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. And of course, that includes thousands of jobs lost in Oklahoma’s energy sector.
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.
Source: Rystad Energy