The Permian basin is on fire, and the current boom cycle in its oil industry is posing an interesting challenge that area in Texas: Right now, that challenge is a shortage of oil industry workers.
The oil industry, in an attempt to keep up with increased oil production—particularly in the Permian Basin, is one-upping other employers in a mad dash to reclaim enough workers to keep the industry awash with oil.
In fact, as the Dallas News pointed out on Wednesday, the industry is throwing double pay to woo workers away from other industries, such as school bus drivers, police officers, and restaurant personnel—and everything in between. So much so, that other businesses are finding it hard to maintain a proper workforce.
That is good for the Permian Basin workers who are now getting double pay. Not so good for the kids who are getting to school late because there aren’t enough bus drivers to get them to school.
But things haven’t always been this cheery for Texas, who is used to the ebb and flow that is indicative of oil country. Oil production in the United States has grown from 8.9 million barrels per day in January 2017 to a record 10.8 million bpd now, and it’s showing no signs of stopping just yet.
Oil production in the Permian Basin, specifically, has grown from around 2.0 million bpd in January 2017 to over 3.0 million bpd now. And while takeaway capacity has been cited as a possible kink in its aggressive plans to pump more, worker shortages may prove to be a significant hurdle. Related: New Technology Could Wipe Out Trillions In Fossil Fuel Investment
This onslaught of production in the Permian—and the boon for Texas workers, is in stark contrast to the bust cycle in mid-2016, when over 11 Texas towns were considered for a downgrade by Moody’s as the oil industry there—and everywhere, really—struggled to maintain during the low oil prices at the time. Oil workers were let go, and were forced to find jobs in other industries.
Many in the industry saw the writing on the wall as early as the end of 2017—including senior Wood Mackenzie energy analyst Ryan Duman, who said of oil workers at the time:
“What we need to see is a massive rehiring to make up for the labor that was let go during the bad times, and operators need more equipment, such as pressure pumping and other assets, in order to push forward with hydraulic fracturing — in other words, the completion stage — which comes after the rigs have dug the wells.”
That hiring frenzy in Texas is now in full swing, and a wage war is underway.
By Julianne Geiger for Oilprice.com
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