With a barrel of West Texas Intermediate crude trading for more than $72/bbl and oil and gas production increasing, the climate is looking favorable for the industry—especially in terms of jobs.
The ramp-up in activity following the downturn means a growing need for skilled workers. The labor market appears strong, according to the latest Dallas Fed Energy Survey. The survey of industry executives tracks conditions facing energy firms in the 11th District using an index, with positive readings indicating expansion.
The survey’s second-quarter 2018 employment indexes reached their highest level in the survey’s history.
“Labor market indexes point to more rapid growth in employment and notably longer work hours in the second quarter, particularly in oilfield services firms,” the Federal Reserve Bank of Dallas said in the survey released June 27. “The employment index was 44.1 for services firms and 11.6 for E&P firms—the highest levels for both indexes since the survey began.”
Employees in the oil patch also are working long hours. The index showed these numbers were either at or near all-time highs. However, the index that tracks wages and benefits was down—dropping from 33.8 in the first quarter to 27.9 in the second quarter.
Still, the news is good considering the hundreds of thousands of jobs that were lost when oil prices tanked in the fourth quarter of 2014 when global production exceeded demand.
Plus, there are still positions to fill. A quick online search of jobs available shows needs run the gamut. Some companies are looking for frack workers, artificial lift specialists and equipment operators, while others are seeking landmen, analysts and project managers.
Most of the firms surveyed (69%) said they are not having hiring problems.
Of the firms that are having difficulty filling positions, most said filling low-skill and mid-skill positions was challenging. The top reason given for difficulty finding workers was a lack of applicants, followed by a lack of experience and technical skills.
When all executives were asked about recruitment and employee retention tactics, most employers said they tend to increase wages and/or benefits (45%); increase variable pay, including bonuses (30%); and step up recruiting efforts (24%) to attract workers.
There appears to be a strong need for oilfield truck drivers, particularly in the Permian Basin, according to speakers at Hart Energy’s DUG Permian exhibition and conference and others such as BP Capital Fund Advisors. Some companies are even offering annual salaries of $100,000 with bonuses, according to E&P’s June 2018 “Market Intelligence” report.
The need for drivers comes as shale players increase sand usage per well, working to optimize completion techniques and get more from wells. In terms of oil and gas production, the survey showed continued growth.
“The oil production index advanced from 34.3 in the first quarter to 39.0 in the second. Furthermore, the natural gas production index moved up from 25.0 to 33.4,” the release said. “Both indexes are at their highest levels since the survey began and suggest that oil and gas production rose at an accelerated rate relative to last quarter.”
In all, the survey’s business activity index—which provides a broader look at conditions facing the industry— jumped from 40.7 to 44.5. The increase marked the second highest level since the survey began in 2016, according to the release. “The increase was driven by both exploration and production and oilfield services firms.”
Nearly 140 E&P and oilfield service firms located or headquartered in the district participated in the quarterly survey, which is based on data collected June 13 to June 21.
The shale market in the U.S. was one of the hardest hit segments of the oil and gas industry in the world for the pandemic, says Janette Marx, CEO of staffing firm Airswift.
Limited growth, decline rates, consolidation, costs and ESG concerns were among the topics addressed.
About half of U.S. energy company executives polled by the Federal Reserve Bank of Dallas expect their firms to increase capital spending in 2021, and another quarter of respondents see those expenditures remaining flat.