Insight: N. American oil companies scramble to find workers despite boom

Civeo

29/04/2022 06:00

By Liz Hampton, Stephanie Kelly and Nia Williams
    April 29 (Reuters) - When Jeremy Davis was laid off from his
oilfield job in Texas in 2020, he did not want to leave the
industry after 17 years in oil and gas.
    But his next jobs brought one mishap after another. He was
hospitalized for almost a week following a shift at a chemical
manufacturing facility; another company he worked for never paid
him, leaving him short $5,000. 
    "There comes a point and time where you also get extremely
frustrated with the unpredictability and (lack of) stability,"
said Davis, 38, who now works in construction closer to his home
and family near Austin, Texas. 
    Davis says he would be open to returning to energy, but for
now, he is one of thousands of workers in the United States and
Canada who have left oil and gas jobs, put off by arduous
conditions, remote locations, and insufficient compensation, or
lured to the renewables sector as the world transitions to
cleaner energy.
    Governments are pushing oil and gas producers to increase
output with prices  LCOc1  CLc1  hovering around $100 a barrel
amid a worldwide supply shortage. The shortage of workers is
limiting how much producers in the United States and Canada can
increase oil output this year as governments try to find ways to
offset the effect of lost Russian barrels following Moscow's
invasion of Ukraine.
    Oil workers left the industry in droves after the COVID-19
pandemic started. Now, the U.S. unemployment rate has fallen to
3.6%, just a hair above the pre-pandemic low, but there are
still roughly 100,000 fewer oil and gas workers now in the
country than before the pandemic. 
    Oil industry employment in Canada has rebounded more
swiftly, which has allowed workers to drive a harder bargain in
negotiations for benefit and wage packages as companies try to
maintain their workforce. 
    "At a job fair in a place like San Antonio, pre-COVID, maybe
200 people would show up. Now it's 50 or 100," said Andy
Hendricks, chief executive of Patterson-UTI Energy  PTEN.O ,
which is currently running about a sixth of the 695 drilling
rigs operating in the United States. 
    His company may hire another 3,000 workers this year after
hiring back 3,000 in 2021, and even has recruiters set up at a
shopping mall in Williston, North Dakota, to find potential
workers.  

    HELP WANTED
    Canadian producer Peyto Explorations and Development Corp
 PEY.TO  would drill more wells if they could staff more rigs,
said CEO Darren Gee. Calgary-based Peyto produces 98,000 barrels
of oil equivalent per day of oil and natural gas. 
    "We probably would increase the capital budget this year if
we could get people," Gee said, adding that new workers often
lack experience. He pointed to the University of Calgary's move
to suspend its oil and gas engineering program last year as an
example of why the industry is struggling for new talent.
    Employment in the U.S. oilfield services and equipment
sector was nearly 609,000 in March, the highest since September
2021, but still below pre-pandemic levels of about 707,000,
according to the Energy Workforce and Technology Council. 
    Mark Marmo, CEO of Deep Well Services, an oilfield firm
based in Zelienople, Pennsylvania, said fracking work in places
like West Texas is currently delayed about two weeks to a month
because of a lack of labor. 
    "We hired 350. If we could hire another 350, we'd put them
all to work," he said. 
    In the mining and logging industries, which includes oil and
gas work, an estimated 14,000 workers quit in January, the
highest level since early 2020, according to data from the U.S.
Bureau of Labor Statistics. About 13,000 workers were estimated
to have quit in February.
    "We've had companies in the Permian that have gone out and
hired 100 new employees and within six months there's only eight
to nine original employees still working," said Tim Tarpley,
with the Energy Workforce and Technology Council, a trade group
whose members include Halliburton Co  HAL.N  and Schlumberger
 SLB.N . 
    U.S. and Canadian production is anticipated to grow even
with a tight labor market, but executives said output could
surpass expectations if more workers were available. 
    In the United States, output is expected to grow by about
800,000 barrels per day (bpd) in 2022 to average 12 million bpd,
the Energy Information Administration (EIA) forecast, short of
2019's all-time high of 12.3 million bpd. Canada's production,
including natural gas liquids, is forecast to rise by 190,000
bpd to 5.75 million bpd, the EIA said.
    
    COMPETING WITH AMAZON 
    Fewer skilled workers are willing to travel to the remote
Canadian oil sands region for turnaround season, when thousands
are needed for essential maintenance on oil sands plants, said
Terry Parker, executive director of the Building Trades of
Alberta, because companies no longer pay a big enough premium
for the inconvenience. 
    Parker said oil sands labor rates ranged from C$30 ($23.78)
an hour for less skilled work, to C$50 an hour for high-skilled
workers like pipefitters, boilermakers and millwrights.
    Unite Here, a union representing hospitality workers in
industry accommodation camps, negotiated agreements for better
overtime for workers at camps operated by Civeo Corp  CVEO.K  in
the oil sands, the union's Canadian director, Ian Robb, told
Reuters. 
    In March, the union also secured a wage increase of up to
22% for workers at an Atco Ltd camp serving the long-delayed
Trans Mountain oil pipeline expansion project, according to a
news release.
    In Alberta, the average weekly wage including overtime for
all employees in mining, quarrying and oil and gas extraction is
up 7.3% since February 2020, according to data from Statistics
Canada. 
    In the United States, hourly wages for production and
nonsupervisory employees are currently about 5% higher on
average than the year-ago level, and oilfield wages are due to
rise about 10% for the year, according to oilfield consultancy
Spears & Associates. 
    However, average hourly wages in the U.S. oil and gas
extraction industry are still below pre-pandemic levels,
currently estimated at $45.45 an hour for February 2022, versus
$48.37 an hour in February 2020, according to the Bureau of
Labor Statistics. 
    Patterson-UTI raised wages last year because of competition
from retailers that historically paid less than the oil
industry, Hendricks said.
    "We're competing against Amazon hiring drivers, or Target
with positions in air-conditioned warehouses. It's easier than a
drilling rig in west Texas in the summer," he said. 


($1 = 1.2618 Canadian dollars)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Oil and gas workers leave industry in droves    https://tmsnrt.rs/3kjxo4u
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Liz Hampton in Denver, Stephanie Kelly in New
York and Nia Williams in Calgary
Editing by Marguerita Choy)
 ((Liz.Hampton@thomsonreuters.com; +1 832 571 8115; Reuters
Messaging: Reuters Messaging: liz.hampton.reuters@reuters.net))