Halliburton’s decision to lay off nearly 650 workers in the Rocky Mountain states has resulted in a debate whether a new Colorado law had anything to do with it.
Colorado Public Radio reports that some contend Senate Bill 181 was behind the layoffs, at least in Colorado.
That’s contributing to a debate raging now: How much has 181 impacted Colorado companies? And the preliminary data suggests not much. A small company, PetroShare went bankrupt, blaming 181. Whiting Petroleum laid off almost 300 people. And then there are the Halliburton layoffs. But there’s a broader slowdown in energy development. An index of oil and gas producer stocks show company values have been cut in half, and most of those companies are outside Colorado.
So the short answer: People have anxiety over the law but it’s probably not the sole cause of the Halliburton layoffs.
Hundreds in the region were affected by the layoffs.
Halliburton, a Houston-based company, didn’t just lay off workers in Colorado. The company cut 650 jobs altogether from Wyoming, New Mexico and North Dakota. Colorado accounts for 178 of those workers.
Company officials say the layoffs were due to local market conditions, but they plan to keep the Grand Junction facility open. Workers were also given the option to relocate with the company.
The law in question was signed six months ago, and energy producers haven’t seemed too worried.
It gives local governments more control over where wells go and prioritizes people’s health, safety and the environment.
In Colorado, oil production is on pace to beat last year’s record output, and the biggest companies that pump the lion’s share of oil have enough permits in hand to drill for years to come. And in financial filings with the SEC, all express confidence there will be no impact in the medium term to their business from 181, saying that they can easily get a handle on the new rules, which are still being finalized.
“We do not foresee significant changes to our development plans, as we have all necessary approvals of more than 550 permits to drill wells over the next several years,” Noble Energy representatives wrote to investors earlier this year.
But Sen. Cory Gardner recently blamed the new law.
On Twitter, Gardner suggested Wednesday evening that Halliburton workers were hurt by the legislation.
“The anti-energy bill from the Colorado Democrats is having a real-life impact on hardworking Colorado families, and there is no denying it is hurting our economy,” he said.
The executive director of the Grand Junction Economic Partnership is somewhere in between.
Robin Brown, executive director of the Grand Junction Economic Partnership, told Colorado Matters Thursday morning that she did not realize Halliburton still had as many employees as it did because the company has been downsizing, moving workers to other states in the last year.
“The regulatory environment has scared a lot of our local energy producers,” she said. “They’re worried about not knowing what’s coming with the changes in the oil and gas commission and the new regulations that will come… There are places that they probably consider more friendly to do business right now.”
Brown said she disagrees with large oil and gas companies in Colorado who said they aren’t worried about 181 because the rules haven’t been finalized yet.
There are a lot of factors at play, though, Brown said, including the price of gas. In Western Colorado, she said it doesn’t make sense for operators to work in the Piceance Basin while the price of gas is as low as it is.
The layoffs are not an isolated incident even for Halliburton.
Halliburton had an 85 percent decline in net income from the first half of 2018 compared to the first half of 2019, according to the federal Security and Exchange Commission.
“In North America, while we experienced a modest improvement in hydraulic fracturing activity from the first quarter to the second quarter of 2019, we expect activity reductions in the second half of the year,” the company said in its filings. “In light of expected softness in activity, we have been taking certain measures to continue to drive growth in our North America business and have been taking steps to reduce operating costs in this market.”
The Houston Chronicle reports the company had layoffs earlier this year and cut 8 percent of its workforce in North America. Halliburton said it recently restructured its North American organization.
The price for its West Texas Intermediate oil has fluctuated since 2018. In the summer of last year, prices reached a high of $77 per barrel of oil then dropped to $44 a barrel in December. Prices averaged $60 per barrel during the second quarter of 2019.
There’s no question Colorado has stepped up regulations on the industry.
And many believe it’s the most heavily regulated state in the U.S. More regulations cost money, but the bigger the operation, the better equipped they are to spread the costs around. Most are drilling in Weld County, which is not planning any local control. Small operators drilling in Boulder and Adams counties have more reason for concern.
The Associated Press contributed to this report.