By Velda Addison, Hart Energy

The U.S. Energy Information Administration and the U.S. Bureau of Labor Statistics recently released some concerning statistics and highlighted a trend that many of those in the oil and gas sector have unfortunately seen too much of lately.

The shale boom opened employment opportunities to the economic benefit of those directly and indirectly involved in the industry. By October 2014, employment in the sector and for related support services climbed to nearly 538,000. But worldwide production growth and not enough demand sent oil prices tumbling, prompting companies to make cutbacks. Though oil prices, which were essentially halved over a year’s time, are rising, the pace has not been quick enough to save jobs.

Between November 2014 and April 2015, BLS figures showed the oil and gas sector lost about 35,000 jobs, or 6.5%. The EIA pointed out that the decline in oil and gas E&P and support jobs tends to lag declines in crude oil prices.

“As prices of North Sea Brent crude oil fell from their June 2014 level of $112 per barrel, firms reduced the number of new wells drilled and the associated workforce,” the EIA said. “The count of drilling rigs in the United States, as measured by Baker Hughes, totaled 857 for the week ending June 19, 54% below the same point a year ago and the lowest level in nearly six years.”

A similar trend in 2008 was noted by the EIA.

After soaring to $133/bbl in July 2008, the spot price for Brent crude oil fell to $43/bbl by February 2009. Oil and gas production jobs, which reached a record at the time of 391,000 in September 2008, did not start to fall when oil prices did. The decline came two months after prices started to fall, the EIA said. Such jobs fell by more than 51,000 during the following 13 months.

It appears that the same trend is playing out again, as companies announce more job cuts in the U.S. and in other parts of the world. Stavanger-based Statoil, which also has operations in the U.S., said it will cut up to 2,000 more jobs by the end of 2016 due to lower oil prices. The company had already removed about 2,300 employees and consultants from its payroll since year-end 2013, Bloomberg reported.

The downturn has impacted not only onshore operations, but also offshore. Subsea 7 is among the companies that announced in May a workforce reduction of about 2,500 positions. The engineering company Siemens also said in May that it will cut another 4,500 jobs.

But there is a bit of good news, at least if you are out of work in some states in the U.S.

“In Texas, where many reported reductions in oil and natural gas jobs occurred, the unemployment rate actually decreased from 4.7% in October 2014 to 4.1% in May 2015, because of offsetting growth in other areas of its more diverse economy,” the EIA said.

That wasn’t the case, however, in North Dakota where the unemployment rate slightly increased from 2.8% in October 2014 to 3.1% in May 2015. The rise caused North Dakota to lose its “state with the lowest unemployment rate” title to Nebraska.

Regardless, oil and gas companies should be thinking about how they will get workers back if or when improved market conditions demand hiring. In the meantime, it is not a bad idea to strengthen in-house talent.

There will be more competition for an even more limited pool of talent because the downturn has not halted the sector’s aging workforce.

A couple of IBM Corp. executives spoke about employment in the oil and gas sector at a Houston forum in March 2015. The advice from Matthew Hiller and Laura Eaton is worth reiterating for oil and gas companies looking to the future and not dwelling on the present.

  • Build a scalable recruitment function. Determine how to attract qualified candidates and bring talent aboard quickly;
  • Develop loyalty and engagement with not only current employees but also those who were laid off;
  • Determine how the company will tell its story, or its employee value proposition (benefits and rewards for performance) to current talent and lost talent the company is trying to bring back. Figure out how the company should communicate;
  • Give current employees a vision and make it personal; and
  • Continue sourcing by building talent pools.

Just like with previous downturns, market conditions will eventually improve. The oil and gas sector needs to be ready when it does.

Contact the author, Velda Addison, at