Oil, Gas Job Recovery Much Slower Than Industry Rig Count, Spending Growth
The U.S. rig count has almost doubled during the last 10 months and upstream spending is on track to increase up to 30 percent this year – but the workforce recovery is traveling at a much slower step.
More rigs are back to work based on shale’s quick development cycle, minimal geological risk and producers’ nimble action to reduce costs, analysts at Moody’s Investors Service said in a new report.
Since bottoming out in May, 357 land rigs have gone to work in onshore U.S. activity. About 48 percent of the total has joined the ranks in the Permian Basin, but lucrative plays in Texas’ Eagle Ford, as well as the STACK and SCOOP in Oklahoma, have also grown.
The increased drilling activity has raised some concern of whether there will be enough workers to run the rigs after massive layoffs decimated the workforce during the recent downturn.
That’s going to contribute to an overall lag in the employment recovery, said Moody’s analyst Sajjad Alam.
“We have heard from many E&P companies that they have openings and they have job postings for months – in Texas, in the Permian Basin, in particular – where they are not able to match the talent with the salaries,” he said. “New salaries are much lower. Folks who were making a certain amount of money two years ago have left the industry, and they are not quite willing to come back at the salaries being offered.”
Driven by increased spending and drilling, most of the jobs that are returning are expected initially on the upstream side, Alam said. However, as that activity ramps up, more oilfield services opportunities will open.
Still, while Moody’s is projecting capital expenditures (CAPEX) this year to increase between 25 and 30 percent – and at some companies, as much as 40 percent – hiring isn’t going to mirror that growth.
“Companies have learned over the last two years to do more with less,” Alam said. “They have automated some functionalities and they simply do things much faster. Where it would take X number of days, they’re [now] drilling with 40 percent greater efficiency. You just don’t need that extra set of hands to maintain or drill extra wells.”
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.
- The Rigzone Interview: Private Equity Cash Focuses on Oil, Gas Development
- Could Argentinian Politics Beat the Vaca Muerta?
- The Rigzone Interview: Oil, Gas Goes Digital for Safety, Speed
- Deal Of The Month: EQT, Rice Energy Merge in Mega Marcellus $6.7B Gas Deal
- OpEd: OPEC Production Cuts Fail, Markets Pay for Underestimating US Shale
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- I Squared Eyes Full Ownership of Europe Gas Storage Firm
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension