Jobless recovery looms for white-collar U.S. oil workers
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.
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 crude prices.
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:聽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.”
EXPERTISE LOST
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 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 or Pioneer Natural Resources Co have been talking about production and budget increases, that does not translate into more job offers.
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
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.
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.
HANGING ON
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.
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, 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)
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