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Note from the webmaster: The last time we saw things this bad in the oilfield, as far as oilfield jobs were concerned, was the late 1980's. Back then there was a banking crisis (savings and loans), much like we have today, just not as bad. As a solution to high energy prices President Reagan opened the giant spigot of Mideast oil by making deals with the Saudis, Saddam, and others, with long term contracts and agreements for U.S.  military protection. As a consequence the domestic oil and gas industry was crushed for nearly a decade.

Many hard working men and women lost their jobs as cheap foreign oil poured in. Now a different set of circumstances is upon us. Demand destruction, a fancy name for people not using as much oil and gas because they are broke, has reduced worldwide oil consumption to levels not seen in a decade.  The current low price of oil will not last, so don't give up hope.  There are signs that oil may stabilize in the $70 per barrel range, where gasoline and diesel are still affordable and exploration is still profitable. Natural gas needs to stabilize above the $4.00 per MCF range to be profitable.

The Current Situation       Why Has The Price Of Oil Fell?

We've been on a good roll, as far as oilfield jobs go, for the past decade. It's hard to explain to a hard working roughneck why there are no jobs but here is the most simple explanation I can come up with.

 Some of the previous decade's high oil prices were due to speculation on the part of  Wall Street and foreign traders, and part of it was real demand from an energy hungry world. Some analysts estimate that speculation accounted for at least thirty percent of the high price of oil. However, much of the recent decline is due to "demand destruction", or the lack of demand for oil.  Hundreds of huge container ships like the one above, bigger than a football field and consuming hundreds of gallons of diesel per hour,  (that just a few months ago were crossing the Pacific in droves, carrying thousands of tons of cheap plastic junk from China),  now sit idle at anchor in foreign ports.  The factories that made all that cheap junk sit idle as well, no longer needing millions of tons of oil based feedstock's such as plastics. Us Americans, who are strapped with debt and no longer able to borrow against our inflated homes, can no longer afford to purchase the cheap plastic things the Chinese factories once made, which  the diesel burning Chinese container ships once shipped.

 On the oilfield side, because of the banking crisis, banks have stopped lending to small and medium sized oil and gas exploration and drilling companies. On the positive side, OPEC is finally cutting back on production, which will have a positive effect on oilfield jobs in the coming months.

  In the short term we are seeing a return to the fundamentals of business. As drilling and service companies adjust their prices, exploration will continue. In the short term the focus will be on known reserves.  The focus will be on infill drilling, horizontal drilling as a part of enhanced recovery, and other methods to get more money out of what is proven and can be shown to bankers when loans are needed. We will see directional drilling increase, shale gas such as the Barnett shale plug along, and exploration companies finally get capital from investors and banks to go after "sure bets". 

What this will mean in terms of oilfield jobs is steady work, lower day rates and lower worker wages. In the long term, as the U.S. dollar becomes worthless, (because of all the money printing to solve the financial crisis), money will pour into "sure bets" like oil and gas, gold, and other natural resources that will continue to be needed by the rest of the world. Finally, and most significant is that the reduction in exploration is going to be felt later down the road. At the peak of the world economy we were using all the oil that every well on earth could produce.

When the economy sputtered a surplus built up. Don't expect oil to remain at these prices. In fact we are seeing signs of a recovery now, as oil nears $70 a barrel.  Oilfield jobs will be some of the best jobs to have in the coming decade as new reserves are hard to find and China and the rest of the developing world demand more energy. The Chinese and Indians have had a taste of driving in cars instead of pedaling bicycles and are not going to return to them. In India you can now buy a new Tata brand passenger car, that gets 30 miles per gallon and seats four people, for only $1800. Imagine one billion more cars on the road in the next decade.

Natural Gas, A Big Part Of The Equation. Oil get all of the attention. It's more tangible to us for some reason but natural gas is a very big part of domestic drilling. Not until natural gas stabilizes above four dollars will we see the rig count really pick up.

Nolan Hart

Current Gulf Drilling Outlook.  (Update, Not Good But Improving)

 Drilling has fallen off in deeper water with only a few new projects coming on line at the very edge of US territorial waters. Day rates for semi-submersible rigs capable of working in 4000' of water are currently in the $320,000 range and falling so this may cause some companies with cash reserves to initiate new projects. Because of the falloff in the price of oil the oilfield job sector is cooling off some but there are still openings for skilled workers.  The outlook for offshore jobs looks fair to poor at this point with only a few companies actively placing ads for qualified offshore workers.

Land Rig Outlook For Texas.

The fact that oil has fallen off of its stratospheric highs of this past summer is now affecting the rig count. Some companies may be taking advantage of lowered day rates in 2009 if they have cash on hand for exploration in hot new areas such as the Eagle Ford Shale and Haynesville shale.

 The Permian Basin has fallen off drastically as well with only a small amount of horizontal re-entry in established fields as well as exploratory wells to the south. Exploration of the limestone gas play along IH-10 in from Sutton County east and west has also lessened. Rio Grande deep gas drilling is steady despite a falloff in natural gas prices. Companies such as Petrohawk Energy are making substantial new finds in the newly discovered  Eagle Ford Shale Play  in South Texas which promises to be the next hot shale gas play. We will just have to see if decreased day rates for rigs and service company day rates help spur exploration in a down oil and gas market.

Companies currently  actively seeking employees:

I recommend the following books for anyone considering a career in the oil & gas industry.  For More Visit More Available At The Oilfield Bookstore 

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