More than 2,500 Texas oilfield workers found themselves jobless in just the past 10-days, as falling demand driven by the global coronavirus pandemic continued to wreak havoc on the the state’s vital oil and natural gas economy.
Most Layoffs Reported in Oilfield Service Sector
According to The Houston Chronicle, data from the Texas Workforce Commission indicates 13 energy companies laid off a combined 2,525 employees during the 10-day-period ending April 23rd. Oilfield workers in the service sector — drilling rig operators, hydraulic fracturing crews and manufacturing – were the hardest hit.
The majority of those layoffs were reported by NexTier Oilfield Services, which shed 1,014 jobs at two Houston offices, including its headquarters, as well as field offices in the Permian Basin and Eagle Ford Shale. Midland-based ProPetro Services laid off 584 employees and Houston’s Baker Hughes issued pink slips to 184.
Layoffs in Frac-Sand Sector, Offshore Industry, Oilfield Trucking
Additional layoffs came in the frac-sand sector, where 105 people at Midland’s U.S. Silica suddenly found themselves unemployed. Meanwhile, Black Mountain Sand’s decision to idle its Kermit plant eliminated 87 jobs and Ohio-based Covia laid off 82 others at a sand mine in Kermit.
The offshore drilling industry reported its share of layoffs, with Diamond Offshore cutting 102 jobs at its Houston headquarters and Enterprise Offshore Drilling laying off 75 after customers halted operations in the Gulf of Mexico.
Permian Basin oilfield trucking also took a hit, as Sun Coast Resources laid off 70 employees at its truck yard in Midland and Sunoco cut 55 positions at its Odessa yard.
Coronavirus Drives Oil Futures Negative
COVID-19 – the novel coronavirus – has sickened more than 2.7 million people around the world and killed over 186,000. Nearly 870,000 infections – including more than 44,500 deaths – have been confirmed in the United States. The citizens of nearly 200 nation have been ordered to stay at home, social distance, and avoid non-essential travel for the foreseeable future.
Earlier this week, falling demand pushed the price of West Texas Intermediate Crude into negative territory – a milestone never witnessed before. Although the oil market rebounded in recent days, prices still hover under $20 per barrel – far too low for drillers to turn a profit.
Rig counts are already falling in the Permian Basin and other Texas energy producing regions. While oilfield workers are considered essential and not subject to government stay-at-home orders, several big drilling companies, including Patterson-UTI and Baker Hughes, have warned of further reductions in response to lower demand and failing prices.
Oil & Natural Gas Downturn May be Here to Stay
Unfortunately, that means the pandemic will continue to inflict even more damage on the oil and natural gas sector well into the future.
By some estimates, the number of active drilling rigs deployed across the United States could fall by another 150 to 200 in the coming months. Meanwhile, the number of operational frac crews is likely to drop from the current 150 into the 80s by the third quarter of 2020.
“As we start shutting in production, obviously you’re not incentivized to complete wells,” one industry analyst told the Chronicle. “As that happens, you’ll see continued and sharp declines in frac activity, which will take the frac crew count below 100.”
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