Talent exodus hits Canadian, U.S. oilpatches

Lack of skilled workers proving risk to growth

For more than a year, Kristopher Guidry criss-crossed the Texas oilpatch, fixing up electrical equipment on drilling rigs. Today, he’s studying to become a home appraiser. Abhinav Mishra was an oil engineer in some of the same fields. In January, he started an internship in Silicon Valley. And Andrew Crum, who ran digital operations for fracking outfits, headed to Kansas City, Mo., where he joined Walmart Inc.’s supply-chain management team.

All three men say they’ve probably left the industry for good.

After three oil busts in the past seven years alone, they’re fed up with the stomach-churning volatility of it all. The boom years may be wonderful, but the trips to the unemployment line that follow are devastating. Besides, some workers say, the industry is on the decline now as the government and Corporate America pivot to a greener future. Who wants to be part of a dying business?

“I would have to be pretty desperate to consider going back,” said Crum, who had followed three earlier generations of his family into the oilfields.

Of all the labour shortages that are wreaking havoc on the U.S. economy — from cashiers to chefs — few are as thorny or potentially as permanent as the one that has a grip on the oil sector. Thousands of roughnecks and engineers are, like Guidry, Mishra and Crum, wary of returning to jobs like the ones they lost when the pandemic sent the price of crude oil crashing last year.

It doesn’t help that oil producers, trying to display a new-found financial discipline to their frustrated Wall Street backers, are hesitant to offer the signing bonuses and double-digit pay hikes that have become commonplace in other industries. Average pay in the Permian shale basin of West Texas and New Mexico remains below PRE-COVID levels. All of which, analysts say, could add up to a cap on production in the Permian and other shale formations that collectively pump out more than two-thirds of all U.S. oil. Drillers may be promising to avoid rushing back into expansion mode — as part of that same pledge to Wall Street — but the lack of workers frankly gives them no choice. “If reported labour shortages continue, it would be impossible to grow production,” said Elisabeth Murphy, an analyst at research firm ESAI Energy.

Spending in the oil basins of the U.S. and Canada will drop seven per cent in 2021 from a year earlier, according to Evercore ISI, even though crude prices have surged by more than a third this year to trade above US$65 a barrel. That’s after U.S. oilfield service workers lost an estimated US$8.7 billion in annual wages to COVID-19, according to the Energy Workforce & Technology Council trade group.

“I am just waiting on better offers at the moment,” said Tremayne Tryels, who has worked in the Permian since oil prices were US$100 a barrel in 2014. Though Tryels has held jobs ranging from roustabout — an all-purpose oilfield maintenance worker — to chemical specialist, “most of the salary offers for jobs are way too low for someone that has the experience level I have.”

While oilfield pay is growing at about three per cent month-over-month, the median salary for a roustabout remains roughly 10-per-cent below PRECOVID levels, according to energy data and consulting firm Enverus.

Canadian rig contractor Precision Drilling Corp. estimates it managed to recruit roughly half of the 1,000 or so former workers on its callback list, a drop from previous recoveries when it could rehire as many as two-thirds.

“They found jobs that have a more stable lifestyle,” said Kevin Neveu, Precision’s chief executive. “I really can’t recall a period where it was this tricky and this challenging to attract people to the industry.”

Chris Wright, CEO of Liberty Oilfield Services Inc., has encountered similar hiring challenges. America’s second-biggest provider of frack work has amassed a larger army of recruiters to fill open posts.

“We laid off about a thousand people last year in April,” he said. “We’ve hired back maybe two-thirds of those people. And I would say the other third have left the industry.”