Effects of oil prices crash on US oil sector

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Rystad Says Over 100K US Oil, Gas Jobs Lost Amid Oil Slump

 

 

The U.S. oil and gas labor market is one of the world’s most severely impacted by the latest economic downturn, according to recent Rystad Energy analysis of the latest US BLS labor data. According the firm, over 100,000 jobs in the sector have already been lost, with most of them coming from the support activities market.

The data shows the four oil and gas segments most affected are:

• Support activities for oil and gas operations (44,550 jobs cut from a pre-Covid-19 level of 233,550)
• Pipeline and gas and related construction (16,000 jobs cut from 227,000)
• Drilling of oil and gas wells (13,450 jobs cut from 79,450) and
• Oil and gas extraction (9,600 jobs cut from 156,600)

In its analysis Rystad Energy included more components of the oil and gas industry chain and is independently estimating the total job cuts to exceed 100,000 to date. Of the four segments above, the support activities segment took the biggest hit, slumping 20% compared to February’s pre-Covid-19 levels, according to Rystad.

“The job cuts can be attributed mainly to the nosediving oil prices driven by a sharp contraction in domestic oil demand, which has resulted in an unprecedented demand-supply imbalance,” said Rystad Energy’s Vice President, Energy Service Research, Matthew Fitzsimmons. “In response to the weakened demand, operators and service providers alike have been frantically cutting jobs.”

On top of navigating the safety risks with ongoing work, various large operators have also been delaying or cancelling new facility construction.

“In Louisiana alone, more than 40% of liquefied natural gas (LNG) investments scheduled for this year have been postponed or canceled,” Rystad said in a written statement. “A revival in construction labor demand may take some time as delays mean weather windows for construction will be missed. In addition, the weak financial stability of service companies may leave them unable to ramp up hiring fast when conditions improve.”

The firm also expects to see deep pay cuts as companies work to right-size in the “new normal” oil market. According to Rystad estimates, wages for various trades will likely fall by at least 8% to 10% moving into next year.

“Overall, the impact of the job cuts would be greater for the oilfield services sector than for exploration and production companies. OFS companies are likely to see more than 20% of its shale, onshore and offshore workforce combined cut by the downturn. While other industries have started to see labor demand embark on a road to recovery, oil and gas workers will have to wait longer for demand to increase,” Fitzsimmons said.

 

 

 

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US Down 690 Rigs Year on Year

 

The U.S. rig count is down 5 rigs from the previous week to 279, with oil rigs down 7 to 199, gas rigs up two at 78, and miscellaneous rigs flat at two, according to current data from Baker Hughes.

Year on year, the U.S. count is down 690 rigs from last year's 969, with oil rigs down 589, gas rigs down 103, and miscellaneous rigs up two to two.

The U.S. Offshore rig count is flat at 13 and down 11 year-over-year, according to Baker Hughes.

Meanwhile, in Canada the rig count is flat from the previous week at 21, with oil rigs flat at seven and gas rigs unchanged at 14. The region is down 86 rigs from last year's 107, with oil rigs down 62 and gas rigs down 24.

The following states dropped rigs last week:

New Mexico -2

North Dakota -1

Oklahoma -1

Texas -1

West Virginia -2

The rig counts for all the major basins remained flat except for the following changes:

Granite Wash -1

Haynesville 2

Permian -4

Williston -1

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Seadrill Cold Stacking Sevan Louisiana Rig, Laying Off Staff

 

Seadrill Americas Inc. has notified its employees about pending layoffs at its office location at 11025 Equity Dr. Suite 150, Houston, Texas 77041, according to a notice sent to the Texas Workforce Commission on June 5.

Seadrill provides personnel supporting the operation of a mobile offshore drilling unit, the Sevan Louisiana rig, currently located in the Gulf of Mexico. The rig recently completed operations under its most recent contract and is now anticipated to be cold stacked.

“The inability to secure additional work for the Sevan Louisiana in the face of the current market and other conditions is sudden, unexpected, and outside of Seadrill’s control,” the company said in the notice. 

“Due to these business circumstances, the Sevan Louisiana will begin preparations to shut down and be placed out of operations during the next 2 to 3 months. As a result, 135 employees assigned to the rig will be laid off beginning during the months of June and July and beyond.”

The company said a small number of employees may receive offers to transfer to other Seadrill positions or locations, but no transfer offers had been extended as of the date of the notice. The company added that any employees who receive transfer offers but reject them will be laid off. 

The separations will begin on June 16 and are expected to be complete by Aug. 31.