Stephen Borud’s company, 4 Aces Oilfield Repair, made its first profit last year. Launched right before the price of oil tanked in 2014, the business has been making do throughout the downturn, losing money but keeping the shop open with sweat, patience and prayers.
It’s a familiar story in Wyoming, where the oil and gas sector busted suddenly after the price of crude fell from more than $100 a barrel to the high $20s.
Not all companies that service the oilfields made it, but those that did, the independent water haulers, small machine shops and large multinational firms, are witnessing an uptick in their businesses.
At Wyoming High Country Fabrication in Casper, the four workers laid off when business dropped have already been brought back. The Wyoming firm works farther from the drilling activities in Wyoming than places like 4 Aces, particularly serving oil refineries. The recovery in oil prices that has recently boosted hopes of a rebound in Wyoming has already made its way to their bottom line, said sales manager Ryan Noel.
“People are spending money,” he said. “We’re pretty thankful.”
In short, optimism is growing in the service sector. Work is coming in and shop bays are buzzing, but as these businesses move into 2018 with more oomph than the previous year, it’s unclear what the uptick will mean for Wyoming jobs as workers trail behind a slow improvement in an industry that’s learned how to do more with less.
A call for workers
Halliburton, the largest oil and gas service firm in the U.S., reported Monday nearly $6 billion in revenue for 2017, exceeding 2015 numbers when the industry started to slide. The firm recently held a job fair to hire 50 workers in the Casper area for a variety of positions in cementing and fracking operations.
A spokeswoman for the company said Halliburton was increasing its Wyoming workforce to meet demand.
That industry activity the company seeks to meet is clear. All down the eastern edge of the state drilling activity has increased, as have the number of applications to drill new wells, up 174 percent from December of 2015.
Steven Kirkwood, of Kirkwood Oil and Gas in Casper said the price of oil is going to be robust in 2018, and drilling is going to follow that price.
The challenge is workers.
The state has yet to replace the manpower that was wiped away through layoffs and bankruptcies in recent years.
“There’s a lot of iron out there, but getting people to run it is a different story,” Kirkwood said of recent drill sites his company has been a part of.
Wyoming’s job market is tighter than it was during the bust. Those who lost work found a replacement or sought greener pastures outside of Wyoming.
The state’s oil and gas jobs slowly increased throughout 2017. December had the highest number of jobs in the sector with 11,900 workers, about 1,500 more than the year before.
Meanwhile, unemployment fell to 4 percent in the fall of 2017, slightly better than the national average.
Halliburton’s CEO Jeff Miller acknowledged the tight job market nationwide, but said he was confident in Halliburton’s ability to pull workers in a call with investors Monday.
“We mitigate the labor issues through the national recruiting effort,” he said. “It’s important to remember that this is the same human resources machine that hired 21,000 people in 2014.”
Drilling efficiency may mitigate the job crunch in Wyoming some say. When prices dipped down to the $30s, $40s and $50s, companies found new ways to operate.
While some are expecting a flush of workers to meet increased drilling and completion activities in Wyoming in the coming months, others say slow growth is more likely.
Companies have learned to operate tighter, said Jim Robinson, principal economists in the state’s Economic Analysis Division.
Jobs will likely go up to meet demand, but fewer workers may be needed to get the same results, he said
“I think we’re still in that area there where oil and gas companies are very cognizant of the fact that they’ve had low profit margins up to this point,” Robinson said. “They are looking at better prices, but they are still keeping the bottom line — it’s very much on their minds.”
It’s not unusual during recovery periods for jobs to return at a slow pace, said Rob Godby, Director of the Center for Energy Economics and Public Policy at the University of Wyoming.
“The bottom line is the workers, in each boom, they don’t tend to come flooding back in the numbers that they left,” he said. “Unless it’s a really big boom, a fundamental change.”
Borud, from 4 Aces in Casper, is considering hiring on another worker. They are always busy and the three partners who launched 4 Aces in 2014 may need help to meet work demand.
The service sector is lagging in just one way, Borud said. Prices haven’t risen for these guys. As the oil sector slid, so did the cost of running rigs, manpower and parts. In short, they are still charging bust prices. That’s expected to change soon. Halliburton’s CEO alluded to it in his earnings call. Kirkwood, the oil and gas operator is anticipating it.
For Borud, from the Casper small oilfield company, prices need to rise for this upturn to really hit home.
“Our rates haven’t gone up. I don’t know when they’ll go up,” he said. “You’re making money, but you’re not making the money you would have three years ago.”
Still, he said, Wyoming’s oilfield services industry may be out of the woods.
“We run into different guys out on the rigs, and everybody is picking up,” he said. “There’s some hope.”