The Merits of Working for A Major Company Versus The Merits of Working for An Independent Company
The subject of this article is quite controversial. The arguments can get very strong on either side. I do not propose to advise you to work only for a major or for an independent company. That decision is up to you. Some of you should work in major companies, others should eventually work for independents, and still others should work for yourself and own your own company. It is up to the individuals to his desire according to his capacities. My purpose is to cause you consider the question, "What do I want for me? That do I propose to do with my life?
Let’s start with your present position now. I believe, you will find that your degree in Petroleum Engineering will serve you well. You will find that the training you have received is well rounded and will help you in many fields. You should ask yourself at this time, "What is my experience and what is my worth to a major company or to an independent." Probably most of you have not had very much experience and you will find that before you are of much worth to any company, it will be necessary for you to do a great deal of learning about a lot of things and not just engineering.
Major companies which have training programs offer wonderful opportunities for young engineers just starting their first work. Some major companies will assign you various training jobs and will move you from one training to another periodically then they will place you in a particular type of job where you and the company feel you are best suited. Your initial employment as an engineer trainee in a training program may be a tank gauger, production clerk, lab assistant, or even a mud logging unit operator. It is very important that you get experience in the field as early as you can. It is very important that you get at least three or four years good field experience, because this is basic to your later success. Even reservoir engineers should have field experience prior to the time they begin their reservoir work.
After you finish the training program with a major company, you will find that major companies have engineers for almost every purpose. They have drilling engineers, production engineers, safety engineers, administrative engineers, cost engineers, marine engineers, engineers in reservoir work, evaluation, unitization, corrosion, research and equipment. After your training, you might be assigned in one of these categories. Major companies try to move their engineers from one category to the other to give them a rounded training; however, some major companies try to develop engineers in a particular specialty. You may become a specialist in drilling and know very little of production work. You may become a specialist in reservoir engineering knowing little about drilling, and that may be all right with you. Most major companies do, however, try to develop their engineers by frequently transferring them from one geographic location to another where they are in contact with all phases of both drilling and production. Engineers who work in a large office or research center tend to become specialized in a particular field.
If you want to consider working for an independent oil company, it is necessary for you to have some experience in order to be worth to the independent. Very few of the small independent oil companies have any training program. When you are employed, they will expect you to be able to immediately accomplish a particular job with a minimum of instruction. You must be prepared to do most any job assigned to you at any time. You may have to design a string of casing and then go to the field and run it. You may design production equipment in the office and then go to the field and supervise its installation. Then you may have to work certain reserve figures when you come back to the office on the next day. You may have to do some geology, some utilization work, and administrative paper work. This experience is good and can make you a well-rounded and valuable man to the company. You must try to decide "What type of engineer do I want to be". There is nothing wrong with being a specialist who works in the office, who works details and works regular hours. There is also nothing wrong with being a field man capable of solving either drilling or production problems. It is up to the individual as to what he wants to do.
You will be interested in a comparison of the advancement which you may expect in a major company versus advancement with an independent. Major companies are very large. Assume that your college or university is a large corporation of approximately 8,000 employees. There is a department in each building. Accounting, Legal, Geology, Engineering, Production, Research, Personnel, and so forth. If you are successful in working your way up through your department, then you will find that you are in competition with all the other department heads who also have advanced. The entire executive staff of this theoretical corporation may be only 100 or 200 men. You will find that there is much competition from qualified men for the better jobs. Major company advancement is usually slow, but it is fairly regular, especially in the early years. There are just so many jobs in the upper levels, when you reach a certain level you may have to be satisfied with a job which is less than you feel that you are actually qualified to fulfill, then you must accept that fact or become unhappy. Many people quit major companies at this stage and seek other jobs. As you will see later on, it may or may not be the right thing to do. It might be best for a particular individual to accept his acquired station and be happy with it. But above all, you must be happy in your work in order to be successful. You should feel a sense of accomplishment or probably you are not in the right job.
Advancement with an independent can be very fast, or can be almost not at all, depending upon the independent and upon your ability. You do have a better opportunity to show your worth. You probably will know most of the people in the company, including the owner or the president. If you show that you can produce, you usually get recognition, but some independents hire you just to work and are not concerned with your future. You have to pick your independent very carefully and analyze what he offers for your future. Independents do not have much turnover in personnel, consequently, you do not have as many advancement opportunities. Some independents may hire an engineer from outside to serve over you. This does not usually happen in a major company as they tend to advance their employees up the ranks. But, if you are a good, well-rounded man with enough experience to manage the business, you can be the man that is hired by another independent to do a management job. Advancement often comes in this manner by accepting a better job in another independent.
Probably you have heard a great deal about the benefit programs offered by the major companies.
Here are the actual benefit programs of two major companies:
Corporation No. 1
?Insure annuity plan for retirement. Contributions are made by the employee and also by the company toward employee retirement. For an employee who makes $450 per month, the employee will contribute $2.78 per month towards his retirement. This annuity program alone will allow him to retire at the age of 55 with a nominal annual income. He is interested in retiring at age 55.
Thrift or Saving Plan. This plan has been instituted to encourage and assist employees in a regular savings program. The employee sets aside from 2 to 8% of his salary each month and the company matches it dollar for dollar. Funds so contributed by an employee and employer are placed in a trust and the fund belongs to the employees. The trustee invests the funds for the employee or he can direct the investment. Funds may be withdrawn in ten years or remain in the program. If one averages only $630 per month for the first ten years of his employment, and regularly put 8$ of monthly salary into this saving plans, he will have a sum in excess of $12,500 in his account at the end of 10 years.
Life Insurance Plan. The group life insurance plan furnishes low cost life insurance to employees.
The first $2,000 of the insurance policy is totally paid for by the company.
Comprehensive Medical Expense Plan - Hospitalization and Accident Policy?
The company plan pays 100% of hospitalization expenses and 80% of doctor fees up to $10,000 for one disability. The company pays a substantial part of the expense for this plan. For individual coverage, the employee contributes $2.25 per month or he can obtain coverage for his whole family for $7.5 per month.
All benefit plans are not as good as this one; it is probably the best plan offered by any major company.
Corporation No. 2
This corporation has a hospitalization and disability benefit plan, a saving plan, a retirement income plan and a death insurance plan. Toward retirement, the employee contributes each month approximately 5 to 10% of his monthly salary and the company makes a contribution. In the saving plan, he contributes 2 to 10% of his monthly salary and the company contribute 1 to 3%. Saving are invested for the employee. The retirement program is designed so that when one has worked with the company for 35 years and is 65 years of age, he will retire and receive each month about 50% of his final pay rate.
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These plans are not to be taken lightly, but should not consider benefits alone. These plans are of value, and are a means of acquiring a good size retirement estate even if you do not ever rise to a high- level job. They are one reason you must consider carefully before you quit a major company. These benefits are hard to let loose of. Some major company may not allow you to keep their contributions if you quit in less than 5 to 10 years. For such a company, if you do quit after 10 years employment, it could cost you as much as $10,000 in cash in lost company contributions.
Independent's Benefits
? Many large independents have some sort of a retirement plan, group hospitalization plans, and group insurance plans, but few have savings programs. An independent company's benefit plans cannot approach the benefit plans offered by the major companies. They do not have the same amount of money to invest in their employees. But an independent may allow a trusted and valuable employee to participate in royalty, or participate in the company's drilling and production ventures. If the company discovers production, the employee may make a great deal of money, but if it does not, he may lose money. To gain one-half of 1% ownership in a gas field with $60 million dollars in reserves is worth $300,000, but the risk is very high. Usually venture participation is offered only to long time and higher-level employees in an independent company. Generally, if you work for an independent, it is up to you to plan your own future estate and do your own investing. Major companies will not allow you to own any royalty in oil or gas or to participate in drilling ventures.
Really, your starting salary for the first three years is not important as long as you make a reasonable living. The important thing in the first three to five years is that you learn. The graduates should work for an active company. He should get all of the experience that he can get and not complain as long as he learns. If a company is not active, one cannot get experience. If a company is busy, one can sometimes get the equivalent of two years experience in one year. It is hard and long, but it is essential. You can stand the physical strain of 12 to 14 hour days in the early years. There will be nights when some of you will be on a rig floor feeling so fatigued that you will be numb. You will curse the day you ever heard of petroleum engineering and will wish that you had studied to be a dentist. But the early years may be the only opportunity that you will ever have to get basic experience. Later when you are in a city office and talking to the field by telephone about a particular problem, you will know exactly what is going on at the field end of the telephone and can make better decisions because of that knowledge.
Salaries increases with major companies are little like promotions. They are smaller, but they come with fairly certain regularity. Major companies even give across the board cost of living increases. This is not so with most independent companies. Independents are more reluctant to give regular salary increases, but they usually pay higher salaries.
The subject of bosses can be a real problem - more than you realize. I have been convinced at times that certain bosses just had it in for me personally, and it really was not true. Being a boss is not easy as some of you will learn. The rule to follow regardless of how you feel is, “I will do the best that I can at all times and then I don't have to look back or apologize to anyone". You should get along with. Personal relations is one of the toughest problems you will ever face. In major companies and in independents you will find the practical field man does not like an engineer—much less a young one. Win him over; help him; do his paper work for him; get his confidence. Realize that some day you may be his boss, if you can help him when you are working for him, if he ever works for you, you have a friend. You will not have much difficulty with most management bosses in a major company. You will get along fine if you do your job. But in an independent, should you get a management boss who is a particularly objectional and inconsiderate person, it can be almost intolerable. Your best course is to always do the best that you can.
One of the biggest complaints of a major company engineer is that he can expect to be transferred from one city to another every two to four years. A transfer in job and location is one way in which a major company places you in a better job and exposes you to different operating problems. Of course, being transferred is hard on you, your wife, and your children. Most family men look forward to home ownership which sometimes can be difficult while working for a major oil company. Some people have said the surest way to be transferred is to buy a home. Transfers are frequent during the early employment years with a major company, but more permanency is acquired after 10 to 15 years of employment.
Although transfers occur within independent oil companies, a much greater degree of permanency is usually assured. If you have permanency, you call start paying off the mortgage on your own house. A home is a good investment, as well as a great deal of pleasure.
During the past years, one of the primary selling points for major companies has been job security. Generally, both major companies and independents have attempted to make their employees feel secure in their employment status. Since major companies usually have more money available, during times of economic stress, they are able to retain most of their employees. At such times, an independent company may have to reduce the employment force. Many people will tell you now that they have little confidence in the security of employment by major companies. Approximately two years ago, many major companies instituted full scale force reduction of employees. At that time, it was common to define an optimist as a major company geologist who took his lunch to work. Most major companies drastically reduced both their employee reduction problem by retiring men at earlier ages, but still many younger employees were laid off.
During the last few years, a rash of mergers and purchases of companies have occurred. Major companies have merged with other major companies and major companies have purchased independent companies. For this reason, major company security of employment may not be applicable at the present time. Major companies still do; however, offer a greater degree of job security than many independents. But, I would like to encourage you not to settle for security alone at an early age. Many opportunities are available to you other than working just for a major or independent oil company. The gas industry has enjoyed a vast growth. There are equipment companies, drilling contractors, electric logging firms, well treating firms, cementing companies, and other allied industries which offer excellent opportunities for a petroleum engineer.
What you do with your future is squarely up to you. I am a firm believer in the saying that a man can do almost anything that he wants to do if he really wants to do it. Whether you go to work for a major oil company or an independent oil company, let me encourage you to exhibit two characteristics which are more important than your qualifications as an engineer. Use initiative and be dependable, and do not forget to have faith in yourself and a faith in God.
Winston Glenn Smith
Chief Engineer Austral Oil Company I ncorporated
Houston, Texas SPE-374 – As presented to the student chapters, Society of Petroleum Engineers, A.I.M.E at Texas A&M
College and the University of Houston
Senior Reservoir Engineer at JX Nippon Oil & Gas Exploration Co
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