Jobless Recovery Looms For White-Collar US Oil Workers

Jobless Recovery Looms For White-Collar US Oil Workers
Job prospects remain bleak even as oil executives cautiously plot production and budget increases.

Reuters

SPRING, Texas, Sept 12 (Reuters) - Elizabeth Huber lost her job inspecting oilfield pipes nearly 20 months ago and her prospects remain bleak even as oil executives cautiously plot production and budget increases.

Despite crude trading 75 percent above its February lows and energy companies shifting focus from survival to recovery, white-collar jobs in the sector remain as scarce as during the depths of the two-year oil price rout.

Like many laid-off energy sector specialists, Huber, 58, a metallurgical engineer, hopes this is just another cyclical downturn that will pass.

Yet dozens of interviews with industry veterans, company executives and recruiters suggest this time might be different.

Recruiters warn that many jobs may not return even when the tentative recovery gains momentum. Job seekers, especially those who have been through several ups and downs and are now nearing retirement age, fear they may get sidelined for good.

Labor statistics seem to justify those fears. Over the past 25 years energy industry employment has closely tracked ups and downs in crude prices.

This year, though, the sector continues to shed jobs even as prices rallied from around $26 per barrel to over $50 in June and have mostly held above $40 since.

To be sure, at this early stage doubts linger whether the recovery will hold after the slump that wiped out more than 200,000 jobs in the U.S. oil industry and related sectors. The longer such uncertainty persists, the harder it will be for specialists like Huber to return.

With severance and unemployment money long gone, Huber said she might have no choice but settle for any job that pays the bills.

"I can't afford to wait another year," she said at a recent meeting of Energy Job Search Team, a Houston networking event that draws hundreds each week. "I'm stretching every penny."

Expertise Lost

For the industry, that could spell a loss of expertise that will be hard to replace if and when the next boom comes.

"You're seeing so many older people and experienced people be let go. The experienced people are out," said Carlos Pineda, 59, a drilling completions engineer laid off from Chevron Corp in January 2016. He said this downturn definitely feels much worse than in 2008 and even in the 1980s.

Even as executives of leading producers, such as EOG Resources Inc or Pioneer Natural Resources Co have been talking about production and budget increases, that does not translate into more job offers.

By the end of July, the U.S. energy industry cut nearly 95,000 jobs compared with just under 70,000 a year earlier, according to staffing firm Challenger, Gray & Christmas Inc.

One reason companies are wary of hiring again is the financial hangover after the shale drilling boom. It nearly doubled U.S. oil output in five years, but left many producers with hefty debt payments that current oil prices barely cover.

Tumbling oil prices also forced companies to get leaner quickly by making greater use of data and computer models, upgrading the techniques and streamlining operations.

Drilling and fracking a new well used to take more than a month; in some cases it now takes half that time, or less, which means fewer drilling crews and specialists.

"There are many people who will never come back to the oil industry," said Gladney Darroh, head of energy recruiting firm Piper-Morgan Associates. He said this latest downturn was the worst he had seen in 40 years.

While many blue-collar workers have already found jobs in construction and other industries, the future looks bleaker for petroleum engineers, geologists and other specialists whose skills do not transfer so easily.

"If you're a petroleum geologist, you don't become a loan executive," says Mike Kahn, a recruiter at Lucas Group in Houston.

Hanging On

Tara Sinclair, senior economic fellow for global jobs site Indeed, says that while search patterns show blue-collar energy workers starting to look for jobs elsewhere after six months, specialists tend to wait longer.

They do not want years of training and experience to go to waste and many have the savings to be patient.

The bad news is that whereas there has been an uptick in blue-collar job postings in the past five months, Indeed figures show that listings of white-collar energy jobs keep falling.

Many analysts expect companies to hold off with large-scale hiring until oil prices eclipse $60 a barrel, despite industry concerns that the retiring baby boomer generation will leave a skills gap that may hurt future growth.

Today, companies can raise production by re-deploying idled rigs and completing unfinished wells, but recruiters warn later on they may struggle to find specialists they will need to find new deposits and further boost productivity.

"If in two years you need a reservoir engineer with experience, where are you going to find that person? It'll be very difficult," said Darroh, the recruiter.

Oilfield services giant Halliburton Co, which laid off more than 20,000 workers in the past two years, is playing down such concerns. Mahesh Puducheri, global vice president of human resources, said attractive benefits and pay - often above $100,000 per year - act as strong incentives.

"Even though people would leave to go to another industry, the moment oil and gas pricing starts to pick up, we expect them to come back to our industry," he told Reuters. "We've never had issues attracting people back."

Others are less confident and consider shortages of skilled labor as a long-term risk. Yet their message is they have to live with that risk while market conditions remain uncertain.

"I can't go hiring people until I'm confident my own customers will have money to spend instead of paying down their debt," said Ian Bryant, president of Packers Plus, which supplies parts used in hydraulic fracturing.

(Reporting by Ernest Scheyder; Additional reporting by Howard Schneider; Editing by Tomasz Janowski)



WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

John  |  September 22, 2016
As someone who rode the coat tails Of the boom I went from a derrick man on a workover rig to wellsite manager in 3 years time and worked as the Wsm for 2 years. I got laid off in February and I for one cant wait for the industry to recover. I dedicated all that time and effort into being as proficient as I could be but in the end it did not matter. I wish I could say Im having an easy time find work but Im not as most employers truly cant grasp how unique the skill sets learned in the oil industry are. I just hope that despite this along with the downturn Ill be able to get back what I love doing by next year.
Jon  |  September 19, 2016
I remember the last couple oil busts and we lost many of the best and experienced people as they retired or moved on. A few came back but we all have gotten older and now as we are near retirement most of us will not be coming back. We have planned our lives to live our sunset years getting to know family that we have spent too little time with having sacrifice much time in the oil patch. The younger guys will likely have to be retrained as they have been out of the game for a couple years now.I dont blame the companies but it rather naive for some like Mr Mahesh Puducheri to believe that droves of experienced aged staff while suddenly show up for work when oil prices improve in a few years.
Jim McAtee  |  September 18, 2016
Even though people leave the industry my rear! Profound changes have hit the oil and gas industry. When the oil and gas industry does come around to hiring, if the new wages that are laid out are supposed to attract workers you will be in for a rude awaking.
John  |  September 16, 2016
After 37 years in the business there are few surprises. It will boom again, some day and we will repeat this same pattern. While the business remains the same the people have changed. We have lost the soul of the business. Try finding a salaried person that will go 38 hrs straight and only ask for 4 hrs sleep today. All dinosaurs die but replacing them is going to be much harder
Victor Straus  |  September 16, 2016
Mr Mahesh Puducheri is full of it like all HR people for service Co. Yes they will get some one to fill a pair of boots but that is about it. Operators are starting to get fed up with this any hand in red coveralls is worth the price we pay for him. Hailb laid off a lot of experience it will hurt them. Schlum. Did the same. Time will tell but I have seen it to many times.
Jacob  |  September 14, 2016
This is going to be verrry bad for the oilfield! People like me; who were just starting out in this industry when it took a nosedive, will be the experienced ones, albeit minimal actual experience (6 months - 1 year). The rest will be greenhorns (which is precisely what I am at this point, truthfully); in essence, the blind leading the blind! Then youll have those not so good hands who stick around; the ones who are poor teachers, cut corners which lead to serious accidents and fatalities, and are just the huge turd in the pile of crap. This is going to lead to a very dangerous, and potentially deadly combination - possibly costing oil companies thousands in wrongful death suites, etc. The upper echelon of the oilfield industry needs to stop kidding themselves, and look past the end of their noses. Three months out is typical for these folks; and frankly, when it comes to this scenario being set up, its going to be devastating for them financially and physically. They are pooping in their own nest and refuse to see it. Its already a job full of inherent risk; but with this ramping up, itll be ten times more deadly with all the inexperienced, and crap employees at the helm! God help those of us!
Laura  |  September 12, 2016
Thanks for that arrogant announcement, Mahesh. Its that attitude that makes it hard for us to find jobs outside the industry. Maybe money isnt everything, but employers are afraid that all of us ex-oil folks think just like you, Mahesh, and they dont want to risk hiring us. Why put time and money into training us just to have us leave when you wave a big paycheck? Its hard to convince them Im not like that, in fact, so far I still havent.
clive Banister  |  September 12, 2016
- No surprises there from Mahesh Puducheri - VP Halliburton HR- No matter how often or how bad we continue to screw people they keep coming back for the money! Really?
Mike  |  September 12, 2016
We old timers have been through this several times. Companies lay off highly experienced workers even as they worry how they are going to get these same people back when things pick up. If I can find a new career path in another industry, I'm out of the oilfield for good.


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