• 2 days Shell Oil Trading Head Steps Down After 29 Years
  • 2 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 3 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 3 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 3 days Venezuela Officially In Default
  • 3 days Iran Prepares To Export LNG To Boost Trade Relations
  • 3 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 3 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 3 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 3 days Rosneft Announces Completion Of World’s Longest Well
  • 4 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 4 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 4 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 4 days Santos Admits It Rejected $7.2B Takeover Bid
  • 4 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 4 days Africa’s Richest Woman Fired From Sonangol
  • 5 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 5 days Russian Hackers Target British Energy Industry
  • 5 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 5 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 5 days Lower Oil Prices Benefit European Refiners
  • 5 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 6 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 6 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 6 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 6 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 6 days OPEC To Recruit New Members To Fight Market Imbalance
  • 6 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 6 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 6 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 6 days GE Considers Selling Baker Hughes Assets
  • 7 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 7 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 7 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 7 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 7 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 9 days The Oil Rig Drilling 10 Miles Under The Sea
  • 9 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 10 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 10 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

Can Oil Prices Hit $65 This Week?

Crude prices climbed quickly as…

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

More Info

Saudi Aramco’s Clever Strategy To Scoop Up America’s Best Energy Talent

Saudi Aramco’s Clever Strategy To Scoop Up America’s Best Energy Talent

Saudi Aramco, the national oil company of Saudi Arabia is now gearing up to take advantage of the turmoil in the US shale oil patch. According to Bloomberg Businessweek, Saudi Aramco is looking to hire US oil workers even as many unconventional producers are shedding employees. Career network site LinkedIn lists openings for petroleum engineers and geologists with the company even while layoffs in the domestic oil industry have skyrocketed.

Saudia Aramco’s strategy is clever and represents a clear shot across the bow of US unconventional producers. The average energy industry employee makes almost $110,000 according the US government figures, so as oil firms lay off workers the lost income is likely to have a bleed through effect on other parts of the economy. That effect may already be observable in the surprisingly weak job figures. Related: Top 4 Energy Innovations On The Horizon

By all accounts, Saudi Aramco has always wanted access to the best oil and gas talent that they can find. Oil and gas resources are useless if they cannot be extracted in a cost effective fashion and this is especially true in the case of unconventional reserves. As a result, unconventional production growth outside the US has been considerably slower than growth in the US. One issue Saudi Aramco faced is that the harsh climate and foreign culture of Saudi Arabia has made attracting employees difficult. Now, thanks to the decline in oil prices and the resulting layoffs across the industry, many skilled US energy employees face as difficult task in finding comparable employment and the Saudi job offers look more appealing. Postings by Saudi Aramco on LinkedIn are consistently drawing dozens of applications for each opening.

The poaching of US workers by Saudi Aramco is ironic but also presents a serious issue for the long term health of the US energy markets. The irony is that the current downward spiral in oil prices took on its greatest urgency last November as OPEC nations met and declined to cut production. While OPEC has not said as much, this decision was almost certainly driven by Saudi Arabia as the block’s only major swing producer. Now with oil prices having crumbled amidst the avowed willingness of Saudi Arabia to tolerate a price war in the interest of maintaining market share, US energy workers are feeling the brunt of the blow. Related: Oil Rebound May Come Sooner Than Expected

Today’s oil and gas companies are high tech organizations employing advanced technology and many highly trained workers. If oil prices stay low long enough, then numerous small energy companies and service companies will fail.

The employees of those failed energy firms will have to either find new employment in other industries or move abroad to work for firms like Saudi Aramco or Statoil that have national government backing and do not need to earn a profit. Over the course of a few years, this would erode the industrial base of the US energy industry and put American oil production into permanent decline even if oil prices bounce back. Related: Earthquake Case Could Doom Fracking In Oklahoma

If this sounds far-fetched, just look at what happened to the manufacturing base in the US. Liberalized trade, three recessions since 1990, and economic incentives by foreign nations pulled US manufacturing abroad. Now, even as wages rise in third world nations and US retailers complain about a lack of American made goods, manufacturing has not come back. The skilled workers in the field have all moved on, and the companies that made up the supply chain have moved abroad or gone out of business for the most part. The future is not written in stone, but the US energy industry of 2040 could look a lot like the manufacturing industry of today.

Saudi Aramco seems to be playing a long term strategy against US oil firms. Those firms would be wise to see that and respond accordingly.

By Michael McDonald for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Terry on April 07 2015 said:
    FYI the top oilmen and women are in canada typical Americans thinking that they are the best at everything. The us oilfield is 15 yrs behind the Canadians. Our rigs arebetter our service ccompanies are bettrer and our oil companies are smarter. We have been drilling the bakken wells for over ten yrs now.
  • ExMEgeoscience on April 10 2015 said:
    The joke is on the Saudi's. They have no substantial unconventional resources. Numbers were inflated by vendors like BHI to gain contracts. Internally their middle management went along to maintain their position and advance themselves in the organization. It is a house of cards ready to collapse.
  • urgconsulting.bjm@gmail.com on May 08 2015 said:
    All outside companies have pulled out including the Russians. Where is the Gas???
    How many well have they drilled? Still no reserve base???

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News