Five oilfield services companies discuss the increasing labour challenge as activity picks up

Five oilfield services companies discuss the increasing labour challenge as activity picks up

By Deborah Jaremko

March 3, 2017, 1:56 p.m.

http://www.jwnenergy.com/article/2017/3/five-oilfield-services-companies-discuss-their-labour-challenges-activity-picks/

 

A familiar problem is facing Canada’s oilfield service providers as they emerge from one of the worst downturns in decades—there aren’t enough workers to fill increasing demand.

It’s the middle of fourth quarter earnings season, when companies announce their operating and financial results from last year and their outlook for the future.

Stabilized commodity prices have encouraged producers to step up drilling activity, and the growing staffing issue is a common thread in response from drilling service providers.

Here is a selection of commentary from five key companies in recent Daily Oil Bulletin detailed coverage.

  1. Canyon Services Group

Canyon Services Group says that right now demand “far outweighs” its ability to supply crews as commodity prices improve and producers are putting them back to work.

However, the company expects to have both enough workers and equipment by this summer or fall.

Canyon Services has been operating at full staffing capacity since the middle of November and it expects to be in this position for the rest of 2017, said chief executive officer Brad Fedora.

At current levels all service companies would put their parked equipment back to work if they could staff it, but they can’t, he said. During spring breakup Canyon will try to add at least 100 people to its employee roster because it is “basically sold out” for the rest of 2017.

The promise of higher pay will lure many who were laid off back to the oilpatch, Fedora said.

“Now that we have had six months of positive momentum in the pressure pumping business and once we get breakup behind us we think those people will return to the oilfield,” said Fedora. “Obviously the pay is better than [in] most industries but a lot of the people were quite spooked given what had happened in the prior two years with respect to spring layoffs.”

  1. Cathedral Energy Services

Cathedral Energy Services says the “dramatic” improvement in its business prospects that began in the fourth quarter of 2016 has led to a challenge—finding enough skilled labour to meet the increased demand.

The company says its active job count has doubled since September 2016 and more than tripled since the lows in early 2016.

“This has presented a completely new set of challenges as we have had to aggressively ramp up our business. Compared to the last two years, these are good challenges to have,” the company said in its fourth quarter and year-end 2016 earnings release.

“The big issue for Cathedral and our industry in this improved environment has been staffing up to meet demand. Attracting workers back to the industry has been a challenge particularly in Canada due to the industry seasonality factors.”

  1. Calfrac

Labour could become an issue as pressure-pumpers gear up for a recovery, Calfrac Well Services said in reporting its fourth-quarter 2016 results.

“The labour market is and will continue to be tight, and the company believes this will be a significant constraint in bringing additional capacity back into service,” the company said.

Last year was among the most challenging ever for North American pressure-pumpers, management said, noting the U.S. land rig count fell to 380 rigs while the Canadian count slipped as low as 34 rigs in 2016.

Since the start of 2017, Calfrac said activity has been strong and expects full utilization of its active fleet in Canada through to spring breakup.

In the U.S., the company said it seeing stronger demand in the Bakken and Marcellus.

  1. Essential Energy Services

Essential Energy Services says it is having trouble finding enough people to crew its equipment even though its headcount was increased 18 per cent between September and December last year (to 348 at the end of 2016 from 295, excluding its service rig division, sold in December), and 35 per cent since first-quarter 2016.

Hydraulic fracturers and large drillers are setting the pace for service price increases, but a labour shortage may be a limiting factor for activity, Essential says.

The company is continuing to hire during the first quarter, primarily in its coil-well service division, and expects that to continue through the year, attracting candidates through advertising, referral bonuses, word-of-mouth and dedicating additional resources to recruiting, according to Karen Perasalo, vice-president of investor relations and corporate secretary.

“We are finding there are not enough ready-to-work people so we are training and developing new-to-industry or new-to-Essential people, which takes additional training time.”

  1. Trinidad Drilling

With increased activity, Trinidad Drilling has had to beef up its labour pool, a situation that CEO Lyle Whitmarsh says has gone smoothly but recognizes it may get harder.

“To date we’ve been able to successfully crew reactivated rigs. During the downturn we kept our most experienced crews and redistributed them throughout our fleet. As activity levels have increased, we have been able to move those crews back to their previous roles,” he said.

“In addition, since our low in the second quarter of 2016 we have added approximately 850 employees. The majority of them were previous Trinidad employees.”

As activity continues to increase, Whitmarsh acknowledged that crewing rigs will be more challenging. That said, he’s confident the company will be able to meet that challenge.

“Our management team has a strong record of successfully crewing rigs during the most challenging conditions, including following the last downturn,” he said.

“We have carefully laid out plans and processes to find skilled crews and we expect that our past experience and thorough planning will position Trinidad well to crew rigs.”

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on March 6, 2017, in economic impact, oil. Bookmark the permalink. Leave a comment.

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