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Gulf of Mexico Production Falls 50%

Gulf of Mexico Production Falls 50%

The supply/demand balance in oil…

Oil and Gas Projects Face Labor Shortage

The surge in oil and gas production in recent years is fueling a revival of U.S. manufacturing. But, according to Ryan Holeywell over at Fuel Fix, the big industrial projects on the planning board for the Gulf Coast are suffering from a shortage of skilled labor.

With so many projects set to break ground in the near future – liquefied natural gas terminals, processing plants, and various petrochemical facilities – many companies are competing for workers. The competition may drive up wages and increase the cost of doing business, undermining the profitability of some facilities.

Chevron Phillips Chemical Company is planning $5 billion in upgrades at the Cedar Bayou plant in Baytown, TX; ExxonMobil is also planning multi-billion dollar upgrades at its ethane cracker in Baytown; and Dow Chemical is putting $4 billion at its Freeport plant. Also, the Department of Energy has approved six permits to allow the export of LNG to non-free trade countries, which will mean a flurry of construction on the Gulf Coast. Sempra Energy, Cheniere Energy, and Freeport LNG are all hoping to attract workers for their multi-billion dollar LNG terminals.

Related Article: Iran Takes on the US: Is this Provocation, Defiance or Tomfoolery?

The shortage of workers has everyone playing catchup.  Unions have developed apprenticeship programs to train workers. Oil and gas companies have donated money to community colleges to develop training programs as well. For example, Chevron Phillips Chemical donated $75,000 to Baytown-based Lee College in 2012 for equipment and scholarships for students. And ExxonMobil announced in 2013 it would spend $500,000 to coordinate training programs at nine community colleges in and around Baytown.

But that may not be enough, and the competition for labor means that oil and gas companies have to raise wages, offer signing bonuses, or other inducements to poach workers. Higher wages mean higher costs, and if costs rise too much, some big projects could be delayed or cancelled all together.

By Joao Peixe of Oilprice.com



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