Report: One in five oilfield servce jobs could be cut worldwide

  • Mar 25, 2020
  • Potpourri

One out of 5 oil-field services jobs could disappear this year as decades-low prices and the coronavirus pandemic hammers the industry, according to a report from Norwegian research firm Rystad Energy.

The oil-field services sector, including drilling rig operators to equipment manufacturers and hydraulic fracturing crews to offshore workers employs more than 5 million people worldwide. Rystad estimates that the current crude oil price downturn could cost the sector 1 million jobs worldwide.

Out of those projected job cuts, nearly two-thirds are attributed to crumbling oil prices while the remaining one-third are attributed to measures being taken by contractors to slow spread of the coronavirus at worksites.

“Low oil prices are likely to persist in 2021 and could lead to further workforce reductions," said Audun Martinsen, Rystad Energy’s head of oilfield service research. "But as we move into the second half of 2021, with better market fundamentals and a fading Covid-19, recruitment is likely to pick up in the shale sector and from 2022 will also kick-off in the offshore sector."

Oil War: U.S. shale industry braces for pain as budget cuts run deeper

Rystad's report comes as numerous exploration and production companies are cutting drillig budgets in response to rapidly falling oil prices, affecting spending that goes to oilfield service companies.

A showdown between Russia and Saudi Arabia has created a global supply glut while the coronavirus outbreak has lowered global demand. West Texas Intermediate crude oil was trading around $24 per barrel Wednesday morning, a price that has not been seen since March 2002 and is too low for most U.S. shale drillers.

Similar to the 2014 crude oil price downturn, Rystad expects the largest number of job cuts in 2020 to come from oilfield service companies that serve the U.S. shale industry.

With the number of completed wells using horizontal drilling and hydraulic fracturing expected to drop down to 3,800 wells in 2021, Rystad expects shale to lose as much as 32 percent of its workforce between now and December.

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