Black gold and worker blues
Massive layoffs after bust may have scared off some talent seeking job security
As Permian pipes come back, talented laborers are wary after
Ryan Byrd worked five years in oil fields from China to West Texas. But after the worst price rout in a generation left him jobless, he’s not ready to jump back into the mix.
Now working at a jail in Huntsville, the 33-year-old Byrd is happy to have a job that won’t disappear under him. His advice to others looking to the oil patch for fat checks: “Just be prepared to one day wake up, go to work and find that the job is not there.”
Welcome to the next big Permian Basin bottleneck. A pipeline shortage slowed output this year, leading to a record 3,722 drilled-butnever-opened wells. But three major conduits set to open in 2019 are expected to solve that. The newest snag: Finding hundreds of workers over the next 18 months to open those wells, at a time when the firing of 440,000 workers between 2014 and 2016 remains a fresh and painful memory.
“It’s a huge concern for 2019,” said James Wicklund, a Credit Suisse Group AG analyst in Dallas. “It’s frankly today a bigger concern than oil prices, because oil prices are fine where they are. The availability of labor is not.”
By the time the new pipelines are fully in service, potentially adding more than 2 million barrels a day of capacity, the number of unfracked wells could reach 7,000, according to the Tulsa consultant Spears & Associates.
Now, there’s 174 fracking crews in the Permian, according to Primary Vision Inc., with roughly 20 to 30 workers each. Colin Davies, an analyst at Sanford C. Bernstein, expects that count to fall even lower. But once the pipes open, Davies believes as many as 100 more crews may quickly be needed.
Not easy
Schlumberger Ltd., the world’s biggest oilfield services company, said on a conference call last month that it was trying to hold tightly to some of its experienced oilfield workers by looking at shifting them to other jobs until they’re needed back in the Permian field. And the industry is starting to recruit broadly, focusing on areas well outside the Permian so as not to cannibalize companies and communities close to the oilfields.
But it’s not an easy proposition. After being fired in the oil rout, many former oilfield workers, like Byrd, have settled into other jobs with much less volatility. Meanwhile, the U.S. jobless rate is at its lowest level in years.
“We’re already underwater in regards to finding qualified talent in that area,” said Amanda Dale, who is hoping to double the size of her Houston hiring firm, Energy Careers, to eight staffers in 2019, anticipating an oil industry buildup.
Rather than simply finding warm bodies to do the work, Dale said companies are pressing for experienced or qualified people. But she’s having a hard time filling those requests.
“The work is there,” Dale said. “But they can’t find the people. I can only imagine what it’s about to be in a year to year-and-ahalf.”
The industry made a “giant mistake” in letting so many people go during the last downturn, said Chris Wright, chief executive officer at Liberty Oilfield Services Inc. “That piece of the story, the human piece over the next two years, is going be the biggest strain for the industry,” he said.
Missing the money
Byrd, meanwhile, said he misses the money he made in the oil patch, noting he once felt free to pick up a $2,000 bar tab for friends. Now, his goal is to become a deputy as quickly as he can. "Do I miss it every other Friday? Absolutely," he said of his oilfield payday. “There are kids out there getting paid $6,000 every 2 weeks.”
But law enforcement offers him “the best job security," he added, “because everybody is always breaking the law."
“That piece of the story … is going be the biggest strain for the industry.” Liberty Oilfield Services Inc. CEO Chris Wright