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Do local hiring trends mean a turning point for Four Corners oil and gas industry?
Local activity spurs hiring trend, but opinions vary on whether trend will stick
FARMINGTON — ‘Now hiring’ signs are appearing in the Four Corners area, which is a shift after several setbacks in commodity pricing and market demand for the U.S. oil and gas industry in recent years.
Anxiety about job loss is high in the local energy industry with plans to phase out two coal-fired power plants in the coming years on top of an industry slump, changing regulations and competition with the Permian Basin and other high-production areas throughout domestic and global industry.
San Juan County’s unemployment rate increased from 6.4 percent in 2014 to 8.9 percent in 2016, according to data from the New Mexico Department of Workforce Solutions.
But things may be slowly looking up for local producers. The rate has improved slightly so far this year, with the rate through June clocking in at 8.3 percent. Some local oil service companies are hiring, including Halliburton’s Farmington office.
Halliburton had more than 30 job openings in mid-October for service operators, experienced supervisors, mechanics and electronics technicians, according to Larry Kent, Halliburton’s senior district manager for Colorado, New Mexico, Utah and Wyoming.
The hiring trend is consistent throughout the district, Kent said, and is in response to increases in local activity.
“Commodity prices have not adjusted a whole lot, but the interest and the attitude that (Four Corners producers) have is turning around, and we are reacting to their interest and attitude,” Kent said.
Kent said Halliburton is so confident in this turning point that the oilfield service company is hiring permanent employees, as opposed to temporary hires.
“If we thought that this was going to be a temporary situation and these weren’t permanent jobs, (temporary hiring is) the route that we would go, because it would be less expensive in the long run on the temporary side. Because we believe that it is a turn in the market long-term, we’re going to make that commitment to hire people permanent,” Kent said.
Kent credited the local hiring shift to the potential of activity after Hilcorp’s acquisition of Conoco-Phillips assets in the San Juan Basin and local operators, like Dugan Productions, picking up rigs.
In March, Dugan Production Corp. announced plans to drill 15 to 17 new gas wells in the Fruitland Formation. The company had 11 built and on their way to connection in mid-October, with another six wells slated for drilling in the coming months, according to Dugan Vice President John Alexander.
Though the project didn’t create any new jobs at Dugan, it did put up work for service companies and contractors to drill and connect the wells. Alexander said some aspects of the Four Corners gas and oil industry “look better in some respects,” but oil and gas companies throughout the U.S. and the global industry face a myriad of issues, including changing regulations and market prices and demand.
A turning point could be on its way, but Alexander said it would not be a quick process because it depends on so many different factors.
“We have become a truly global business,” Alexander said. “If King Fahd wakes up with a bad hair day somewhere, the price of oil will change $2 here in the San Juan Basin, so we’re driven by so many economic factors. Will it turn? Eventually and obviously, towards the end somewhere as you run out of hydrocarbon reserves, sure it will change. It sure doesn’t look like it’s going to be anytime quickly though, as far as we can determine.”
Despite a general lack of new wells — partially because of a massive drilling application backlog at the Bureau of Land Management — some in the industry see potential in existing wells in the San Juan Basin.
Tom Mullins, engineering manager of Synergy Operations, asked for legislative assistance in taking advantage of energy from marginal wells — existing oil and gas wells that have been tapped but are still producing — during an economy and job creation brainstorming event with state representatives in October.
Approximately 70 percent of San Juan Basin’s wells are considered marginal, Mullins said, and the fact that producers can’t use the potential energy in the remainder of resources in those wells is not doing local economy any favors.
“The analysis that I’ve seen the state do at the Legislature, it’s just an all or nothing category with regard to the marginal well production,” Mullins said during the Oct. 18 event. “I think there needs to be a little more specific analysis to that, but because 70 percent of our wells are marginal, we really need to consider maintaining those in that condition.”
Mullins asked for assistance in making it possible for producers to use electric generators at marginal wells to put electricity produced there into the local grid.
“If we could facilitate some kind of electrical generation, then that would keep those marginal oil wells producing and allow some royalty to come in on natural gas electrical generation,” Mullins said. “Everybody wins, and the job situation would continue to maintain those marginal wells.”
Megan Petersen covers business and education for The Daily Times. She can be reached at 505-564-4621.