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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Data Centers Are Poaching Texas Oil Workers  

  • The computing, engineering, and data center sectors look to attract oil patch workers with higher pay and air-conditioned offices.
  • The shortage of skilled workers is driving inflationary pressures on energy projects in the U.S. and in Texas.
  • Labor costs and work scheduling issues could add headwinds to the boom of U.S. LNG projects.

Recruiters for technology firms are targeting energy industry workers in Texas, offering better pay, career advancement, and better working conditions.  

While employment in the oil and gas industry has recovered from the pandemic lows, the overall number of workers in the Texas oil patch has dropped over the past six years. At the same time, the number of jobs in the tech industry has jumped by nearly 40% since 2018, per data from the Texas Workforce Commission cited by Bloomberg.

The computing, engineering, and data center sectors look to attract oil patch workers with higher pay and air-conditioned offices, while some oil workers are looking to escape the boom and bust cycle in oil and gas, attracted by positions in industries that are not prone to sudden mass layoffs when oil and gas prices slump.

Labor Shortages In The Oil Patch

The shortage of skilled workers is driving inflationary pressures on energy projects in the U.S. and in Texas, along with higher interest rates and higher costs of materials. Some major LNG projects in the Gulf area in Texas could struggle to find enough skilled workers to execute the projects on time and on budget.

“Labor availability is a big issue in blue-collar areas. It is hard to find employees, and wage rate requirements continue to increase,” one executive at an oil and gas support services firm said in comments in the latest Dallas Fed Energy Survey for the second quarter.  

Another executive, at an exploration and production (E&P) firm, commented,

“Labor is hard to find. Dirty-fossil-fuels stigma drives younger talent away.”

Some of those who are not driven away by the “dirty business” stigma are being poached by technology firms, data centers, Tesla, SpaceX, and other jobs in computing and engineering. Related: G20 To Pursue More Renewables And Carbon Capture

This leaves fewer workers available for the oil and gas industry, driving up labor costs and overall project costs, potentially setting the stage for project delays.

For example, hiring and keeping construction workers and operators for the next wave of U.S. LNG export facilities could be a challenge and raise the costs of the projects, Paul Marsden, president of the Energy global business unit at one of the top contractors in the industry, Bechtel, told Reuters earlier this year.

Contractors for the LNG export terminals are creating training programs and improving coordination of project timelines to avoid losing workforce when one project is completed and before the next one begins, according to analysts and industry professionals.

Labor costs and work scheduling issues could add headwinds to the boom of U.S. LNG projects, which have already faced supply-chain cost inflation and increased competition to secure long-term buyers and financing. Despite the surge in LNG demand and the abundance of natural gas in the United States, America’s next LNG export boom could stall as costs have surged and financing has become more complicated with the higher interest rates. 

Even amid concerns about cost inflation, developers of LNG projects in the United States are set to approve a record-high volume of export capacity this year, driven by rising global LNG demand and increased long-term contracting from customers willing to boost energy security.

However, “Labor has grown as an inflationary concern for everyone in the industry. We need to actively forecast and manage labor availability and supply chain like never before,” Marsden told Reuters in an interview in July.

Big Tech Competition

More recently, Marsden told Bloomberg that Bechtel is losing talent who prefer to join SpaceX, Tesla, or some of the technology giants that have recently moved to Texas.

“Big Tech has a lot of buying power,” Marsden told Bloomberg in an interview, adding that the construction and engineering firm did not have that kind of competition from the tech industry in the past.   

“The mission is to go hard, go fast, and that’s been a disruptor for the labor market,” he noted.

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In the oil and gas industry, competition for talent comes from other market segments, too, including from the energy sector.

The number of clean energy jobs is increasing in the United States, and rising employment in clean energy led the 3.8% jobs growth in the U.S. energy sector in 2022, when the industry outpaced the overall U.S. rise in employment, the annual report by the Department of Energy showed in June. Clean energy jobs made up more than 40% of total energy jobs in 2022.

The U.S. fossil fuel-based energy sector remains larger than the renewable energy industry, but data shows that renewable energy is gaining ground, according to LinkedIn’s Global Green Skills Report 2023

“Since March 2020, the LinkedIn hiring rate for the U.S. renewable energy industry has consistently surpassed the LinkedIn hiring rate for US oil and gas. There were 69% more renewable energy jobs posted in the first three months of 2023 than in the first three months of 2022, for example, while oil and gas job postings grew by 57% over the same period,” LinkedIn says. 

By Tsvetana Paraskova for Oilprice.com

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