Kemp: Mass Layoffs Complicate Oil Industry's Long-Term Plans

Kemp: Mass Layoffs Complicate Oil Industry's Long-Term Plans
The challenge is recruiting, training and retaining workers and maintaining an appropriate long-term labor force in an industry stuck with a profound boom-bust cycle, analyst John Kemp says.


John Kemp is a Reuters market analyst. The views expressed are his own

LONDON, Feb 13 (Reuters) - "This is the really crappy part of the job, and this is what I hate about this industry frankly," the chief executive of oilfield services company Baker Hughes complained as he announced it would lay off 7,000 employees.

Baker Hughes is cutting jobs in response to slumping prices and a downturn in drilling activity.

But the company's obviously frustrated chief acknowledged that "this is the industry, and it's throwing us another one of these downturns, and we're going to be good stewards of our business and do the right thing."

So the company will cuts costs, he told investors in a conference call on January 20 to discuss the firm's fourth-quarter earnings and outlook for 2015.

More than 100,000 layoffs have been announced across the industry worldwide since prices began to slide last summer, according to a tally kept by Bloomberg.

In recent weeks other major service companies have announced job reductions. Halliburton announced it will cut 6,400 jobs (8 percent of its global workforce) while Schlumberger will eliminate 9,000 positions (around 7 percent of its workforce).


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Miles | Feb. 18, 2015
I would like to see the CEOs and all of their top executives at BH and HAL and also SLB to take a serious pay cut and forfeit all bonuses! What they get paid in one day took me a month or more to make. I argued for years as a oilfield worker that we need to pay into a downturn fund for all field operations employees so that we can survive low oil prices, but executives wouldnt listen! You CEOs dont have to worry, you and the board of directors get on the companys private G5 jet and fly home.

Loren Reagan | Feb. 16, 2015
Even tho many of the issues related to this article are accurate many are not, Haliburton and Baker Hughes were a given to lay off many workers or employees as they combine there companies there are many employees that would be doubled up, for the ones that were not doubled up it is likely they were just filling a spot, we talk about many trained personal, for the most part the industry has attempted to do this, for the most part the have failed, I recently spent a 1 year contract in the kingdom, both rigs that I was a foreman on had less than 15% experienced personal, most had less than 6 months experience and even the smallest task takes forever or they just dont feel the urgency of the situation, its not the oil companies fault that there is a turn down in the industry, have a look at what the real issue is, does greed sound familiar, if oil companies have work and cant wait to recover the oil and gas so be it, does this mean that the contractors should run out and build more equipment and hire more people, part of the issue of the costs today is just that, inexperienced people take twice or three times as long to complete a simple task, Wells that were being drilled 5 years ago in north America to a depth of 10000 take twice as long today, wells in the middle east are being drilled like north America was in the late 70s, does anybody listen or want to change, no, as soon as you get back to the basic drilling 101 program and there is a improvement in performance or well bore conditions everyone gets there back up because they didnt or couldnt do it, companies like Haliburton and Baker, Schulumberger all call themselves "PERFORMANCE DRILLING SERVICES", this is so far from the truth and here in lies the problem, sit down with them and ask them what there performance mandate is and then ask what the costs of these services are, ask them what there average age of employee is and there experience, then sit back and ask yourself, would you want a health care system to manage your heart surgery if this was the experience that the doctors have. I have 35 + years experience in the industry and 15 of those being performance minded owning my own business, I dont understand why the simple facts of the industry always get clouded when the issues have been going on for decades, with little effort the industry could save millions of dollars by paying attention to the small issues of drilling a hole in the ground, al they have to do is pay a bit of attention.

Mark Easley | Feb. 14, 2015
The only way we will fix this problem is STOP building new rigs, or at least lay down a older rig when a new one is brought out.

Mark | Feb. 13, 2015
I graduated from Colorado School of Mines in 1991. When I was hired in October of 1990 (during the first gulf war), oil was about $40/barrel, By the time I started work it was down to $14/barrel. After working for 2 months, my boss came in and said theyre laying off 25% of folks. A year later, most of us were laid off and two years later the oil field was sold. ARCO doesnt even exist anymore, other than gas stations in California. I went back to grad school and got a masters in Civil Engineering. Working in the oil patch makes sense if you are planning to go over seas and bank it all away. Its a profession of feast or famine. Folks need to know that before they choose what to study. Ive met many geologists and geophysicists that have re-tooled themselves into programers. The oil patch is not for the faint of heart. It takes a gambling spirit ride that profession... and good timing. I still treasure the time I spent up there in Wyoming. It taught me that all that glitters isnt black gold or Texas Tea... and that family is more important than money.


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