Oil, Gas Job Recovery Much Slower Than Industry Rig Count, Spending Growth

Oil, Gas Job Recovery Much Slower Than Industry Rig Count, Spending Growth
Higher oil prices and a US rig count surge propel industry earnings toward recovery, but hiring is expected to lag behind, according to Moody's Investors Service.

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.”

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Adam | Mar. 22, 2017
The jobs arent worth it at the new rate of pay, the work sucks, its only worth it with high salaries and bonuses, the oil companies can afford it. Pay the higher ups less! Let them work 14 12 hour days on a rig then reevaluate their pay system. I worked in ND for 3 years and I would never go back.

G.Hobbs | Mar. 21, 2017
We may well have seen the rig rate rise to its most needed,given improved technology and lessening manpower requirements.This was all brought about do to the shale revolution,were not forgetting that,its called progress.It takes fewer people to do the jobs than before,the advances in geology and geoscience allow for many more wells to be drilled from a single pad.And the people that were brought on board during the shale revolution,had never seen the boom and bust of our industry.Those waiting for the glory days may have a long wait.


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