Oilfield Jobs Outlook. Offshore Employment Slowdown Temporary.

Offshore Oilfield Jobs Outlook:

As someone who works in the oil and gas industry and also maintains a couple of resources for oilfield job seekers it appears to me that the slowdown we are experiencing in the oil and gas industry, both offshore and on land, is similar to the late 1980's. At that time I was just graduating college and working part time as an oilfield pumper or gauger.

In 1985 oil went from an actual price per barrel of $26.92 (inflation adjusted price per barrel of $53.15) to an average price in 1986 of $14.44 ($27.92 inflation adjusted.) The price of oil remained in the twenty to thirty dollar per barrel range for most of the late eighties, ninties and into the new millenium, not again reaching it's inflation adjusted 1985 price until 2006!

The Banking Parallels

Back in the late eighties one thing that hurt the oil and gas industry and the oilfield job sector was the lack of readily available capital. There was a banking crisis (savings and loans.) There were similar regulatory issues as the ones we have today. Savings and loans were loaning money to anyone who came in the door, with no insurance in many cases, for depositors. Oil and gas companies, mostly smaller operators, depended on savings and loan money for exploration and operating capital, in addition to investor money. That all dried up just like bank lending has today.

Now small to medium sized oil companies, drilling companies that need loans for new equipment, service companies, on down the line, can't just walk into a bank anymore and get a loan. Credit has dried up just like it did in the late 1980's.

Mideast Parallels

Another factor that crushed the price of oil back in the 80's was the inflow of cheap Mideast crude. Ronald Reagan forged trade alliances, including agreements for protection and arms, with both OPEC and non OPEC nations that resulted in an increased flow of foreign crude into the United States. The focus of drilling activity shifted overseas and American and other companies poked as many holes as possible into rich fields such as the Gwahar of Saudi Arabia and the floodgates were opened. Cheap energy started one of the greatest periods of economic expansion in history. High energy prices and a housing bubble would end up helping crush it. Now that OPEC oil is such a big part of the mixture, only cutbacks by OPEC can stabilize the price. We are beginning to see those cutbacks have an effect.

Meeting In The Middle.

We saw many hardworking roughnecks lose their jobs in the late 1980's but the oil and gas drilling industry finally did get back on it's feet again in the 1990's, though not at the same level of intensity. What happened for the twenty years between the booms was that people kept working, wells kept being drilled and oil and gas flowed because companies adjusted to the new reality. Offshore day rates for drilling rigs went down, and investors began to see bargains again and turn loose money to explore new fields.

The outlook for oilfield jobs from here on out.

What we will see from here on out is a stabilizing of the oilfield job market. As drilling companies and service companies lower their rates to those of the 1990's we will see exploration continue. When all of the costs to investors for drilling a well get back to that level, and a profit can be made on $40 or even $30 per barrel oil can be made, we will see the industry stabilize. It might take a while, since greed is a strong force to be dealt with. At first it will be a game of chicken as exploration companies demand lower day rates, and multi year price locks, and one by one drilling contractors and service companies will blink and join the bandwagon.

Keep checking the site for new job postings. There have not been many lately. Texas Oilfield Jobs