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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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How COVID Relief Saved Texas Shale Jobs


Four months ago, Congress approved the ambitious and unprecedented Paycheck Protection Program (PPP) as part of the $2 trillion pandemic rescue package, and now we’re starting to see the benefits of that in the shale patch, of all places.  

PPP involves federal loans to small- and medium-sized businesses primarily to help them keep their workers on the payroll. The low-interest loans are potentially forgivable provided 60% of the loan goes to pay workers over the course of 24 weeks. 

About $660B of the loans have been disbursed to SMBs, with up to $2.5B of that finding its way to the Texas shale patch where a huge number of companies were teetering on the edge of survival long before the pandemic struck. 

As expected, the loans have received their fair share of flak, mainly on the grounds of fairness and accountability, with the WSJ lambasting them as being little more than legalized fraud

The Texas shale patch is probably not complaining much, though: The majority of Texas oil field workers have been able to retain their jobs thanks to PPP, despite the U.S. shale industry being one of the hardest hit by the pandemic.

The Houston Chronicle has reported that 93,117 jobs of the 182,500 people employed in the Texas oil field are still intact even as the worst of the oil price crash appears to be in the rearview mirror.


Data by the Small Business Administration (SBA) shows that a total of 6,610 PPP loans have been disbursed to oil and natural gas companies as well as oil field services companies and related equipment manufacturers headquartered in Texas.

The SBA listed the amounts borrowed in five different ranges, not exact amounts, making it hard to work out the exact amount the Texas companies received.  Related: Big Oil Forced To Change Strategy After The Oil Price Crash

But using the provided ranges shows that a total of 4,877 oil and gas companies in Texas borrowed loans below $150,000 for a total of $188 million. The other 1,733 companies borrowed amounts higher than $150,000 for a total of up to $2.3 billion. Going by this math, Texas oil and gas companies could have received as much as $2.5B in loans under PPP.

Unfortunately, that did not stop the Texas shale patch from losing a staggering 26,300 jobs in April alone, and nearly 90,000 since the pandemic reared its ugly head. 

And, we certainly know nothing about the quality of those jobs that were retained.

Oil and gas companies, both big and small, have been known to stiff their workers, especially blue-collar ones, when times are hard. Case in point is Halliburton Inc. (NYSE:HAL) which in 2016 was forced to settle with the Department of Labor for $18 million after DOL found the company guilty of cheating more than 1,000 workers including oil field service representatives, drilling tech advisors, pipe recovery specialists, and reliability tech specialists by refusing to pay them the required overtime. DOL’s Houston Wage and Hour Division district director, Robin Mallett, has told DeSmog that oil and gas has a very large number of vulnerable workers:

What we see in oil and gas is a lot of contingent workers, moving from job site to job site. We look at the industry and pay practices and how industry may be set up. The pay structure in oil and gas is fissured, and there’s a lot of subcontracting, with one big company paying another who pays another who pays another until you get to the oilfield workers. The lower you go, the more likely there will be violations, because the money flows through a chain.”

Maybe that’s one reason why HAL was quick to furlough 3,500 workers at its Houston headquarters in March during the early stages of the pandemic when about 2000,000 roughnecks, or half the industry’s workforce, lost their jobs.

PPP Loopholes


While it appears that a lot of companies are using PPP for its intended purpose--i.e., pay their workers--a large number are not.

Back in July, the Houston Chronicle reported that more than 550,000 PPP recipients were listed in the official government data as having retained zero jobs. 

That’s the case because of a glaring hole in the program that allows companies that have no intention of retaining employees to apply for--and receive--the loans before diverting the funds for other purposes as long as they repay their loans. One such company is Midland, Texas-based compression equipment provider, Natural Gas Services Group (NYSE:NGS) which returned its $4.6M PPP loan and had to cut 20% of its workforce.

By Alex Kimani for Oilprice.com

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Leave a comment
  • Andrew Doolittle on August 12 2020 said:
    US energy production and indeed exports still remain at record highs. So much so in fact the US is now exporting oil to Saudi Arabia.

    The USA remains a deminimus importer of pretty much everything at the moment save for Canadian Industrial goods. Even Aluminum from Canada got slapped with a huge tariff despite that killing another hundred thousand US jobs in the US Aircraft Industry. Nothing another hundred trillion bazillion can't solve as pointed out here very well no doubt.

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