There could be a growing shortage of skilled workers in the oil industry.
That may seem counterintuitive in an industry that has been rapidly shedding workers, with more than 350,000 people laid off in the oil and gas industry worldwide.
Texas is one place feeling the pain. Around 99,000 direct and indirect jobs in the Lone Star state have been eliminated since prices collapsed two years ago, or about one third of the entire industry. In April alone there were about 6,300 people in oil and gas and supporting services that were handed pink slips. Employment in Texas’ oil sector is close to levels not seen since the aftermath of the financial crisis in 2009.We've heard these stories before. It's quite amazing how fast companies can ramp back up.
But the damage to the oil industry’s workforce could be exactly why companies could face a skills shortage in the months and years ahead.
North Dakota had nearly 1,000 drilled but uncompleted wells as of March, and more companies are showing some signs that they might step up completions now that oil prices are above $50 per barrel. But they might find it difficult to ramp up the rate of completions if they cannot field enough workers. There are only about eight fracking crews left in the state, down from 45 two years ago.
A recent survey of oil companies in the Bakken revealed concerns from the industry about the dismantling of fracking crews. “Even if prices went to $100 per barrel of oil, you don’t have any frack crews available to complete all the wells that need fracking."
RBN Energy: a look at STACK's over-pressured hot spot.
The STACK shale play west/northwest of Oklahoma City has quickly emerged as one of the hottest hot spots, and two “sweet-spot” counties in the heart of the play rank near the top nationwide in drilling activity. For now, the primary focus of the small group of producers active in STACK isn’t on production, it’s on gaining a more complete understanding of the play’s complex geology, which offers (as acronym luck would have it) a bona fide stack of hydrocarbon production layers (including the particularly promising Meramec) that together may offer off-the-chart volumes. Today, we consider a play that can provide some producers a 75% rate of return at $45/bbl oil and $2.25/MMBtu natural gas—that is, at prices 11% to 13% lower than they are today.
We’ve blogged extensively about how the collapse in oil prices that started two years ago spurred shale producers to focus their drilling-and-completion dollars on the plays—or, more specifically, the counties (and parts of counties) within the plays—where they could quickly produce sufficient oil, natural gas and/or natural gas liquids (NGLs) to recoup their capital investments and help pay the bills. Profitability (and, in some cases, corporate survival) depended on successful execution of this “flight to quality”. As we described in our The Good, the Bad, and the Ugly blog series and Drill Down Report, producers in the Eagle Ford in South Texas zeroed in on the counties with the highest initial production rates on a barrels-of-oil-equivalent (boe) basis. Then, in our May 18 (2016) webcast for Backstage Pass subscribers, we noted that two-thirds of the active drilling rigs in the U.S. are now doing their thing in only 20 counties, another sign that producers are focusing on the sweetest sweet spots. As it turns out, 10 of those counties are in the Permian Basin, two are in the Eagle Ford, and two (Blaine and Kingfisher) are in STACK—which until recently was far less known than its Texas counterparts.