The educated roughneck
Low technical skills in Permian could impact oil and gas industry
An oil field services worker types into the search bar on one of three massive computer screens mounted to the wall of an eighth-floor Houston office. A series of boxes fill the screen, each one representing a drilling site around the city of Midland, more than 400 miles away in the Permian Basin of West Texas.
Another screen looks like the Google Maps of drilling rigs, with the ability to zoom in on locations and see the number of operating Patterson-UTI rigs and their coordinates. The third screen has data related to the rigs, and the display looks like a hospital heart monitor rotated 90 degrees.
As the activity in offices of Patterson-UTI shows, the oil and gas in-
dustry is like any other: Jobs change as technology advances. Here, workers use a combination of software, digital tools and their own analysis and data visualization skills to help satisfy the world’s growing demand for energy — whether at the office in Houston or a drilling site in the Permian.
These advances require oil and gas workers to possess or quickly develop digital and other technical skills, which might be good news for workers in major metropolitan areas like Houston, but could make it harder to find qualified workers in the communities that stretch across the Permian, where educational attainment is low and opportunities for higher education few.
The region has long-struggled with labor shortages, but as brains replace brawn in the oil field, those shortages threaten to become even more acute, with implications not only for the West Texas economy but also for the state’s oil and gas industry. Ultimately, modern economies and industries need skilled workforces and improving productivity to grow, making education and training an important prerequisite for prosperity.
When Midland County Judge Terry Johnson started working in the oil fields four decades ago, he said it was about being able to “manhandle” heavy equipment. Someone without a high school diploma could find highpaying work in the oil patch, but today is different, Johnson said. Workers need to read and analyze data while working with an increasing number of digital tools.
“Back in my early career, if you were a welder, you were a hot commodity, because everything was just built out of iron, the drilling rigs, the pipelines, everything,” said Johnson, who’s also the owner of TCO Field Service, an oil field services company. “It’s not that way now. It’s electronics. It’s data. It is so much more than what it used to be.”
Drive for efficiency
Since the oil bust in the middle of the last decade, the industry has been on a relentless drive to become more productive and efficient, introducing technologies from robotics to satellite mapping to digital analysis of massive amounts of data. Companies have made advances in hydraulic fracturing and horizontal drilling, which in turn has increased the productivity of wells.
The result: companies are producing more oil with less equipment and fewer workers. Since the number of operating drilling rigs peaked at 1,062 in June 2018, the U.S. rig count has fallen nearly 30 percent to 763, according to the Houston oil field services company Baker Hughes, while the number of oil production workers has declined by more than 70,000, according to the Labor Department.
U.S. oil output, however, has increased by 1.1 million barrels a day.
“You don’t need all the people when you have technology that can replace some of those functions — that’s certainly true,” said Mark Guthrie, chairman of the Texas Association of Workforce Boards. “But you know, the more technology you have, the more skills that people need to have to do those jobs.”
That could be a problem in the Permian Basin. In the 2019 scorecard from the Texas Education Agency, about 13 percent of the state’s 8,300 rated schools received failing grades. For the Midland Independent School District that year, it was nearly 50 percent — 19 of the roughly 40 schools.
The region also has some of the lowest levels of adult literacy skills in Texas, according to a recent study by the economic consulting firm Perryman Group. The study examined so-called level three literacy skills, defined as the ability to integrate information from relatively long and dense text and documents — roughly the level a person should be at when graduating high school.
The Perryman Group study found that all but one of the 22 counties in the Permian have significantly lower literacy skills than the state average of 40 percent for Texas and 39 percent for New Mexico. In the majority of Permian counties, less than 30 percent of adults met level three literacy; to the west of Pecos in 2,000-person Culberson County, it was just 8 percent.
Midland, at 42 percent, was the only county in the region to exceed the state average for adult literacy skills.
“When you need a skilled workforce population, having literate adults really helps,” said the consulting firm’s founder, Ray Perryman.
Right skills
The firm forecasts the Permian will need 98,000 more workers by 2030 — with about one-third of those jobs requiring level three literacy.
If literacy skills don’t improve to at least meet the state level, it could mean a loss of nearly $425 million in potential earnings for Permian Basin residents, according to Perryman. It would likely result in a $292 million hit to the economic output of the region. The state of Texas could miss out on $22 million in tax dollars, and local governments in the region could lose $16 million.
Meanwhile, oil and gas companies are expanding operations in the Permian, hoping to produce oil there for decades to come. In recent earnings calls with investors, oil majors Exxon Mobil and Chevron both said they had plans for steady growth in the Permian.
This year, Exxon is on track to increase production by 25 percent compared to 2021, while Chevron said output already has increased 15 percent since last year.
For companies to carry out those plans, they need a workforce with the right skills, according to Tracee Bentley, president of the Permian Strategic Partnership.
“And none of them are able to fully get the workforce that they need,” she said, “because our education system is among the very lowest of anywhere.”
The Permian Strategic Partnership is a group of 17 oil and gas companies that was formed, in part, to help steer investment toward education in the Permian Basin. The partnership, along with three other area foundations, helped support the 2021 founding of the Literacy Coalition of the Permian Basin to promote literacy efforts and programs.
The partnership also invested $16.5 million in IDEA Public Schools, a nonprofit network of more than 130 charter schools across Texas, Louisiana, and Florida. IDEA has set up elementary and middle schools in Midland and Odessa, and said it eventually wants to serve 10,000 students at seven different campuses in the Permian Basin.
But not only K-12 education needs to be addressed. The region has few resources for advanced and continuing education. Often, the nearest place for Permian oil and gas employees to learn technical skills or obtain industry certifications is Houston, more than 400 miles away.
The partnership invested $2.6 million in Skillpoint Alliance, which offers free training for people interested in learning technical trades often needed in energy and manufacturing.
‘One and the same’
These efforts are only the beginning, industry officials said. A 2020 survey by consulting firm Ernst and Young of nearly 160 energy executives found that more than 90 percent said the ability of their workforce to learn new digital and technical skills was critical to their companies’ success, but fewer than 10 percent had a robust plan to do so.
That could be one reason oil and gas companies are choosing to invest in organizations like the Permian Strategic Partnership to help improve educational opportunities in the communities where they operate.
Back in Houston at Patterson-UTI, workers monitor thousands of data points from rig sites in the Permian, and communicate with workers on the ground.
David Millwee, vice president of drilling performance at PattersonUTI, said there’s no going back for the energy industry. It’s become dependent on technology, and on the workers with the skills to operate that tech.
“In the age we’re in,” Millwee said, “the oil field worker and the tech worker are one and the same.”