Oilfield Woes: Workers adjust to low prices, layoffs and uncertain future
Published 4:37 pm Friday, March 4, 2016
- Kilgore ISD could see over $200,000 coming back to the school.
Brandon Parnell was on a family ski vacation in early January when he got the news he had been laid off. The oilfield supply firm he worked for had been struggling for months, ever since oil prices began their precipitous decline.
“It wasn’t unexpected,” Parnell said. “My family is in the oil and gas business, and I grew up in the oilfield. I’m old enough to remember the 1980s – living in nice houses and then moving out of nice houses.”
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It was his boss who called that Monday morning with the news.
“This was the nicest man I’ve ever worked for,” Parnell said. “It was harder for him to tell me than it was for me to hear it.”
Parnell’s wife, Brittany, knew something was wrong, he said. But he waited until the couple and their three children, ages 16, 9 and 2, returned home before breaking the news.
“But the first thing she said to me was that we’ll get through it,” he said. “We’ll find something else.”
Realizing there are no more oilfield jobs to be had nowadays, Parnell and his wife have started their own business. They subcontract to builders, using a spray-on liquid masking to protect windows, bathtubs and other surfaces that tend to get damaged during the construction process. They also clean windows.
It’s a niche Parnell found through a friend who left the oil patch in Lubbock.
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“We bought some equipment, and we have some accounts,” he said. “But of course we’re hoping for more.”
In the meantime, the family has scaled back spending – dramatically, Parnell said.
“For six years, I’ve driven a nice truck the company provides,” he said. “Now I drive a farm truck I got from a relative.”
The family doesn’t go out as much now for dinner or for movies.
“It’s gone as far as renting movies, even,” Parnell said. “We might say well, we rented two last week, so let’s hold off this week.”
HIT HARD
The Texas economy is booming, with one notable exception. The oil and gas industry is hurting.
Karr Ingham, an economist with the Texas Alliance of Energy Producers, estimates that so far, Texas has lost 76,000 oil industry jobs since a peak employment of 306,000 in December 2014. And more job losses are coming, he said.
“The last time the crude oil price and the rig count were at present levels, upstream oilfield employment in Texas was about 100,000 less than the January 2016 estimate of about 230,000,” he said. “That suggests the bloodletting in Texas’ upstream oil and gas industry will continue as the year progresses.”
The term “upstream” refers to jobs dealing directly with exploration and production. Even more jobs have been lost in support industries, he estimates.
That’s why it’s actually an improvement that oil production has started to decline. It’s a matter of supply and demand. High production is keeping oil prices low. And low oil prices discourage production and exploration. That’s evidenced by low rig counts and lower production numbers.
In January, production was down 2.3 percent from January 2015. But the value of that oil, an estimated 102.2 million barrels, was $2.92 billion – which was 36.8 percent lower than January of last year.
“It is at least somewhat encouraging that estimated crude oil production in Texas actually posted a year-over-year decline in January,” Ingham said. “Although the decline was modest, we can expect the pace of production decline in Texas and the U.S. to accelerate in 2016.”
From his perspective as president and CEO of Fair Oil Company, Bob Garrett said the industry has always been cyclical.
“The industry has lost a lot of jobs this time,” he said. “And undoubtedly, there’s a trickle-down effect that we’re starting to see in other areas of the economy.”
Garrett sees some of those effects as a member of the board of directors for a local bank.
“The stock prices of some regional banks in Texas have suffered across the board because of speculation that their portfolios may have some exposure to the oil and gas industry,” Garrett said. “Those reductions have come about not because of their balance sheets, but because of speculation about what might happen.”
But like Parnell, Garrett lived through the 1980s oil bust, when so much of the state’s economy was dependent on the petroleum industry. But East Texas is more economically diversified now, he said, with larger medical, education and service sectors.
“And there are some economic benefits to cheaper prices for fuel,” he said. “Some sectors are really enjoying the low gas prices. That’s money in the consumer’s pocket, and that can really make a difference.”
Garrett predicted 2016 would be a tough year for the industry. But he also predicts some improvement by the end of the year.
That’s a long time to be out of work. And that’s where East Texas Workforce Solutions can help, says Dough Shryock, who works with that agency as the East Texas Council of Governments.
“We are starting to see people come in,” Shryock said. “People from the oil field are looking to retrain, and they say they want training for jobs that are a little more stable. Some want to get out of the industry altogether.”
That’s something East Texas Workforce Solutions can help with.
“It is difficult to transition for many people,” Shryock said. “But there are some technical skills that translate across various industries. Welding, for example – it’s not the welding I did back n the day; it’s high tech, it’s arc welding. Welders are some of the people coming out of the oil fields and enhancing their credentials. They’re very valuable, in any industry.”
There are workforce centers in each of the 14 counties in the region, and they’ve recently launched a new website, EastTexasWorkforce.org.
“It’s a first stop, so they don’t have to be running across the county,” Shryock said. “We can identify how we can help and where we can help. We can get them in touch with a case worker. And there’s lots of useful information.”
The agency also is developing a call center to reach out to rural communities.
“Our average client commutes about 30 miles, and that’s a long way to go just to ask a question,” he said. “So call in, and look at our website. We can help.”
STABILITY
For Brandon Parnell, a steady income is important.
“In the oil industry, it’s easy to get comfortable,” he said. “And lots of us did. I had a steady paycheck. It allowed me to take vacations, to do things with my family, for my family.”
But that’s gone. His wife, a hairstylist, is working more hours now. And they’re hoping their new business takes off.
“The transition isn’t easy,” he said. “I have a lot of friends who are in the same position I’m in, but they’re struggling to find a job in East Texas. Some are fortunate to find jobs in the oilfield, which is all they’ve ever known, but they’re having to move for it. And the majority of them are unemployed.”
Parnell’s goal is to build a steady business. When oil prices come back up, as they’re sure to, he acknowledges that he’ll be sorely tempted to get back into the industry.
“The temptation is always there,” he said. “And I know I’ll be one of the first they call back. But that’s why I am working to start this business. So I won’t be tempted. And I know that my success or failure in this is all up to me, not to oil prices.”
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