Layoffs in the Bakken and a shifting economy

Zach Koppang | Energy Media Group

As the oil price slump persists consumers are reaping the benefits of lower fuel costs. Towns like Williston, however, with economies structured around the oil and gas industry, are beginning to see the effects of the nation-wide drilling slowdown.

A recent report from CNN Money examines how the slowdown is beginning to affect workers in the Bakken oil formation of Montana and North Dakota. Across the nation, oil and gas companies have been announcing layoffs. Schlumberger, the world’s largest oilfield services company, reported that it would cut 9,000 jobs companywide. Earlier this week, Baker Hughes announced the layoffs of about 7,000 employees by the end of March.

The rig count in North Dakota has dropped significantly within the past month and has reached the lowest level in five years. As of today, the rig count is 157 compared to 189 the same time last year. CNN reports that CEO of MBI Energy Services Jim Arthaud said, “My prediction is we’re down to 50 rigs by June.” Though, he didn’t express much concern about the effects it would have on his company. The firm repairs area oil field equipment, works to increase well flow and transports oil from the fields to adjacent rail hubs.

Arthaud, who grew up in North Dakota, has been working in the oil and gas industry since the late 1970s. Having experienced the industry’s cyclical nature before, he plans to use the layoffs from other companies as an opportunity to hire additional employees. The Belfield-based company currently employs roughly 2,000 people. The effects of the drilling slowdown will likely have a large impact on the region if low oil prices persist, however. Arthaud commented, “I’d say we’ll lose 20,000 jobs by June.”

Despite the current slowdown, other residents don’t seem as concerned. While the drilling slowdown may lead to layoffs in the oil and gas sector, the region continues to sustain its population and retains the need for infrastructure related to the industry. CNN reports that Josslyn Dodds, an owner of a local pharmacy said, “I hear about people getting laid off, but there are still so many people everywhere. There are so many people who have made this place their home.”

In Watford City, for example, Mayor Brent Sanford stated that when his daughter was born in 2000, there were only three other children born in the county that same year. Today, there are about 90 kids in her class. He said, “Half the students are living in RVs.” Housing developments continue to spring up at an exponential rate, and the city is in the process of building a new high school, hospital and events center to remedy the rapid population growth. Although many are concerned about what will happen if the oil boom turns bust, the region continues to hire in other industries.

In Williston, Mayor Howard Klug said, “I’m not worried, because it’s going to come back.” He added that if the oil boom dries up, there are plenty of other industries to be a buoy for the slowing pace of the oil and gas industry. He said the city is looking to refining, tourism, or even returning to the area’s agricultural roots if the oil dries up. Though, he doesn’t see that happening anytime soon.