Drilling technology
An energy CEO says despite automation, rig crews are finding lots of work.
With advanced drilling rigs and fracking equipment, Patterson-UTI and its rivals are at the center of another oil boom this year, hiring 4,000 new workers in places like West Texas and Oklahoma to meet rising oil field demand. Still, most oil field services companies, especially smaller ones that lack nationwide recruiting operations, have struggled to hire workers fast enough to keep pace with high demand, particularly in the hydraulic fracturing business.
Hendricks recently spoke about the drilling boom and the constraints the oil industry faces rebuilding its operations after a two-year energy bust. Edited excerpts:
Q: We’ve seen oil prices drop recently. Will the industry slow the growth in drilling activity we’ve seen this year?
A: It was really the trigger of oil prices moving above $50 a barrel last summer that started pushing the rig count up again. Some oil companies may pause. We’ve seen some pullback a couple of times, but what we’ve seen from operators is, if you’ve already made plans, those plans will continue even with a pullback in oil prices.
Q: What kind of constraints have the oil field service sector faced in ramping up operations this year?
A: The majority of those companies couldn’t afford the maintenance on their own equipment, so they were pulling a part off a pump to keep the fleet active. So here we are in 2017, and all those companies are now having to find cash to rebuild that equipment. They’re finding a whole other level of constraint than we are.
Q: What about hiring workers?
A: If you’re a local West Texas company trying to hire people, there’s nobody to hire. In our case, we work across multiple states, and we have a national recruiting campaign. The flood of activity pulls people in from other parts of the state and from out of state. Unless you’re a company of our size, you’re going to have challenges getting people.
Q: How has that affected the oil patch?
A: The number of drilled but uncompleted wells is going up in West Texas. It’s easier to drill wells quickly, but now you’re finding a shortage of frac labor. From 2014 to 2016, you saw an improvement in the time it takes to drill and produce wells in the United States. You’ve seen that flatten out over the last year. The rigs aren’t less efficient. But on the macro level, there are twice as many companies operating at least one rig. Not all are as efficient.
Q: How did Patterson-UTI deal with that during the downturn?
A: When we had to start laying down rigs, we had a very structured process. We lost some of the newer people to the industry and kept the senior people, and we started distributing that experience around the company. When we started hiring people back, 90 percent of the returning people were former Patterson employees. Now we’re down to about 70 percent, which means we’re bringing new people into the industry right now.