'This could be the one that gets me,' Says Oilfield Service Veteran

Liz Hampton
Tuesday, May 26, 2020

Tim Harris was preparing to relocate for an assignment with energy services firm Halliburton Co for the fifth time in 15 years when his career came to a halt.

A third-generation employee, Harris rose through the ranks at the top shale-oil services provider to oversee oilfield crews. He sailed through several busts, with the exception of a 9-month break in 2016.

But April's historic price crash, which has left U.S. crude prices down 50% since January, put him and tens of thousands of oil service veterans out of work. The cuts have gone deep into the ranks of managers, taking seniority and skills gained through past downturns.

Such cuts, which are expected to accelerate this year, spell trouble for firms when it comes to restaffing and tapping know-how from prior busts, said some industry executives interviewed by Reuters.

Halliburton this month cut 22% of its headquarters staff while Schlumberger recently reshuffled its executive team and warned of "significant" expenses for job cuts this quarter. Oil major BP plans to cut half its senior managers in coming months.

Since March, some 66,300 oilfield jobs, or 8.5% of the sector's workforce disappeared, according to an analysis by trade group Petroleum Equipment and Services Association. For all of 2016, when crude oil prices slumped amid a supply glut, employment in the sector fell 17.4%.

"Losing talented people is a concern," said Kevin Broom, a PESA director who did the analysis. "We're going to need that knowledge and expertise when demand returns."

Harris has cut his oil ties, moving to Amazon.com, where he accepted an entry-level manager's job in light of the 14.7% April U.S. unemployment rate.

The oil industry could struggle to re-hire experienced managers if other sectors rebound first, said Ron Ness, president of the North Dakota Petroleum Council.

Career website LinkedIn.com has dozens of goodbye posts from workers with 15- to 30-year careers in the oilfield, many with top firms Schlumberger, Halliburton, and Baker Hughes Inc. More than two dozen tributes appeared recently from mid- to senior-level Schlumberger executives.

"I'm joining the crowd posting my departure via retirement from Schlumberger after 34-years," Jatinder Kalra, a team leader, wrote in a heartfelt post.

"It's Armageddon for oilfield service companies," said Andrew Graham, a 20-year Schlumberger veteran cut in April. He was the only member of his sales team in the last bust to keep his job. This time, "There's no work," he said.

Graham was attending a family celebration when his mobile phone buzzed with news that top producers Russia and Saudi Arabia ended a four-year pact that limited their oil production.

"I told my wife, 'This could be the one that gets me,'" Graham recalled in an interview with Reuters.

In some ways, the scale of the latest job reductions is unprecedented. Fracking services provider ProPetro Holding Corp cut 89% of its workforce, according to state workforce filings.

Halliburton, which cut over 8% of its North American staff last year and furloughed 3,500 employees in March, since has cut another 2,000 jobs in Texas alone.

"This is truly a tragedy for many of these mid-level to senior executives," said Ed Hirs, an energy researcher at the University of Houston.

Primoris Services Corp operations manager Ray Scriven was cut in late March via a Zoom call. Despite losing his job, he said he could understand why highly skilled workers were let go.

"I know they're faced with decisions they've never had to make before," Scriven said. 

(Reporting by Liz Hampton in Denver; Additional reporting by Jennifer Hiller in Houston; Editing by Andrea Ricci)

Categories: People Industry News Activity North America Jobs news Jobs Oilfield Services

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