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The Oil Bulls Betting On $150 Crude

The Oil Bulls Betting On $150 Crude

Oil markets aren’t out of…

Oil Rig Count Collapse Beginning To Slow

Oil Rig Count Collapse Beginning To Slow

Baker Hughes reported on Thursday…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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The Single Biggest Threat To U.S. Oil Jobs

When earlier this year Whiting Petroleum announced it would cut a third of its workforce, the news did not make a huge splash as it was lost among other cost-cutting efforts in the industry.

But when earlier this month Halliburton said it was cutting 650 jobs, the signal became clearer: the U.S. shale boom is slowing and businesses are preparing for a bad-case scenario where the slowdown extends.

Indeed, the U.S. oil and gas industry is bleeding jobs. Reuters’ John Kemp reports, citing official data, that the oil and gas support segment had shed 14,000 jobs between October last year and August this year. That’s a 5-percent decline and while it might not be worrying in itself, combined with other data from the industry, it does suggest a slowdown is in motion.

New drilling rig additions between September 2018 and August 2019, Kemp wrote, fell by as much as 20 percent, or 176, according to data from Baker Hughes. Part of that may be better drilling efficiency, of course, but there is also the issue of drilled but uncompleted wells, or DUCs, that the EIA includes in its production forecasts as they can be completed and out into production relatively quickly.

These forecasts, according to industry insiders, could be misleading precisely because of the DUCs. In an energy industry survey by the Federal Reserve of Dallas, half of the respondents from the oil industry said the EIA had been overestimating the number of drilled but uncompleted wells in the Permian. What’s more, a quarter of these respondents said the overestimation was significant, S&P Global Platts reported in late September. Some oil executives blamed this on the loose definition of a DUC.

Kemp, for his part, notes the slowdown in completions as well. Earlier this year, he wrote, completions of wells drilled last year kept the ball rolling and production growing. Yet recently the number of completions has started falling as has the number of DUCs, which declined by 11 percent between January and August.

Related: $300 Oil: What If The Attacks In Saudi Arabia Had Destroyed Production?

In April this year, Pioneer Resources and Laredo Petroleum announced plans for job cuts. The pressure then came mostly from shareholders who insisted on getting their promised returns despite the decline in oil prices. Now, with prices stuck between $50 and $60 a barrel, additional pressure is mounting on the industry.

Production is still growing, though. At the end of September, the EIA reported Texas had added 40,000 bpd during the month and had topped 5 million bpd for the first time ever. In North Dakota, production spiked to 1.41 million bpd, also a record-high.

For this month, the EIA expects production in the Permian alone to add another 63,000 bpd in production and while later data based on actual reported output may be lower, chances are oil production in the star play will continue rising over the observable future. However, the workforce employed in this production and oil production in other shale plays may continue to shrink unless price trends change and the change lasts for more than a couple of days. There are investors to make happy and bank loans to repay, all while the outlook for global oil demand becomes gloomier.

By Irina Slav for Oilprice.com

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Leave a comment
  • D Pierce on October 17 2019 said:
    what was the single biggest threat to oilfield jobs? I don't feel covered or made clear the single biggest threat. I work in both the drilling and exploration side as well as the production side. Reason companies like halliburton are laying off people they're streamlining operations I've seen firsthand what's going on. halliburton would show with 20 people 30 people on a frac location and the majority of them would stand around until it's time to make a connections or switch heads whereas other fracking companies like Liberty or Calfrac would have 10 guys that would stay busy the whole time rebuilding pumps getting iron in order so forth and so on. A lot of these companies are just trimming the fat.
  • r.j. sigmund on October 19 2019 said:
    there is no slowdown in completions, unless you call 10 off the record high a slowdown...they've been flat near a record for 7 months...

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