Transition – From Corporate Engineer to Independent Practitioner
Authors: LaRoche William E. 
Published: December 2007

As I mulled over the subject of this presentation, it seemed to me that what I could offer was pretty everyday stuff compared with the hardcore technology of the usual SPE program. But it also occurred to me that in this boom time for our profession, when some 10,000 engineers change jobs in a year, some soft information gained the hard way might in the long run be as useful to some of you as the more sophisticated findings.

We are fortunate indeed to be petroleum engineers. The profession has not always been so attractive. A comparison of the number of ads for independent engineers in the Journal of Petroleum during the late 1950's with the number in the current issue shows we are in great demand. But do not be lulled into thinking it will always be this way. I remember Jean Paul Getty predicted a few years before his death that there would be an oversupply of crude oil in the world. Few of us agreed with him. To the contrary, we felt the supply would only become shorter. OPEC certainly did not believe him. I mention this only to stress the importance that we build on a broad base and prepare ourselves for the cyclic nature of supply and demand that seems to be inevitable.

Let me say this at the outset: I believe firmly that there is no substitute for sound experience, and sound experience is best obtained through prolonged work with a well managed company. Many engineers I have known change jobs so often that they are never able to accumulate the invaluable experience to be gained from progressive moves or promotions within a company. Moreover, they are never able to accrue the vested interest in pension or profit-sharing plans that can be indispensable in giving the engineer the financial freedom to become independent.

I was 50 years old when I became independent. I had Invested ten of those years in a major oil company and twenty of them in a large consulting firm. My greatest comfort is the substantial tax-sheltered IRA (Individual Retirment Account) that I had accumulated In those years. Certainly, I am not advocating you wait till you are 50 before you go out on your own. Only give yourself time to stockpile plenty of experience--at someone else's expense, I might add. And to stockpile some financial security--a considerable amount of it.

The Fundamental Questions

I cannot stress too stongly the need to plan your venture carefully and to consider the following questions: Can you be assured of several good clients? If not, wait until you have established something of a following and are certain your services are needed. Develop a relationship with one or more successful independent consultants who need your particular capabilities and can use your services from time to time. Fall-out jobs can help pay the rent.Do you understand clearly where your strengths lie? Whether you are going to specialize in production, drilling, evaluation, reservoir engineering, secondary recovery, investment counseling, or any other facet of the industry, limit your operations to the fields you know best. A good reputation takes time and effort to build; overreach once, and all that building can come to nothing. I have found it advantageous to have working arrangements with other independent engineers whom I greatly respect and who have expertise in areas where I am inexperienced. Such relationships allow a great deal more latitude in the size and scope of assignment an engineer can accept.Is your temperament suited to independent work? Visit with an engineer in private practice and find out what his day is like. A colleague of mine recently gave up what appeared to be a successful private career to take an executive position with a large independent oil company. It was his wife who volunteered to me that he had been lonely and that he missed being a member of "the team".Do you have the ability to discipline yourself? Being on your own means there is no one telling you when and where and how. Think about that. And if things go well and the clients begin covering you up with commissions, remind yourself that one reason you left Colossal Conglomerate was to spend more time with Mary and the kids.Could you sustain yourself and your dependents for at least six months on the money you have laid aside? Remember that even if you get generous commissions immediately, there will be expenses you never dreamed of, and payment for your services may be slow.If you plan to form a partnership with another engineer or geologist, are you certain you have a very clear understanding of your objectives? Such a relationship must be entered into slowly and with great care. Talk to others who have had successful partnerships and try to determine what makes them so. I have seen the closest friendships end in bitter resentment. I have watched partnerships that appear perfectly compatible collapse in less than a year.Do you have ample and comprehensive insurance? Health and life insurance are mandatory for all of us--at any age--in this time of runaway inflation. Without proper insurance an engineer's financial stability is in jeopardy. If an individual has had any sort of medical problem, insurance companies are disconcertingly reluctant to take him on. This is true even of the group plan offered through SPE. You should apply for and get confirmation of a good insurance program before you become independent. Remember, there won't be a big company umbrella to duck under if you become disabled, however briefly. The cost of hospitalization, life insurance, and disability insurance is a major expense item for the self-employed.