One of the most painful busts in the history of crude oil happened just six years ago when a sharp price drop cost 200,000 roughnecks, almost half the entire workforce, their jobs. And now, the spread of the coronavirus coupled with an oil-price war between Russia and Saudi Arabia threatens to devastate the oil services industry and its workers once again.
Tens of thousands of Texans are being laid off across the state in places like the Permian Basin shale fields in West Texas as companies shut down drilling rigs, according to Ryan Sitton, a state oil regulator. Announcements are trickling in. Drilling-service company Canary LLC cut 43 workers last week. And oilfield pipe maker Tenaris SA is firing 223 from its Houston-area facility. But the biggest blow so far came from Halliburton Co., the world’s dominant fracking-services provider, which is furloughing 3,500 workers at its Houston headquarters. The cutbacks follow a precipitous drop in the price of West Texas Intermediate, the U.S. benchmark crude. Futures in New York are down more than 60% this year and just had their worst week since 1991.
While workers in just about every industry are threatened by the economic slowdown, few are more at risk than those in the oilpatch. The Midland-Odessa region of West Texas, where Occidental Petroleum Corp. and Parsley Energy Inc. have dominated, could be decimated, according to a report from the Brookings Institutions. More than 40% of Midland’s workforce is in high-risk industries, mostly oil and gas, the highest of any region in the U.S., it said. Overall, the services workforce today stands at about 316,000, down about 30% from its peak in 2014.
“It’s pretty overwhelming,” said Kendrick Trinidad, a 25-year-old worker who said he was previously a frack supervisor for Recoil Oilfield Services and most recently was put on “standby” until further notice at another oilfield company, Big Ass Tanks. He remembers his dismissal in the last big downturn of 2015 while still having to cover his $1,100 monthly truck payment. “It is uncharted territory, because you just never know.”