2,500 oil and gas workers in Texas lose their jobs in 10-day span

[Tom Kirkman + 8,860]

And it's going to get worse, before it gets better.

And ... when global economies eventually recover, when the global oil glut eventually dissipates, and oil demand eventually resumes, it's going to be pretty dang difficult to get oil & gas back online to sufficiently cover demand.

The oil & gas roller-coaster never ends.  This current loop-de-loop crash and derailment is damn horrendous, though.

Waiting now for oil storage to become totally saturated and filled up.  Then what?

There is likely going to be more crashes upcoming, as Russia, Saudi Arabia, U.S. frackers, and some OPEC countries continue to stubbornly overproduce oil. 

Waiting to see what happens to the ongoing overproduction when there is no more storage space for oil.

 

2,500 oil and gas workers in Texas lose their jobs in 10-day span

The oil and natural gas industry shed another 2,500 jobs over the past 10 days, new figures from the Texas Workforce Commission show.

Blaming record low oil prices and the coronavirus pandemic hurting demand for their products and services,  13 companies laid off 2,525 people. The service sector, which includes drilling rig operators, hydraulic fracturing crews and manufacturing, took the hardest hit.

Houston-based NexTier Oilfield Services reported the highest number of layoffs. It cut 1,041 employees working at its headquarters, another Houston office and field offices in the Permian Basin and Eagle Ford Shale.

Midland oil-field service company ProPetro Service announced more job cuts in the Permian Basin where losses now total 584 layoffs. Houston oil-field service company Baker Hughes cut 184 jobs after merging operations at two locations in Houston.  ...

 

[Douglas Buckland + 6,308]

Keep in mind that when the third party service companies and drilling contractors go belly up, even if oil goes to $100/bbl, nobody will be able to drill, case, cement, log, frac or complete ANY wells until these outfits get back on their feet AND crewed up again.

You judge the ‘health’ of an oilfield by the health of the third parties servicing it. FULL STOP!

[El Nikko + 2,145]

and that after a pretty bad last 5 years, things never really recovered since the last crash in 2015/2016. Our day rates were chopped by $200 per day back then and never rebounded so unlike the normal cycles there was no good times to make up for the bad.

Honestly I don't know why anyone would bother getting into this industry it's been terrible since the financial crash and just seems to get worse and worse and all anyone seems to want is cheap bums on seats.

[Douglas Buckland + 6,308]

Correct! The oilfield, globally, had not recovered from the crash in 2015...and now this mess. And you bring up a good point, nobody is considering either white or blue collar oilfield jobs as a career path.

Even if the glut dries up, demand comes back around, and the price picks up....the oil patch will be in a sad state for a long time to come.

[Enthalpic + 1,496]

[Bob_W + 37]

That's kinda the way the way it goes in the boom-bust cycles of the energy / resources industry.

We had the same thing here when the last mine closed after a hundred-year coal industry run.  The town and all of the businesses here were built by coal mining.

Then it happened again about ten years ago when the coal seam natural gas drilling came to a screeching halt.  Everyone who wanted a job out there made good money, including me.  The whole region was prospering for those years.

And after each of those crashes we got no bailout money or handouts, no business development grants, no new investments, no job training programs...  While many of the company men relocated to other places in the country, the locals were mostly left to scrape by on service industry jobs.  Those drivers and drillers out in the Permian Basin making $80,000/year might think working at WalMart is beneath them.  Some of them will change their minds over the next year.

[Bob_W + 37]

Enthalpic, while Trump might be an incompetent bald-face liar and thief, it's hard to blame him for either the virus or the oil industry's over-production.

[JoMack + 547]

So, the Texas RR Commission finally make a decision -  on proration?  Oh no,  they just charged $1.1 million bucks in penalties to the oil industry and pipelines.  So HURRAH for the TRRC!  Showed the true nature of the overreaching regulatory body.    Pro oil and gas, just like all the Commissions in each producing state, trying to find bucks while the industry goes down the tubes.  They are all what they'll always be --  a pain in the ass!!

[Dg56 + 16]

^ a drop in the big debacle. 

There is a glut of oil. More pain on its way until the glut is resolved.

Good times, bad times, that's how we lived. Booms and busts is the rule. We all knew it, in our heart, that it could not go on forever. 

In the meantime, people are going to suffer. No doubt. And we shall see clearer once dust has settled. 

[SGT-Craig + 2]

What companies have zero chance of making it?

[Hotone + 412]

6 hours ago, Douglas Buckland said:

Keep in mind that when the third party service companies and drilling contractors go belly up, even if oil goes to $100/bbl, nobody will be able to drill, case, cement, log, frac or complete ANY wells until these outfits get back on their feet AND crewed up again.

You judge the ‘health’ of an oilfield by the health of the third parties servicing it. FULL STOP!

Service companies don't have much capital investments and debt.  Their main assets are IP and people - whom they can layoff to avoid going belly up.  When business recovers, they can rehire the unemployed hands - isn't that so?

[RSD + 41]

A lot lot more pain to come - the U.S. oil industry needs to reduce production to about 8.5 mbbl/day to match the Saudi and Russian cuts on a pro-rata basis and take the 250,000 bbl/day hit that Trump volunteered the U.S. to take for Mexico - the pain has barely started yet.

[Jan van Eck + 7,558]

1 hour ago, RSD said:

A lot lot more pain to come - the U.S. oil industry needs to reduce production to about 8.5 mbbl/day to match the Saudi and Russian cuts on a pro-rata basis and take the 250,000 bbl/day hit that Trump volunteered the U.S. to take for Mexico - the pain has barely started yet.

The USA needs to reduce production to Zero.  The country is inundated with oil, both in storage and from offshore.  Until all that gets burned off, there is zero point in producing anything. 

[El Nikko + 2,145]

6 hours ago, Enthalpic said:

The job losses are global, forget 2500..try millions in poor countries

You show your true colours

[Enthalpic + 1,496]

6 minutes ago, El Nikko said:

 

You show your true colours

Was my dislike of trump not clear enough? Sorry I will try to be more direct in the future.  I have to remind myself that learning is hard for deplorables; must keep sentences short.

I can adapt.  I'll use the best words.  Nobody uses words like me.   Trust me.   Huge, Huge words. But not too huge.  I'll use the hugest word that they can handle. 

[Jan van Eck + 7,558]

2 minutes ago, Enthalpic said:

Was my dislike of trump not clear enough? Sorry I will try to be more direct in the future.  I have to remind myself that learning is hard for deplorables; must keep sentences short.

I can adapt.  I'll use the best words.  Nobody uses words like me.   Trust me.   Huge, Huge words. But not too huge.  I'll use the hugest word that they can handle. 

Here's an idea for you:  Knock it off!   

Enough already with the Trump monologue.

[El Nikko + 2,145]

Just now, Enthalpic said:

Was my dislike of trump not clear enough? Sorry I will try to be more direct in the future.  I have to remind myself that learning is hard for deplorables; must keep sentences short.

I can adapt.  I'll use the best words.  Nobody uses words like me.   Trust me.   Huge, Huge words. But not too huge.  I'll use the hugest word that they can handle. 

No mate it's fine, your hatred of working class people is on display for all to see...very typical of the left who used to care about working people.

I'm not American, people in countries like Nigeria aren't either but they're going to suffer by the tens of thousands because of the oil crash and the wider economic collapse that will destroy the lives of millions but hey it's all about trump isn't it.

Have a good one, just hope the pitch fork types don't come out and start looking for people to blame 😂

 

[Douglas Buckland + 6,308]

5 hours ago, Hotone said:

Service companies don't have much capital investments and debt.  Their main assets are IP and people - whom they can layoff to avoid going belly up.  When business recovers, they can rehire the unemployed hands - isn't that so?

So you honestly believe that when you layoff people, sometimes repeatedly, that they will magically be available whe you decide to start up again? That they have not moved to other jobs to keep fo food on the table and are just sotting around, for uears, waiting for you to call?

Sorry mate, it doesn’t work that way. They will be able to hore people to fill the slots, but the experienced people are likely no longer available.

[Jan van Eck + 7,558]

5 hours ago, Hotone said:

Service companies don't have much capital investments and debt. 

Nope.  "Oilfield service" is a bit of a misnomer.  They have large capital investments in specialized drilling machinery.  If you start scrapping trucks and rigs  (which is already happening) then it costs a tone to get back up to speed. Remember that everything used in the oil fields is very expensive, they are working with oil and fluids under serious pressure, nothing can fail, there is no margin for error.  Costs the big bucks, or "beaucoup bucks" as they say in Canada. 

[Dan Warnick + 6,100]

10 hours ago, Bob_W said:

That's kinda the way the way it goes in the boom-bust cycles of the energy / resources industry.

We had the same thing here when the last mine closed after a hundred-year coal industry run.  The town and all of the businesses here were built by coal mining.

Then it happened again about ten years ago when the coal seam natural gas drilling came to a screeching halt.  Everyone who wanted a job out there made good money, including me.  The whole region was prospering for those years.

And after each of those crashes we got no bailout money or handouts, no business development grants, no new investments, no job training programs...  While many of the company men relocated to other places in the country, the locals were mostly left to scrape by on service industry jobs.  Those drivers and drillers out in the Permian Basin making $80,000/year might think working at WalMart is beneath them.  Some of them will change their minds over the next year.

Sad, no doubt.  Good, hard working people, living good clean lives (other than the work clothes, those gave the old Maytag and GE washers and dryers a challenge!).

You mention that nobody got any so-called assistance, and I fully believe you (I'm from farm country in Illinois).  I've read stories about those times and the people in the hills and mines.  Forgive me if I'm speaking out of turn, but the stories I read outlined the many ways that aid was raised or set aside from government coffers for workers like those, and in other industries as well, but the corporations somehow convinced the government people in charge of the aid that it would be better managed by and doled out to the workers by the companies themselves, in many cases.  And, in many cases, due to lack of follow up by the bureaucracy, those same companies gave little if any of the aid to the workers.  At or below subsistence money if any at all.

Today's government, and industry, makes big headlines about how they are taking care of the employees losing their livelihoods for every reason in the book, and on a much larger scale, but in the end you had better find another job fast or you're going to be in the miner's shoes (boots) soon enough.  But the headlines look/sound good on the news!

Hang tough everyone.  Rely on yourselves and pay attention to signs you just might be being abandoned sooner rather than later.

[Jan van Eck + 7,558]

7 hours ago, SGT-Craig said:

What companies have zero chance of making it?

Any outfit involved in coal-to-oil conversion, and anyone in US oilsands production. I suspect their cost bases will be way too high to be able to sell anything even at break-even.  You might be surprised at the resiliency of the rest of those fellows, though!

[Dan Warnick + 6,100]

1 hour ago, Douglas Buckland said:

So you honestly believe that when you layoff people, sometimes repeatedly, that they will magically be available whe you decide to start up again? That they have not moved to other jobs to keep fo food on the table and are just sotting around, for uears, waiting for you to call?

Sorry mate, it doesn’t work that way. They will be able to hore people to fill the slots, but the experienced people are likely no longer available.

Forgive me Douglas, but where are they going to go in the current environment?  These ain't normal times.  Every industry is shut down and the only ones going into the offices are the guys who are now focused on which employees are no longer needed.  I don't say this just to be contrary, it's just that it really is happening.  Hell, many management teams are already way past the headcount reduction determination phase and are now on the how much office/warehouse/plant space and vehicles they can stop leasing phase.

[Jan van Eck + 7,558]

1 minute ago, Dan Warnick said:

vehicles they can stop leasing phase.

And this part will wreck chunks of the auto industry.  Those leases are premised on "residual value," what the car will fetch at the auto auction.  Today, there is no buyer at all, the auto auctions are like the oil-storage situation at Cushing, all chock full and no place to store. 

Where are the Buyers for those lease turn-ins?  Nowhere. So, if the market is flooded with used stuff, then who is buying new stuff? 

[Douglas Buckland + 6,308]

26 minutes ago, Dan Warnick said:

Forgive me Douglas, but where are they going to go in the current environment?  These ain't normal times.  Every industry is shut down and the only ones going into the offices are the guys who are now focused on which employees are no longer needed.  I don't say this just to be contrary, it's just that it really is happening.  Hell, many management teams are already way past the headcount reduction determination phase and are now on the how much office/warehouse/plant space and vehicles they can stop leasing phase.

Everyone will be looking for work, they just won’t be looking to go back into the oilfield, which has likely laid them off twice in the past five years!

When/if things turn around, many just ain’t coming back!

Then what do you do? Start up with green hands?

Edited April 25, 2020 by Douglas Buckland
T

[Gerry Maddoux + 3,627]

8 hours ago, Hotone said:

Service companies don't have much capital investments and debt. 

Well, I'd call a fracking fleet an oil well service company.

Massive investments.