Jobless recovery looms
for white-collar U.S. oil workers
Send a link to a friend
[September 12, 2016]
By Ernest Scheyder
SPRING, Texas (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
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. (Graphic: http://tmsnrt.rs/2caqb41)
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."
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 <CVX.N> 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 <EOG.N>
or Pioneer Natural Resources Co <PXD.N> have been talking about
production and budget increases, that does not translate into more
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.
[to top of second column]
An oil refinery is seen in Carson, California March 4, 2015.
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.
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. (Graphic: http://tmsnrt.rs/2c2sR78)
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 <HAL.N>, 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)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.