April 20, 2024
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Oilfield Companies Brace for Job Cuts Amid Sliding Natural Gas Prices

In response to sliding natural gas prices, oilfield service companies and drillers are slowing down hiring efforts and preparing for potential job cuts. Recent data from the Energy Workforce & Technology Council indicates that approximately 4,680 oilfield jobs have already been lost since December, marking the first decline in four months. This downturn stands in stark contrast to the 7,700 jobs added during the same period last year.

The looming threat of further staff reductions is fueled by natural gas producers, including Chesapeake Energy, Comstock Resources, and Antero Resources, who are reacting to ultra-low gas prices by scaling back spending on new wells. U.S. gas futures have recently plummeted to a 3-1/2-year low, closing at $1.67 per million British thermal units, down 6% from previous levels.

The situation is particularly challenging for companies operating in regions like the Haynesville and Marcellus, where the impact of reduced drilling activity is expected to result in job losses. Mark Marmo, CEO of oilfield firm Deep Well Services, emphasized the impending challenges for companies lacking exposure to oil.

In response to market conditions, companies are also pursuing consolidation efforts. NexTier, a hydraulic fracturing company, recently merged with Patterson-UTI and announced the closure of a facility in Pennsylvania, affecting approximately 104 employees. Patterson-UTI, which operates high-end drilling rigs, anticipates being better positioned to weather the downturn due to the strong demand for its advanced equipment.

Other companies, such as Diamond Offshore, have announced layoffs as a result of operational changes. Diamond Offshore will lay off 176 employees in Louisiana following the permanent closure of its West Auriga rig in the Gulf of Mexico. This decision comes amid efforts to manage operations more efficiently, with the rig’s management transitioning back to Seadrill Limited.

Overall, the oilfield industry faces significant challenges ahead as companies navigate the impact of declining natural gas prices and adjust their operations to remain competitive. As market conditions continue to evolve, further workforce reductions and operational changes may be on the horizon.

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