Worker Shortages In The Permian Basin Continue Even As Companies Tap The Brakes
By Mitch Borden
The Permian Basin’s oil industry hit its first real slow down in years over the last seven months. Companies have cut thousands of jobs and the number of oil rigs has fallen. But at the same time, the region is producing more oil than ever and labor shortages are running rampant.
Even though the oil industry is becoming more efficient, labor shortages aren’t expected to go away. In fact, they may get worse in the coming years. This becomes clear when you visit some of the oil industry's rural outposts.
Take the small town of Orla, Texas, for example. It sits just south of the Texas-New Mexico border. The town of just a handful of residents is basically a four-way stop. It's constantly filled with large herds of semi-trucks, some of which are filled with water and mud from drilling operations. Some of them are headed to a waste disposal site just outside of town run by Milestone Environmental Services.
There, workers quickly unscrew caps, releasing black fluid from the truck's huge tanks. The dark liquid runs into nearby drains, as site manager Julio Ibarra looks on.
After the tanks are emptied, Ibarra explained, his crew will get high-pressure hoses to start cleaning the truck. In a day, they'll service roughly 100 trucks.
It’s dirty work and things get hot under the West Texas sun, but Ibarra loves his job.
“I mean to get to the nitty-gritty," said Ibarra. "The pay’s great, the housing. All they’re asking is for a full day's work.”
The Permian Basin's oil industry has been going through a slight cooling period since the beginning of the year. The area's rig count dropped by 32 percent from January to May, according to the Dallas Federal Reserve, and companies related to the oil fields have cut thousands of jobs over the last six months. But you wouldn't know this is happening by driving around. The roads are packed with workers like Ibarra, there are 18-wheelers everywhere and there's drilling happening practically everywhere you look.
The ability of this West Texas industry to continue growing amid national job cuts is special, especially since this hasn’t been the trend in oil patches across America. In the last 5 years, the nation has lost about 41,000 oil and gas jobsaccording to the U.S. Bureau of Labor Statistics. Meanwhile, the Permian is producing around 4 million barrels of oil a day — which is a new high — and in 2018 the region added around 10,000 jobs related to the oil industry.
Jesse Thompson is a senior business economist at the Dallas Federal Reserve and explained West Texas may have a lot of oil, but it doesn't have enough people to work in it.
“Everybody to the extent necessary is bringing their labor in from outside the region," said Thompson.
Thompson also explained it now takes fewer workers to produce a barrel of oil than it used to because of improvements in technology. He also pointed out that the Permian Basin's major growth hasn't prevented labor shortages from happening — at least not yet. Even though some in the West Texas energy sector have been reducing their workforce recently, that number is nowhere near the amount the industry's added in recent years — and many more jobs still need to be filled.
“I don’t think I’ve talked to a single person from an industry that hasn’t worried about labor shortages in the recent past and labor shortages going forward,” said Thompson.
Companies, especially those related to oil, offer as many perks as they can to lure potential employees. Things like health, dental and eye insurance. There's also housing options, retirement plans, competitive pay with overtime, and per diem.
“If you need a worker, if you need a skill set and it’s not available, you do what you need to do to get them in there," quipped Thompson.
That means companies fly people in, recruit anyone they can, poach workers, and do whatever it takes to keep employees.
At recruiting fairs, like the one where Jason Wiggins was looking for applicants, companies in the energy sector are trying to attract applicants.
Wiggins manages service crews across the Permian basin for SPN Well Services, an oil field service company that helps with drilling and production across the United States.
“You get five or six guys, you lose two or three," explained Thompson.
He's lived and worked in the Permian Basin since 2012 and he's never seen it so busy, which makes it particularly challenging to retain workers.
“I would say we’re usually looking for at least 15 to 20 guys," said Wiggins.
Many jump from job to job looking for the company with the best pay or benefits. But for Wiggins, his challenge when hiring isn’t finding applicants — its finding skilled workers.
They’re a hot commodity because every downturn in the oil market means a slew of workers exit the industry for good to pursue new careers, which leaves businesses adrift. Companies are burdened with having to find and train a new generation of workers.
Wiggins thinks many get into the oil business for the good wages without thinking about the price they'll have to pay.
"People think strictly money and they get out there and it’s a sacrifice and it’s a hard job. It’s a hard life."
Standing outside a gas station in Orla, Rodrigo Burciaga agreed. “I mean it sucks, it’s all about the money out here."
He dropped out of college after getting married. He supervises construction crews for a water transfer company and is currently making around $80,000 — lower than what he’d like to be making. Burciaga said there is no love lost between companies and their employees. Every worker is here to make money, he said, so if you’re out in the field and a company sees that you're a good worker and offers you better pay, you take it.
"So everyone is constantly changing," said Burciaga.
He doesn’t expect to stay in the oil industry forever. He’s going to get his degree and be a graphic designer, but he also says he’s going to ride the oil wave for as long as he can. And, analysts believe that could be for years.
With new oil pipelines coming online soon, the region is preparing for even more growth. That means the Permian Basin’s labor problem isn’t going anywhere anytime soon.