• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 17 mins Iran Vows Major War Even If US Conducts "Limited Strikes"
  • 4 hours Shale profitability
  • 55 mins Memorize date 05/15/2018 cause Huawei ban is the most important single event in world history after 9/11/2001.
  • 8 hours When Trying To Be Objective About Ethanol, Don't Include Big Oil Lies To Balance The Argument
  • 5 mins Hong Kong protesters appeal to Trump for support.
  • 2 hours Europe: The Cracks Are Beginning To Show
  • 11 hours Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 16 hours Let's shut down dissent like The Conversation in Australia
  • 10 hours One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 16 hours A little something for all you Offshore swabbies
  • 18 hours New designs will reduce transport fuels consumption
  • 4 hours LA Times: Vote Trump out in 2020 to Prevent Climate Apocalypse
  • 20 hours Democrats and Gun Views
  • 2 hours US and China are already in a full economic war and this battle for global hegemony is a little bit frightening
  • 7 hours Yawn... Parliament Poised to Force Brexit Delay Until Jan. 31
Alt Text

Oil Price Explosion – Brent Crude Jumps 20%

Brent crude rocketed on Sunday…

Alt Text

Can Oil Survive The Looming Economic “Ice Age?”

A wide-spread economic recession is…

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

Premium Content

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:




Download The Free Oilprice App Today

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
Download on the App Store Get it on Google Play