WILLISTON, N.D. – Ahmed Osman recently worked 16-hour days hauling water and sand used to frack oil and gas wells in western North Dakota.
But Osman now sees mostly eight-hour days as companies in the Bakken respond to low oil prices by cutting operations.
“It’s very slow,” said Osman, a truck driver who moved from Fargo to Williston last year.
Osman, afraid he may get laid off, was among many workers who stopped by a job fair in Williston last week for a company in a different sector of the oil industry that is hiring.
“We are worried about it,” Osman said. “That’s why we’re looking at other opportunities.”
North Dakota Petroleum Council President Ron Ness said he expects companies involved in drilling and exploration will make substantial cuts as oil prices hover below $50 a barrel. Many will start by cutting overtime and housing allowances but also may cut jobs, Ness said.
“As we move into spring and into June and those rigs are laddered in, you’re going to see some pretty substantial correction in terms of activity,” Ness said. “If prices change, that will change. At this point, I think companies are preparing to buckle down the hatches and cover the costs and try and reduce costs where possible.”
North Dakota’s drilling rig count was 146 on Friday, down about 40 from mid-December. The Department of Mineral Resources estimates that every rig supports about 120 jobs. Ness estimates that figure at about 180 jobs.
Using those estimates, the drop in drilling rig count has potentially affected 4,800 to 7,200 jobs in North Dakota in six weeks.
“It’s not just the guys on the rigs,” said Williston oilfield worker Shad Frederick. “Everything they use is brought in on a truck.”
Frederick, from Boise, Idaho, works for a company that keeps equipment used for drilling and fracking fueled. He recently returned from two weeks off to find his hours suddenly cut from 80 to 90 a week to 40.
When a major oil company cut back on how many drilling and fracking crews it contracted with, that trickled down to workers like Frederick, as well as others who haul drill pipe, repair equipment or do other work that supports the drilling activity.
A recent CNN story attracted a lot of attention for a quote from MBI Energy Services CEO Jim Arthaud that predicted North Dakota would be down to 50 rigs by June.
“I’d say we’ll lose 20,000 jobs by June,” Arthaud is quoted in the CNN story. Cell phone messages left for Arthaud by Forum News Service were not returned last week.
The Department of Mineral Resources projects the rig count will go no lower than 120.
“We think 50 rigs is pretty pessimistic,” spokeswoman Alison Ritter said. “We don’t see things happening that drastically.
Oil field service companies Schlumberger and Baker Hughes, both major employers in the Bakken, have announced they will have thousands of layoffs in their operations worldwide. Both companies declined to answer how many layoffs are planned in North Dakota.
Halliburton, which employs 1,500 workers in North Dakota, has not had any workforce reductions in the state, a spokeswoman said. The company will continue to monitor the business environment and make adjustments as needed, she said in a statement.
Reduced hours and uncertainty about the low oil prices may cause some workers to return to their home states.
Losing quality employees will be a major concern for oil companies as prices recover.
“It’s hard to get people back,” Ness said. “You want to keep your quality workforce to the extent possible.”
Oasis Petroleum is among the major Bakken operators making cuts this year. The company has announced it will reduce its rig count from 16 last year to six by the end of March, as well as delay other well completions this winter.
While Oasis has had to let a number of contractors go, the company does not plan to lay off any of its 320 workers in North Dakota, said Larry Skaare, director of community affairs.
“We’re trying to do our best as far as a company goes to make sure that all of our employees are protected,” Skaare said. “We’ve got to be able to ramp down and ramp up at the same time.”
Frederick said he knows other service company workers who have left after seeing hours reduced, but he’s trying to find a new opportunity that would allow him to continue earning good wages in North Dakota.
“For somebody with experience, there’s still money here,” Frederick said.
Other sectors of the oil and gas industry will continue to have demand for workers even while drilling slows, such as staff to maintain the wells that are producing. The Department of Mineral Resources estimates prices would need to drop to $15 a barrel before continuing production would cease.
In addition, workers will be in demand to continue building out infrastructure to process and capture natural gas, Ness said.
Bridger Transportation hosted job fairs in Williston and Dickinson last week to hire truck drivers to haul crude oil. The company has about 35 employees in North Dakota and officials said they have enough work to easily double that number of drivers even while oil prices are low.
“The drilling may stop, but oil’s got to be moved,” said Justin Olson, area operations manager.