Last week, the Bureau of Labor Statistics (BLS) released its monthly jobs data. The energy industry has gotten used to seeing layoffs and downsizing among many key players. It doesn’t seem like all that long ago we were tallying the number of oil and gas job losses, which reached approximately 155,000 over the past two years.
But November’s numbers showed an increase in energy jobs for the first time in over two years. Reuters reported that combined oil and gas extraction and support services jobs increased by 3,300 to 384,300 in November.
On Friday, the U.S. rig count, reported weekly by Baker Hughes, also increased 7 to 665. An continual increase of rigs in the Permian Basin, where growth still appears strong, has led to reports of hiring. Halliburton is set to hire 200 workers in the Permian Basin in West Texas and New Mexico in the upcoming months.
Deloitte’s recent Oil and Gas Industry Outlook 2017 also indicated a slow but steady path towards recovery in the energy sector. John England, Vice Chairman, US Energy & Resources Leader and US and Americas Oil & Gas Leader at Deloitte, weighed in, saying:
While I called 2016 the “year of tough decisions,” I’d characterize 2017 as “the slow road back.” Supply and demand balances are still slow to return to a sustained equilibrium, although the OPEC decision to cut production should help accelerate the drawdown of global oil inventories, even if OPEC countries do not completely deliver on their announced production cuts.
England also said his optimism for the industry stemmed in part from the resiliency of the industry, home to some of the “brightest, most innovative people I have ever met.”
Continued development of innovative practices and improved technology have allowed many companies to weather through the downturn that finally seems to be subsiding. Deloitte’s outlook specifically points to oil companies’ ability to “operate in a lower price environment, returning to a healthier focus on capital and operating cost discipline.” Gone are the days when the mantra seemed to be “drill fast, worry about the costs later.” Deliberate and careful cost analyses have allowed companies to maintain profitability and a much lower dollar per barrel.
Deloitte’s assessment of what’s to come, however, also involved a moment of looking back on the downturn. One effect of all those layoffs and all those jobs cuts is the workplace environment the industry faces now that recovery is at hand. Despite England’s declaration that the industry contains bright, innovative individuals, it might be more difficult now to attract such talent to the oil and gas industry. Fear of further cuts and disillusionment about how many companies dealt with the downturn has some job-seekers looking beyond oil and gas into other, friendlier industries.
The downturn and resulting layoffs across the industry threaten to damage the industry’s brand as a career destination. This seems to make it more imperative than ever that oil and gas companies be innovative in their approach to talent acquisition, development, and deployment. As a large number of senior employees head toward retirement, companies should find ways to transfer this wealth of knowledge to the next generation of employees. When thinking about potential constraints on the recovery of the industry, we should view people as equally, if not more, critical to capital.