Permian Pipes Are Coming, But The Workers Aren't



Permian Pipes Are Coming, But The Workers Aren't
'It's frankly today a bigger concern than oil prices, because oil prices are fine where they are. The availability of labor is not,' says analyst.

(Bloomberg) -- Ryan Byrd worked five years in oilfields from China to West Texas. But after the worst price rout in a generation left him jobless, he’s not ready to jump back into the mix.

Now working at a jail in Huntsville, Texas, the 33-year-old Byrd is happy to have a job that won’t disappear under him. His advice to others looking to the oil patch for fat checks: "Just be prepared to one day wake up, go to work and find that the job is not there."

Welcome to the next big Permian Basin bottleneck. A pipeline shortage slowed output this year, leading to a record 3,722 drilled-but-never-opened wells. But three major conduits set to open in 2019 are expected to solve that. The newest snag: Finding hundreds of workers over the next 18 months to open those wells, at a time when the firing of 440,000 workers between 2014 and 2016 remains a fresh and painful memory.

“It’s a huge concern for 2019," said James Wicklund, a Credit Suisse Group AG analyst in Dallas. "It’s frankly today a bigger concern than oil prices, because oil prices are fine where they are. The availability of labor is not."

By the time the new pipelines are fully in service, potentially adding more than 2 million barrels a day of capacity, the number of unfracked wells could reach 7,000, according to the Tulsa, Oklahoma-based consultant Spears & Associates.

Now, there’s 174 fracking crews in the Permian, according to Primary Vision Inc., with roughly 20 to 30 workers each. Colin Davies, an analyst at Sanford C. Bernstein, expects that count to fall even lower. But once the pipes open, Davies believes as many as 100 more crews may quickly be needed.

Schlumberger Ltd., the world’s biggest oilfield services company, said on a conference call last month that it was trying to hold tightly to some of its experienced oilfield workers by looking at shifting them to other jobs until they’re needed back in the Permian field. And the industry is starting to recruit broadly, focusing on areas well outside the Permian so as not to cannibalize companies and communities close to the oilfields.

But it’s not an easy proposition. After being fired in the oil rout, many former oilfield workers, like Byrd, have settled into other jobs with much less volatility. Meanwhile, the U.S. jobless rate is at its lowest level in years.

“We’re already underwater in regards to finding qualified talent in that area," said Amanda Dale, who is hoping to double the size of her Houston hiring firm, Energy Careers, to eight staffers in 2019, anticipating an oil industry buildup.

‘Can’t Find People’

Rather than simply finding warm bodies to do the work, Dale said companies are pressing for experienced or qualified people. But she’s having a hard time filling those requests, she said, mainly because workers just got sick of the inconsistency of a boom-and-bust industry. "The work is there,” Dale said in an interview. "But they can’t find the people. I can only imagine what it’s about to be in a year to year-and-a-half."

The industry made a "giant mistake" in letting so many people go during the last downturn, said Chris Wright, chief executive officer at Liberty Oilfield Services Inc. "Our industry isn’t sexy today," he said by telephone. "That piece of the story, the human piece over the next two years, is going be the biggest strain for the industry."

Crystal Webb, chief executive officer of the oilfield recruiting firm Intent Houston LLC, said she believes the industry needs to change the focus of its worker search moving forward. While the industry has depended primarily on high pay in the past, it needs to add better working conditions, more affordable housing and better benefits to compete for workers in the current job environment, she said.

Misses the Money

Byrd, meanwhile, said he misses the money he made in the oil patch, noting he once felt free to pick up a $2,000 bar tab for friends. Now, his goal is to become a deputy as quickly as he can. "Do I miss it every other Friday? Absolutely," he says of his oilfield payday. “There are kids out there getting paid $6,000 every 2 weeks.”

But law enforcement offers him “the best job security," he added, “because everybody is always breaking the law."

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net. To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Reg Gale, Will Wade.



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.

Gil Blevins  |  November 26, 2018
The industry made its mess with the people it let go, let the fat cats get out there and get dirty. Earn those fat checks. I'll never go back. The volatility is too much to even want the money.
Mike Cloud  |  November 22, 2018
I agree with all of you. I'm 67, fit and have decades of experience all over the world. I'd like more training in computer programs such as nodal analysis and WellCat but training can cost $4000 for a week long class. What other occupations are there for petroleum engineers?
Ian Joel  |  November 17, 2018
There is no shortage of experienced oilfield works, what is creating this shortage is age discrimination. I have been out of work since late 2014 have 40+ years of experience and 71 years on my shoulders. I'm fit, healthy and don't get a look in the door so don't give me this "shortage of labor" spiel, just hire the experience, age is nothing if a medical can be passed, there are a lot of guys like me out there.
Hooahmedic  |  November 16, 2018
Part of the problem for filling the much-needed rolls is all too often spots are filled by word of mouth and referred by those inside the industry. That is a slow process. Sure it helps by bringing in known people but when very qualified and experienced people apply over and over and over again and never get a call; what's the point?
jlbenitz  |  November 15, 2018
I hear shortage, shortage, shortage, but I know plenty of people my age more than willing to work that don't even get a second look. Experienced, tons of it. Are they interested in that? It appears not.
Mark  |  November 14, 2018
Treat the money as if you're making minimum wage. If you can self discipline yourself into doing that and saving every bit of the money you'll always have a good chunk saved up when work slows down.
C Reed  |  November 14, 2018
Aberdeen 1986, when the industry carried out a full scale cull of its oil and gas workforce. The labour disappeared to pastures new, the Channel Tunnel, the massive nuclear works site at Sellafield, a large refinery project in the north east of England. Many never returned,and who can blame them. Yet another lesson never learned, but that's accounts for you.
Black Blade  |  November 14, 2018
It will take a lot more money and a better benefits package to attract experienced workers after the last bust. Many of my friends are gun shy of working the oil patch now especially with falling oil prices and building inventories. Most now say they can be at or close to home and they have steady work even if it does not pay as well.as the oil patch. Can't say that I blame them even though I am still currently working in the oil patch.