (an annual growth rate of 1.4 percent), from 158,900 in 2010 to 182,100 in 2020. EIA projections indicate that total employment in oil and gas extraction was 452,891 in 2010 and it is expected to rise to 459,032 in 2020, and then decline to 404,866 in 2030 and 383,205 in 2035 (EIA, 2011a; EIA projections are based on BLS data.) Table 2.3, above, projects oil production to rise through 2020 and then decline through 2035, and natural gas production to rise through 2035. The EIA employment projection for oil and gas extraction reflects the projection for oil production.  The Bakken and Eagle Ford shales noted above are only two of perhaps 10-20 other basins that will have productive shales. The shale projects will take decades to develop, requiring a diverse workforce of professionals and nonprofessionals. However, the industry is facing two challenges. The first is increasing international competition for workforce talent that is being drawn from the United States to high-paying jobs in a well-integrated international market. The second, larger challenge is the prospect of large numbers of worker retirements in the near term. The Aging Workforce The boom in oil and natural gas exploration and production has created a demand for workers and equipment that comes when a large portion of the existing workforce, professional and nonprofessional, is less than 5 years from retirement. Many of these workers are actually now at retirement age, but still remain employed because of an undersupply of experienced workers. Prepublication Version 

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MATURE SECTORS 29 U.S. Census data indicate that about 76 million baby boomers are poised to retire in great numbers by the end of the decade (see Figure 2.3). Baby boomers represent about a third of the nation’s workforce, and there are too few younger workers to replace them. Expected labor shortages in important industries will require a major reconsideration of recruitment, retention, work schedules, and retirement (Reeves, 2005). FIGURE 2.3 U.S. population distribution in 2010. SOURCE: Schill (2008). Reprinted with permission from Mark Schill, NewGeography.com. The oil and gas workforce reflects a similar age distribution and retirement issue (see Figure 2.5, below). According to the EIA, energy and commodity prices are expected to stay high well into the century (EIA, 2012d). Accordingly, demand for skilled and professional oil and gas workers at all levels is expected to continue to climb; however, the future source of the workers to replace the retiring population is still in question. Soon-to-retire boomers also are a large portion of the experienced technical and skilled workforce. A discussion with the U.S. Department of Energy (DOE) Fossil Energy Headquarters management team indicated that all of their technical staff is eligible for retirement. Other agencies within the federal government also are experiencing a similar situation, with a large gap between the younger workforce and older management. (The federal workforce is discussed in Chapter 5.) Reeves (2005) indicates that the number of U.S. workers aged 35 to 44—or those typically moving into upper management—declined by 19 percent in 2007, the number of workers aged 45 to 54 increased 21 percent, and the number of workers aged 55 to 64 increased 52 percent. The age demographics are not limited to the United States. Similar demographics exist for Germany, the United Kingdom, Italy, Japan, and China (Reeves, 2005). The Workforce Concern in the Earth and Engineering Sciences The discussion now focuses on the earth and engineering sciences, specifically, future workers with careers in geology, geophysics, petroleum and natural gas engineering, drilling, and Prepublication Version 

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30 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES   related fields associated with the oil and gas industry. According to the National Petroleum Council’s 2007 Global Oil and Gas Study (Raymond et al., 2007), the majority of the U.S. oil and gas workforce is eligible to retire in this decade and there are not enough prospective employees in the pipeline. Virtually every major technical society across the energy spectrum has conducted workforce studies, and they have expressed concerns about the aging petroleum workforce and the lack of qualified personnel. Figure 2.4 shows the dramatic effect of the U.S. E&P workforce that will be lost and the number of incoming graduates to replace them. As shown, the U.S. petroleum engineering workforce in place in 2000 will decline because of retirement and attrition, and the number of incoming graduates will be insufficient to fill the gap. FIGURE 2.4 U.S. petroleum engineering workforce. NOTE: Blue columns are the workforce in place as of 2000, red columns are cumulative new graduates, and the green curve is the projected workforce. SOURCE: Sampath and Robinson (2005, Exhibit 2, p. 3). The 2010-2011 annual American Association of Petroleum Geologist Salary Survey (Nation, 2011) indicates that groups in high demand are workers with 10-14 and 25-plus years of experience. Almost 44 percent of the survey respondents had more than 25 years of experience, indicating the magnitude of workforce aging. Another concern is that smaller and mid-size companies are reluctant to add entry-level staff because they cannot spare the mature geologists the time needed to mentor new geologists. This trend does not help prepare new, trained workers.   A similar aging trend for the petroleum engineering sector has been documented by the Society of Petroleum Engineers membership survey. It revealed that more than 30 percent of the members were 50 years of age or older.5 A global workforce study in 2008 indicated that nearly a third of the global petrotechnical workforce (about 40,000 workers) was 50 years of age or older and expected to retire in the following 5 years (SBC, 2008). These older workers are typically the most experienced, highly trained, and senior members of the workforce. A more recent analysis by Rousset et al. (2011) indicates similar trends. This article describes the transition that is now in progress for the global petrotechnical workforce. It notes that 25 percent of petrotechnical employees of E&P companies are older than 50 years of age                                                              5 SPE membership demographics are available online at http://www.spe.org/about/demographics.php.   Prepublication Version 

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76 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES FIGURE 2.27 Competency lattice. SOURCE: Courtesy of Leigh Freeman. This view of workforce development also demonstrates the time factor in expanding the U.S domestic workforce and in replacing the retiring baby boomers. It also presents a potential opportunity to identify unique workers at an earlier stage of development, enabling possible acceleration in filling gaps generated by retiring, highly skilled workers. The distribution of the workforce by industry subsector and levels of education and training has been compiled by a member of the committee (L. Freeman, Table 2.11) for comparison with the competency lattice. Prepublication Version 

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MATURE SECTORS 77 TABLE 2.11 Distribution of the Mining Workforce by Industry Subsector and Levels of Education and Training, Relative to the Competency Lattice. The first column contains the required education/training in years and the first row of data indicates the distribution of total jobs (in thousands) across the industry subsectors. Coal Metals Industrial Sand & Crushed Contractor Consultant Government Education Total Minerals Gravel Stone Support s Work- force Total 90 40 25 40 80 100 20 50 1 446 jobs/1000 Required Education/ Training (yrs) 8 1% 1% 1% 5% 5% 20% 4 6 4% 4% 4% 5% 5% 5% 30% 30% 40% 32 4 15% 15% 15% 10% 10% 10% 25% 25% 20% 58 2 25% 25% 25% 10% 10% 10% 15% 15% 10% 68 1 25% 25% 25% 20% 20% 20% 10% 10% 5% 88 0.5 20% 20% 20% 30% 30% 30% 5% 5% 2% 32 0.2 5% 5% 5% 10% 10% 10% 5% 5% 2% 32 0.1 4% 4% 4% 10% 10% 10% 4% 4% 1% 30 0 1% 1% 1% 5% 5% 5% 1% 1% 13 Total 100% 100% 100% 100% 100% 100% 100% 100% 100% NOTE: Total jobs data are from MSHA. For simplicity, levels of education and training are denominated in terms of time reflecting an approximate interval necessary to earn a degree or level of necessary competencies, which may be recognized by a formal certificate. Changes in required training/education levels: more complex equipment and automation will require higher levels of maintenance and operating skills. Increasing social complexity (social license and multicultural workforce) will require more training/education. SOURCE: Courtesy of Leigh Freeman. The way in which engineering and science professionals develop through their professional careers is illustrated in Figure 2.28. Some 70 percent of graduating mining engineers begin their careers in production-related jobs. Having established this practical base, they move on to fill other roles in the industry. For example, a mine safety inspector for the government would clearly gain invaluable skills with some previous work experience in mine production. Although this figure was developed for mining engineering, it serves as a conceptual proxy for the development process for other engineering and science professionals in the mining industry. Prepublication version 

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78 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES FIGURE 2.28 Progression of degreed professionals in the mining industry over time. SOURCE: Brandon (2012, Fig. 12, p. 15). Education While market responses may eventually cover some of the apparent gap between the short-term demand for workers and the supply of new hires, the time lag of market responses, the very large number of anticipated workforce openings, and the need for technology innovation entail larger commitments than the market alone is able to address and suggest the need for government engagement in the matter of professional training. (NRC, 2008a) An average of approximately 125 B.S. degrees in mining engineering has been awarded annually for the past 25 years from U.S. colleges and universities (Figure 2.29). SME estimates the sustaining B.S. graduation rate to be 300 to 350 per year. The number of accredited mining and mineral engineering programs has also declined, from 25 in 1982 to 14 in 2007 (SME, 2007, 2011).The number of faculty has also declined, from approximately 120 in 1984 to 70 in 2007. This translates into an average of 5 faculty at each of the 14 programs, each awarding 9 B.S. degrees per year. Relative to other engineering disciplines, these programs are small and may be more vulnerable to financial pressures experienced by universities. Furthermore, the major proportion of the current technological leadership in U.S. institutions of higher education is approaching retirement without an obvious source of qualified replacements. Prepublication Version 

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MATURE SECTORS 79 FIGURE 2.29 Number of mining engineer B.S. graduates from accredited U.S. programs (1974-2009). SOURCE; Brandon (2012, Fig. 15, p. 19). These statistics for mining engineers serve as a proxy for graduates of other mining- focused disciplines, such as mineral processing, extractive metallurgy, economic geology, exploration geophysics, and geochemistry for which statistics are not available. Demographics for these specialty disciplines appear to be similar to those of mining. Importantly, the majority of workers at a mine are in skilled trades and in production, where the training and education are not received at 4-year institutions. Community colleges and trade schools are important components of the overall development of a qualified workforce in the mining industry. The training at these and other institutions is addressed in more detail in Chapter 7. University faculty in mining engineering is also aging, and it is expected that a large number will be eligible to retire by or around 2020 (Poulton, 2012). Although these retirements are not mandatory, anticipated loss of at least some of these senior faculty members in the coming decade, combined with low doctorate production, may place some programs in danger of losing faculty positions. This situation at universities has been exacerbated to some degree by the relative absence of consistent federal research funding to support graduate programs at mining schools since the closure of the U.S. Bureau of Mines in 1995. However, the increased attention in recent years by Congress and federal agencies, such as the USGS and DOE, to the issue of critical minerals and materials has renewed interest in minerals issues. One example of this increased interest has been the establishment (January 2013) of a Critical Materials Energy Innovation Hub by the DOE.3 The Critical Materials Hub, led by Ames National Laboratory and a team of six university research partners, other national laboratories, and several industry partners, will have continued support for an initial period of 5 years to focus on mineral processing and material manufacturing and engineering issues. Although the Hub will not address the primary supply of minerals through mining research or the development of primary mineral resources at new or existing mines, the kind of partnership the Hub represents, supported by the federal government in partnership with industry and research institutions, is a constructive model to examine in the effort to renew U.S. expertise in minerals and mining, or earth resources engineering. A model for new centers for interdisciplinary research in earth resources engineering to address the research challenges in this field, to attract new students to these programs, and to develop the professional expertise that will be required by the mining industry, is described in more detail in Chapter 7. Global research in the minerals sector today is otherwise 3 http://www1.eere.energy.gov/manufacturing/rd/critical_materials_hub.html. Prepublication version 

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80 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES dominated by Australia and Canada. AMIRA4 and Mining Technology lead the way in Australia, and CMIC leads in Canada.5 Innovation Innovation in key areas of the process of mining and exploration could potentially enable a smaller workforce to provide a larger supply of minerals and metals (from domestic and global sources). Upstill and Hall (2006) looked at the pattern of innovation in the global minerals industry, including structure and drivers for change. These authors found that the global minerals industry ranks highest among all industry sectors in research and development expenditures. Specifically, they observed that conventional studies on research and development expenditures fail to include design activities and engineering development, continuous improvement by equipment manufacturers, and expenditures for mineral exploration. Four principal areas of innovation suggested by the authors include minerals exploration, mining/extraction, mineral/metal processing, and environmental innovations. These four innovation areas are viewed in concert with continued work in improvements in worker health and safety. An example of the effects of innovation on productivity is presented in Box 2.6. BOX 2.6 Impacts of Innovation Throughout most of the 20th century, the United States was the largest copper producer in the world. Chile is now the largest as a result of decades of exploitation of competitive-grade copper deposits. In the period between 1970 and 1985, U.S. copper output declined by nearly a third and its share of production from the western world dropped from 30 percent to 17 percent. This drop in production was accompanied by a 70 percent drop in employment. A revival in the U.S. copper industry was subsequently spurred by innovation, and by 1995, output was 72 percent above its 1985 level. The revival of the U.S. copper industry is attributed primarily to innovations in work productivity related to technological innovation at individual mines. This finding is significant because it suggests that changes in understanding the specific mineral endowment (deposit) was not as decisive as factors relating to the productivity of the workforce at the mine. One of the most important innovations was the technical development of the solvent extraction/electrowinning (SX/EW) process. The SX/EW process is oriented specifically toward the recovery of copper from low-grade ores such as waste piles of copper ore minerals that typically accumulate at a mine site. The implementation of this technical process resulted in a competitive advantage for historically important copper-producing companies and countries that had developed fairly substantial waste piles of previously unexploited and unrecoverable (from an economic viability standpoint) copper ore. In essence, waste rock associated with a century of mining was converted from a liability to an asset. This development allowed the United States to sustain domestic copper production in spite of the fact that many of the richest domestic deposits had been substantially depleted. From a public policy standpoint, Tilton (2003) suggests that such innovations shift the role of government from ensuring that society gets its fair share of the wealth created by mining . . . to creating an economic climate conducive to the innovative activities of firms and individuals. In short, public 4 Australian Mineral Industry Research Association. See www.amira.com.au/ Mining Technology, Australia. See http://www.miningtechnologyaustralia.com.au/lead-focus Canadian Mining Innovation Council. See http://www.cmic-ccim.org/en/about/cmic_about_us.asp 5 See Australian Mineral Industry Research Association, www.amira.com.au/; Mining Technology, Australia, http://www.miningtechnologyaustralia.com.au/lead-focus; Canadian Mining Innovation Council, http://www.cmic- ccim.org/en/about/cmic_about_us.asp. Prepublication Version 

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MATURE SECTORS 81 policy focuses more on how to increase benefits flowing from mining and less on how to divide them. (Tilton, 2003) SOURCE: Tilton (2003). Impediments to innovation are borne across industry, government, and academia— investment in research (both government and industry), decrease in the capacity of universities to conduct research in these areas, and a tendency to focus on short-term profit margins rather than long-term investments in research and their benefits. An important recommendation from the NRC (2008a) report on critical minerals suggests that a very important role can be played by federal agencies—including the National Science Foundation, Department of the Interior (including the USGS), Department of Defense, DOE, and Department of Commerce—to develop and fund activities that would encourage innovation related to critical minerals and materials and increase the understanding of global mineral availability and use. The report notes that, absent such federal efforts, the nation may not be able to anticipate and react to potential restrictions in the mineral markets. Public Policy and Regulation A stable, competent, innovative workforce is the foundation of secure access to strategic resources. Borrowing from a well-established Australian vision advocating policy as it relates workforce: A productive workforce needs to be a skilled workforce. The Minerals Council of Australia (MCA) advocates building an uninterrupted, sustainable education and training pathway to increase workforce participation, workforce diversity and workforce skills, regardless of the business cycle in the industry. The MCA is developing and implementing national strategies to ensure the adequate supply of skills to the industry and to increase minerals industry labour productivity by: Advocating public policy and institutional capacity building for improved delivery in the tertiary education sector – both the university sector and the vocational education and training sector (VET) – in minerals industry related areas (MCA, 2012, p. 3) An early example of the recognition of policy to support minerals supply was the formation of Land Grant Colleges in 1862 to provide sustaining financial support for the development of talent and research in applied sciences and engineering (Morill Act of 18626), and the Mining Law of 18727 to facilitate access to federal lands for mineral extraction. The effectiveness of these monumental policies to support the domestic minerals industry as a foundation for the growing U.S. economy has eroded over many decades, while the importance of a stable mineral supply to the U.S. economy and national security has remained. This erosion occurs, while today, some of the most populous countries in the world with emerging economies institute policies to secure mineral resources. Their goals are consistent U.S. efforts of the late 1800s and early 1900s, although their policies vary substantially. Global change in minerals policy by large emerging economies has put the supply of critical minerals to the United States at risk. See the following discussion on rare earth elements (Box 2.7) as an example. The influence of politics and policy on mineral availability ranges from the regulatory regime in a given country to global geopolitics, global trade, and diplomacy (Box 2.7). 6 http://memory.loc.gov/ll/llsl/012/0500/05350503.tif 7 http://memory.loc.gov/ll/llsl/017/0100/01330091.tif Prepublication version 

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82 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES BOX 2.7 Renewed Interest in Development of Domestic Deposits of Rare Earth Elements: The Influence of Export Restrictions from China The United States has relied essentially on imports to meet its needs for rare earth elements (REEs) since the mid-1990s. REEs have widespread applications for advanced technologies and renewable energy. It is reported that China has 37 percent of the world’s REE deposits, but it has provided 97 percent of the world supply until recently. Because of the low pricing of REEs from China, the costs to pursue the process of permitting a new REE mine in the United States had been difficult to overcome (Brandon, 2012; additional background information on China’s REE industry and its implications is provided by Hurst, 2010.) In mid-2011, China placed major restrictions on the export of REEs, which spurred more widespread interest in identifying and developing U.S. REE resources. For example, Molycorp, Inc. reopened the Mountain Pass REE mine in California in 2011 (Brandon, 2012). However, new REE deposits will potentially take years to identify and develop. Conclusions and Recommendations Conclusions 2.15 Using BLS data, the total employment for nonfuel mining is estimated to be about 128,000, and about 89, 300 for coal mining (totaling about 217,300). MSHA data show total employment for nonfuel mining to be about 225,600, and about 135,500 for coal mining (totaling roughly 361,100). (The BLS data undercount employment, largely because of limitations associated with the NAICS taxonomy that result in the undercounting of contractor employment.) 2.16 Employment projections are limited. BLS projections for private-sector employment for the NAICS codes of metal ore mining and nonmetallic mineral mining and quarrying indicate a net increase of 3,300 jobs by 2020. BLS projections also indicate that private-sector employment in the coal mining industry (excluding support activities) is expected to decrease modestly by 2020. 2.17 Other projections estimate the total number of U.S. coal miners will be about 92,300 in 2020 and about 112,500 in 2030, and the EIA projects that total employment in coal mining could be about 86,500 in 2020, 115,700 in 2030, and 128,600 in 2035. 2.18 Natural resources remain a critical component of the U.S. economy. 2.19 The various stakeholders have diverse, sometimes conflicting, interests:  Governments seek security of resource supplies and employment for citizens.  Government agencies conduct permitting and regulation oversight functions that must balance economic, environmental, and social imperatives, especially in developed economies.  The workforce seeks employment, but with an increasing sense of balance with social/family components, especially in developed countries.  The mining industry seeks growth and profitability, employing and distributing its financial and technical capital in risk/reward environments it deems prudent.  Universities support departments that can generate substantial grant money and other sources of funding, and that can attract high-quality students. Prepublication Version 

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MATURE SECTORS 83 2.20 Increased global demand for resources has created a shortage of many minerals and metals, as evidenced by a step-change in prices. 2.21 A talent crisis for professionals and workers is pending, and already exists for faculty, driven by two main factors—an aging workforce and international competition for talent. Both will precipitate fundamental changes in the cost of talent at all skill and education levels, but particularly for those positions requiring the most highly trained or educated practitioners. 2.22 Innovation in the mining business, broadly including the technology, science, and social domains, will be necessary to minimize the negative impacts of increased global demand for many minerals and metals, an aging workforce, and a pending talent shortage. This applies equally to industry, government, and educational institutions. 2.23 Significant stakeholders, including industry participants, academic institutions, and the government, could focus attention on issues relating to the discovery, cost, and supply of minerals and metals, and create an atmosphere of enthusiasm, stirring creativity. Such an effort could result in a renewed focus and interest in the industry, spurring increased enrollments in mining and geology departments at universities. 2.24 Shifting domestic U.S. demographics alone are expected to create a workforce shortage that is unlikely to be offset by increasing efficiencies. Australia, with similar trends as the U.S., offers strong evidence for an emerging shortage here. 2.25 Mining is important. Mining jobs are regionally distributed, generally well paying, and available across the full spectrum of job skills and educational requirements. Mining products form the foundation of the economy and add significantly to the GDP, and many are critical for national security. Information provided by the federal government, and particularly the USGS, for the collection, summary, and analysis of data and information related to mining in the U.S. economy, including commodity availability, production costs, and the supply of important and critical minerals through the full mining cycle are important to understanding the evolution of minerals and mining. Such data and information are also critical to the analysis of mining jobs and the mining workforce. Although federal offices are applying their resources to collect and analyze reliable mineral data and information, the complexity of the global mineral market and the speed with which minerals, mining, and mineral products evolve are expected to require the collection and provision of increasing amounts and types of data with greater speed. The positive effects of this kind of enhanced information could be envisioned, for example, with respect to the way in which BLS classifies mining jobs. Currently, BLS does not use classification codes that allow a nuanced description of mining jobs that accurately reflects the variations in and evolution of the mining industry that might otherwise be informed by a more detailed federal analysis of the complex global character of minerals, mining, and mineral products. Collection and provision of the summary kinds of detailed, reliable information noted above could most effectively be envisioned as being derived from a central federal source, such as the USGS, which has an established history of this kind of data collection. Such a federal entity would be a valuable BLS collaborator, serving as a source of comprehensive mining data and information that could assist the BLS in defining and updating classification codes and in informing BLS data collection, analysis, and projection efforts. Prepublication version 

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84 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES Recommendations Some issues are critical and acute, requiring immediate solutions. Industry is most capable of a quick response by providing financial and leadership support to address short-term solutions until government and educational institutions are aligned to address medium- and long- term solutions. (Short term is defined as 2 years or less, medium term as 2-5 years, and long term as more than 5 years.) 2.5 The committee recommends that industry leadership consider that they could be facilitated by a fact-collecting and advisory entity (nonlobbying) composed of leadership from all extractive sectors, including metals, coal, industrial minerals, aggregates, and also possibly relevant governmental and educational institutions. Ideally, this entity would have an international perspective as well. (Short Term) 2.6 Such an entity could also help in the development of industrywide competency models, facilitating better alignment of educational and training programs with industry needs. (Medium Term) With respect to higher education for “professions at risk,” including mining engineering, extractive metallurgy, and economic geology (including geochemistry and mining geophysics), the teaching faculty for mining in the United States is insufficient to meet current and future needs. The system to replace these critical faculty is unsustainable and in need of major change. 2.7 Industry should consider providing financial and leadership support to sustain a critical teaching capacity until medium- and long-term solutions can be developed and implemented. (Short Term) A holistic view of the workforce across all extractive industries in the context of competencies clearly indicates that the majority of workforce issues are served by a similarly educated and trained workforce, with STEM education as a foundation. With few exceptions, the training and educational capacity can be adapted to the changing needs of the extractive industries and government. 2.8 The committee recommends that industry and educators develop metrics and track training and education capacity at all levels to simply develop a comprehensive and talented workforce in the context of a “competency lattice.” (Short Term) 2.9 Industry and educators should work together to develop a workforce capable of supporting the minerals sectors to serve the entire U.S. economy, including addressing all anticipated scenarios. (Medium and Long Term) In addition to these recommendations, the Shared Recommendations for Chapter 2 (below) also apply for the mining industry. Prepublication Version 

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MATURE SECTORS 85 SHARED RECOMMENDATIONS FOR CHAPTER 2 The following recommendations apply across the mature industries in this chapter, and they address a range of actions that are complementary. As noted in Chapter 3, they also apply across the emerging industries in that chapter. These “shared” recommendations are more general than the industry-specific recommendations presented in the various industry sections of the chapter because they can be applied across all of these industries. They also indicate that these industries share many common issues and basic solutions. All of the Shared Recommendations should be initiated as soon as possible, and they are ordered and labeled in terms of when they would be expected to become fully operational. All are expected to continue for the long term. Short term is defined as 2 years or less, medium term as 2-5 years, and long term as more than 5 years. Shared Recommendation 1: To address the growing demand for trained workers, industry, potentially with government support, should take an active part in developing the workforce of the future by working closely with educational institutions at all levels. Active involvement could include, but would not be limited to, developing a curriculum that trains individuals to be “job ready” upon completion of their certification or degree. This effort would benefit from being a national initiative and having a local/community focus. In pursuing this initiative, it would be important to consider, encourage, and emulate existing educational success stories, such as the programs supported by the National Science Foundation at community colleges, and the Truckee Meadows Community College program. The other educational success stories noted in Chapter 2 that are focusing on minority outreach also would be instructive for this broader initiative. (Short Term) Shared Recommendation 2: To ensure that there are enough faculty now and in the pipeline, who are qualified to work and teach at the cutting edge of technology, the committee recommends that the government and industry consider entering into partnership to provide joint support for research programs at U.S. universities, with the goal of attracting and better preparing students and faculty, promoting innovation, and helping to ensure the relevance of university programs. (Short Term) Shared Recommendation 3: The committee recommends that the industrial parties who are working with educational institutions on workforce education and training, along with the Department of Education, urge educators to encourage students to seek STEM disciplines, and to consider realigning education in the K-12 curriculum to emphasize STEM education, with existing and future educators being better trained in STEM disciplines. (Short Term) Shared Recommendation 4: To provide a needed enhancement of the workforce, the committee recommends that industry and educators pursue efforts to attract nontraditional workers (who predominantly are minorities and women) into the energy and mining fields. This initiative would benefit from being a broad, national initiative and having a local/community focus. In pursuing this initiative, it would be important to consider, encourage, and emulate existing educational success stories, such as those with a focus on minority outreach (noted in Chapter 2). (Medium Term) Prepublication version 

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86 EMERGING WORKFORCE TRENDS IN THE U.S. ENERGY AND MINING INDUSTRIES Shared Recommendation 5: Industry and educators should also pursue efforts to attract more of the traditional workforce into the energy and mining fields. This initiative also would benefit from being a national initiative and having a local/community focus. Educational success stories, such as those highlighted in this report, could also offer insights for this initiative. (Medium Term) Prepublication Version