Rig workers an endangered species as technology takes over
Summary: After 20 years in the oil-and-gas industry, Eric Neece was used to its booms and busts. He wasn’t surprised when he was laid off by GE Oil & Gas in Conroe, Texas, in 2015 after oil prices plummeted. He figured his job would come back when prices crept back up.....
He was almost right. The work came back. But Mr Neece’s former job as a well logger — measuring well conditions thousands of feet underground — was gone. Those duties are increasingly being overseen remotely and handled by automation.
Technology has already transformed labour needs in most of the world’s manufacturing. It’s now up-ending the energy business, one of the last US sectors where blue-collar workers could depend on jobs with six-figure salaries.
“Our industry has had a lot of people making $US150,000 out in the field,” said Kathryn Humphrey, who spent two decades at BP before retiring from the company’s digital oilfield program in 2013. Those days were going away, she said.
For Mr Neece, the changes could reduce the number of jobs he used to do by more than 25 per cent, analysts said. Automated control systems can send commands to underground tools that capture data on a well’s geological formations, flow rate and other variables. Smaller teams of technical specialists located in remote operations centres are replacing labourers on the ground, who in the past made adjustments manually.
The energy sector had been shielded from pressure to innovate by high oil prices. When prices fell 75 per cent over 20 months beginning in 2014, oil and gas companies were finally forced to modernise to squeeze out profits. Many found they could use new technology to do the work better and cheaper, with fewer people. They have invested billions on what the industry dubs “digital oilfields”, embracing artificial intelligence, automation and other technologies.
Oil prices are back up to their highest levels in more than three years. US production has topped record levels, hitting 10.9 million barrels a day in the last week of June, according to the US Energy Information Administration, compared with its high of 9.6 million in 2015. But as of May, nationwide oil and gas employment is down 21 per cent since 2014, according to state and federal data compiled by Karr Ingham, an economist for the Texas Alliance of Energy Producers.
For decades, high school graduates could jump into a job on a drilling rig with few technical skills and expect a well-paid career. The allure of the often dangerous life of a roughneck attracted generations of workers from Oklahoma to Wyoming. A few highly active pockets with labour shortages, such as the Permian Basin in West Texas and New Mexico, retain this boom feel. Truckers, for example, are so in-demand there they can command bidding wars.
Mr Neece followed his father, who spent more than 20 years working in oilfields, into the industry in 1997. He worked in fields from Wyoming to Oklahoma.
The work paid well, and Mr Neece, 54, bought boats, cars and motorcycles. “You get used to a certain lifestyle,” he said. Things changed after he was laid off in 2015, and he looked for a new position for months. “It seems they’re doing more with fewer people.”
With diminished prospects, he left the business. He now repairs wind turbines for a living. He took a pay cut from his oil job, but he likes the stability of his new career and the way it gives him more time at home. He said he would encourage his children to study technology and become specialists. “My dad was a roughneck on the rig and then moved up the ladder. You can’t just start out swinging and hauling iron any more.”
Baker Hughes, a GE company that is the successor to GE Oil & Gas, is focusing on recruiting hi-tech workers, increasingly from Silicon Valley. “You need to combine talent from the tech industry with oil and gas expertise,” said Binu Mathew, who was hired from Oracle in 2013 and heads the company’s newly created digital products division.
“(Everyone) understands this is going to change the industry.”
Oil companies and smaller shale producers including Chevron, Devon Energy, Baker Hughes and EOG Resources are recruiting computer scientists, who develop algorithms and other tech tools.
A BP field operation outpost monitors oil and gas pumps near Wamsutter. Picture: The Wall Street Journal
At Devon’s WellCon centre — short for well construction — in Oklahoma City, a small team of engineers and scientists monitor every well the company is drilling and fracking across the US.
From several screens, Kyle Haustveit, a 28-year-old completions engineer — he has a bachelor’s in petroleum engineering — watches the company’s “showboat” development, where five rigs are drilling 24 wells in a complex project in Kingfisher County, Oklahoma, that will tap multiple layers of rock simultaneously.
One screen displays the progress as a 3km-long horizontal well is drilled 3000m underground.
A graph tracks the budgetary impacts in real time using customised software. If the drill bit goes outside the sweet spot where the company believes oil and gas to be — an area sometimes no more than 2.5m across — dollar signs tick up and a call is made to workers in the field to adjust equipment.
“I grew up in a small town in North Dakota, so I thought all oil and gas happened in the field,” Mr Haustveit said. “I didn’t have a clue that this is what it would be like.”
The centre was manned by about 80 people monitoring 40 rigs before the 2014 oil bust. Today, roughly a dozen people monitor the company’s 21 active rigs.
In Wamsutter, Wyoming, BP has about 2000 wells. Site manager Henry Hopkins used to drive to a group of wells every morning, prioritised by instinct, and check if pump jacks and other equipment were working.
These days, Mr Hopkins gets his marching orders from a computer algorithm that maps his route every morning, telling him which wells need maintenance or repairs based on sensors installed in the wells. He pops on augmented-reality glasses when he arrives at a wellhead and sends a real-time feed of what he sees to BP technicians at an office in Denver, who can transmit instructions and data into his field of vision to show him how to perform complicated tasks.
Mr Ingham, the economist for the Texas Alliance of Energy Producers, said he believed technological changes would create new jobs in the oil industry to replace the ones it rendered obsolete. But analysts say the process is disruptive for workers, because those who lose work due to automation are seldom the same people employed in newly created jobs.