Oil and gas industry could hire 100,000 workers

2016

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OIL AND GAS INDUSTRY COULD HIRE 100,000 WORKERS

The U.S. oil industry will need to hire tens of

thousands of workers in the next two and a

half years as oil prices recover and drillers

stand up rigs, Goldman Sachs projected in a

note this week.

The question is whether workers flushed out of the industry and into a resurgent U.S.

labor market will head back to the oil patch. On Friday, government data showed the

United States added a whopping 287,000 jobs in June, and the nation's unemployment

rate held below 5 percent.

Recruiters have long warned that layoffs could come back to haunt an industry still

dealing with a shortage of mid-career workers following the 1980s oil bust. As the

United States reaches full employment, oilfield services companies and drillers could

face a shortage of workers and may have to pay dearly for them.

Since the start of the oil price downturn in 2014, more than 291,500 energy jobs have

been lost worldwide, estimates recruitment agency Airswift.


Airswift Chief Operating Officer Janette Marx said

employers should anticipate a significant increase in the

cost of attracting and retaining talent once demand for

skilled staff returns.

"Job seekers continue to turn to other, related industries

that offer more stability. It's too soon to tell if this talent will exit the oil and gas

industry permanently, but if it does, it could result in a long-term, more pronounced

talent shortage when the oil price recovers," Janette Marx, chief operating officer at

Airswift, told CNBC in an email.

There are signs the layoffs have peaked. On Thursday, outplacement firm Challenger,

Gray & Christmas reported U.S.-based energy sector employers cut 42 percent fewer

jobs in the second quarter than in the first quarter.

In Goldman's view, high pay in the oil and gas industry will make it possible for U.S.

oilfield services companies to attract the 80,000 to 100,000 employees the bank

believes energy firms will need.

The industry's staffing needs would absorb about 8 to 11 percent of the unemployed

population in energy-producing states, according to Goldman.


Further, Goldman argues that many oilfield services companies have retained

experienced staff throughout the wave of layoffs, and "in many cases" shuffled them

into low-ranking positions with an eye toward "promoting" them once oil price recover

and activity ramps up. That staffs are ideally positioned to preserve the efficiency

gains achieved during the downturn, Goldman notes.

If all goes according to plan, those companies will mostly have to hire and provide

training at the lowest skill levels.

But Raymond James believes pay may not be enough to attract workers back to

remote oil fields.

"Although these non-oilfield jobs often pay less than those in the oil patch, the

stability of employment and less harsh work conditions in non-oilfield industries might

offset the lower compensation as the oilfield up-cycle progresses. This is particularly

true today after the devastation industry participants have witnessed firsthand over

the past 2 years," the firm said in a note earlier this year.

Citing rig operators, Raymond James said

the initial addition of 100 to 200 rigs will

be manageable, because current staffing

can handle the increase. But the firm

believes bottlenecks will develop as the

U.S. oil and gas rig count approaches 600.

It now stands at 431.


Gladney Darroh, president at Houston-based energy

recruiting firm Piper-Morgan Associates, is also

skeptical that staffing up will be an easy lift.

Energy-producing states may have a theoretically

sufficient pool of workers to meet the oil and gas

industry's needs, but there's no telling how many of

those workers are qualified and willing to work in the

sector, he said.

He also cast doubt on Goldman's assessment of staffing strategies: "This whole idea

that we've got this whole group we have sort of demoted for the time being that are

still in the organization that we can quickly promote back up, that's a fairy tale," he

told CNBC.

"These oil services companies don't even think that way. They slash and burn," he

said.

Asked by CNBC for clarification on how widespread a supposed retention-through-

demotion strategy may be among energy firms, Goldman Sachs did not respond.

Oilfield services firms Schlumberger (SLB), Baker Hughes (BHI), and Halliburton (HAL)

either did not respond before publication or declined to make an executive available

for comment.

It's far more common for service companies to cut to the bone, retain their best

workers, and ask those star employees to shoulder a heavier workload until the firm

can reverse layoffs, according to Darroh.

But that strategy is fraught, as well, Darroh said. Employers run the risk of

overworking their top-performers, who are likely to be pursued by headhunters as

resurgent drilling yields labor shortages and bidding wars.


Jeff Bush, president at Denver-based CSI Recruiting, said he

already sees signs that this happening, particularly as private

equity-backed management teams seek to build out their upstart

drilling enterprises.

"The directive we get is we don't want to see guys that are out of

work," he told CNBC.

Oil and gas firms will have a tough time meeting their personnel demands as they

confront a "three-headed monster," Bush said.

First, the industry hasn't done any net new hiring in two years. At the same time,

enrollment in petroleum engineering degree programs across the United States is

falling, department heads tell CNBC .

Source:

By Tom DiChristopher

http://finance.yahoo.com/news/oil-gas-industry-could-hire-132744732.html

http://finance.yahoo.com/news/oil-gas-industry-could-hire-132744732.html


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Oil and gas industry could hire 100,000 workers