As crude prices rise, hiring poised to restart
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Written by: Collin Eaton
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Coming soon to the oil patch: job applications.
It could take another two months, but rising crude prices could finally spur Texas drillers to begin rehiring workers in August, a regional economist said. That would be welcome news for an industry that has shed one in three jobs across the state, not to mention the local economy.
With oil prices near $50 a barrel, a dozen oil producers such as Devon Energy of Oklahoma City and Pioneer Natural Resources of Irving plan to plow an extra $600 million into the U.S. oil patch this year, which means more rigs, more drilling permits and – eventually – more jobs.
“We’ve endured this chaos for two years now,” said Karr Ingham, a Texas oil economist based in Amarillo. “It seems like we’re getting to the end of the tunnel.”
Of course, the oil market could stumble between now and August. Analysts say the financial turmoil in the United Kingdom, following its vote to leave the European Union, could spread to major trading partners in the rest of Europe, the U.S. and Japan, and dampen the world’s growing demand for energy.
But Ingham believes the long-awaited recovery that is just getting underway won’t come to a sudden halt. Crude settled at $48.99 Friday.
Ingham estimates Texas has lost more than 100,000 jobs from oil-producing companies and their equipment suppliers and service providers. That’s a third of the state’s energy workforce, and it’s a major chunk of the production jobs Texas added after the shale oil boom began in 2010.
To be sure, companies are still cutting jobs. Oil field service company Weatherford International said last week it plans to cut 90 jobs at an oil equipment facility in the Houston area. Energy service companies have cut deeply during the downturn: Weatherford has slashed some 20,000 jobs around the world, while its biggest rivals, Schlumberger and Halliburton, have together cut nearly 70,000 jobs to cope with a sharp drop in demand for oil equipment.
Their customers, exploration and production companies, will set the pace of the recovery, but large oil field service companies have already begun preparing for new business. One large service company has raised prices for its high tech equipment by 10 percent in recent weeks, showing that for the first time in two years the service sector is gaining back some pricing power in the equipment market, said James West, an analyst at Evercore ISI, a consulting and research firm. He declined to name the oil services company.
Rehiring drilling crews, geologists and engineers will take time, likely beginning about six months from crude‘s bottom, hit in February at about $26 a barrel.
But as drilling becomes more efficient, the industry probably won’t regain every job it cut. From a financial standpoint, it’s a lot easier for companies to decide to cut jobs than add them. “The industry can attract people back to it when it needs to, but it hardly ever turns on a dime,” Ingham said.
At its peak in late 2014, the Texas oil industry had 306,000 upstream jobs, according to Ingham’s estimates. That fell to 205,000 in May.
Written by: Collin Eaton
Click HERE to Read Article From Publisher.