San Antonio Express-News (Sunday)
West Texas a hard sell for firms seeking workers in Permian Basin
Josh Garcia found himself in a position familiar to many energy workers when he was laid off from Houston’s C&J Energy Services during the recent oil bust. Unemployed for months and short on options, he went back to school, earned an MBA and tried a different industry before finding another opportunity in energy with a Louisiana chemical supplier in the booming Permian Basin.
The company, Centurion Technologies, offered a sixfigure salary, free housing for a year and a company car. But Garcia, 33, still hesitated, unsure about moving far from the state’s population centers and the diversions they offer to young professionals.
“I knew how remote it is out here,” Garcia said. “There’s not another industry out here if things go south. It’s either sink or swim.”
With the local supply of labor all but exhausted, energy companies are finding that recruiting workers like Garcia to West Texas is a tough sell — one made all the harder by strong national and state economies that provide skilled workers with plenty of options elsewhere.
Isolation is far from the only
issue recruiters must overcome as they try to convince qualified candidates to relocate to West Texas. Housing in the region is in short supply and prices are soaring. Schools are crowded, understaffed and underperforming. Health care is woefully short of doctors. Crumbling roads and highways are jampacked with heavy trucks and traffic.
To fill one position, companies need to make at least 10 offers and pay premiums of 20 percent over salaries in other parts of Texas, oil industry analysts said. And still that might not be enough. Oil field jobs in the Permian start at close to $100,000 a year while an experienced truck driver can make close to $300,000 with overtime, analysts said.
The Midland Chamber of Commerce estimates that at least 15,000 jobs are open at any given time, mostly in oil and gas. A job on a drilling or fracking crew takes maybe two months to fill, while engineering and management positions, which often involve relocating families, will sit vacant for several months, energy companies said.
“It’s an unprecedented challenge, not only due to the exceedingly tight labor market, but due to woefully inadequate Permian housing and a beleaguered school system,” said Bill Herbert, a senior energy analyst at Piper Jaffray & Co. “Getting a family to relocate to Midland is especially challenging.”
Garcia’s position was open for about five months before a friend connected him with Centurion. He ultimately decided to take the job, rationalizing that he’d focus on his career, which he has.
But with his housing allowance running out, he made bids on several homes — and lost — before overpaying for one under construction. His social life revolves around professional networking events since there’s no semblance of a dating scene. He joked there’s 50 men for every single woman.
“I guess I should have asked for more,” said Garcia, recalling the job offer that seemed too good to refuse.
Does not compute
The Permian is the world’s hottest oil basin, accounting for 55 percent of the nation’s active oil rigs and producing 3.2 million barrels of oil a day, about 30 percent of the nation’s output. Since oil prices began their recovery in early 2016, unemployment in the MidlandOdessa region has plunged from about 5 percent to 2.4 percent, compared to 4.1 percent in Texas and 3.9 percent nationally.
The Midland-Odessa metro population has grown more than 20 percent since 2010 to nearly 350,000 people. But at any given time, Midland may only have 200 homes for sale.
The strong demand and limited supply has made Midland the nation’s hottest housing market, according to the National Association of Realtors, beating out happening coastal tech centers San Francisco and Boston. The median home price, $370,000, is higher than in the Houston or DallasFort Worth metro areas.
Midland real estate agent Tyler Barrandey, who was born in Odessa, said most properties that come on the market are under contract within a few hours and sell for $20,000 over asking. Some homes are bought sight unseen.
“If you’re a seller, you just sit back and count how many offers roll in,” Barrandey said.
The housing shortage is leading companies to rely on dozens of so-called man camps, the worker lodges that can range from trailer parks to high-end college dormitories. Workers will typically work in the oil patch and stay in the temporary housing for two or three weeks before returning home — whether in other parts of Texas or out of state.
But man camps tend not to work for engineers, managers and other white-collar workers who typically want to relocate with families and buy homes.
Ron Lalonde, unemployed since getting laid off from a Houston area energy services company two years ago, has had opportunities to move to the Midland area, but balked because of the tight, expensive housing market and the difficulties of relocating his wife and two children, aged 8 and 10.
But with financial woes mounting, he’s reluctantly considering a West Texas oil job that would mean leaving his family for three weeks each month.
“Some of those barriers I had are kind of coming down,” said Lalonde, 45. “I guess I’m going to have to do it because my family and I are suffering so much.”
Schools a breaker
Workers with families are also reluctant to move because of the poor performance of schools in Midland and Ector counties, which comprise the region’s biggest cities, Midland and Odessa. Despite the flood of oil money, voters in the conservative region have rejected several tax increases aimed at improving education and building new schools.
Of Texas’ more than 1,030 school districts, Midland and Ector’s counties rank outside of the top 850, according to Niche, a Pittsburgh company that rates schools based on test scores, college readiness, graduation rates and other criteria.
Last year, Midland hired a new superintendent in Orlando Riddick, previously chief of high schools in Houston. Riddick didn’t respond to interview requests, but Midland Chamber of Commerce CEO Bobby Burns said there’s faith that Riddick can turn the district around.
The community needs new elementary and high schools — which will go to voters next year or in 2020. Burns said he expects a different outcome at the polls than in the past. “We’re growing, and the needs are clearly there for everyone to see,” he said.
Teaming up, competing
The city is in discussions with large energy companies to build more housing — including apartments, single-family homes and temporary lodging — as well as day care accommodations for young children. Child care shortages are just as dire as public school overcrowding, Burns said.
To help resolve some of these needs, 10 energy companies formed the Permian Strategic Partnership earlier this year. The nation’s two biggest oil companies, Exxon Mobil and Chevron, are involved, as as well as Houston producers Anadarko Petroleum, Apache Corp., EOG Resources and Occidental Petroleum, and the oil field services company Halliburton.
Chevron spokeswoman Margaret Cooper said the partnership is focusing on education, workforce development, road improvements and health care and providing financial support through public-private partnerships.
“It’s always a good problem to have the growth and the strong economy,” Burns said. “There’s a lot of opportunities in Midland, but there’s a lot of challenges, too. Catching up is going to be a very difficult task.”
Housing from afar
Halliburton employs 3,300 people in the Permian area, hiring 200 each month to work there. But about 60 percent of that workforce doesn’t live in the region, largely because housing constraints are so bad, said Sheri Whitaker, Halliburton’s human resources manager in the Permian.
The majority of workers are long-distance commuters, living for two weeks in man camps, going home, then returning for another two-week stay. But the grinding travel means many workers don’t come back.
The closer people live to their jobs, the better the retention, Whitaker said, but hiring locally is incredibly difficult. That’s why companies in the Permian try to poach experienced, local workers from each other.
Thad Dickey of San Antonio works as a thirdparty contractor to help companies oversee the quality and safety of their drilling and fracking operations. He refuses to move his wife and 6-year-old son to West Texas. Or, at least, his wife refuses.
“She’s not going to go out there, and I don’t blame her,” he said. “The cost of living is outrageous.”
If he could avoid the Permian, he would, but that’s where the work and the dollars are. He earns about $700 a day there, about 40 percent more than he could make anywhere else.
He lives in a camper when he’s working, parking near well sites, if possible, or at nearby camp grounds. The commute and traffic are hellish, he said, but he puts up with it.
“I try to spend as much time out of the Permian as I can,” Dickey said. “But, every time, the pay keeps bringing me back.”