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U.S. Oilfield Jobs at Risk as Natural Gas Prices Plummet

2/22/2024

(Reuters) — Oilfield service companies and drillers have put the brakes on hiring and further job cuts could loom as natural gas producers respond to sliding prices by slashing spending on new wells to reduce excess production.

Already some 4,680 oilfield jobs have been lost since December, according to data from trade group Energy Workforce & Technology Council. It was the first decline in four months and a reversal from the 7,700 jobs added in the same period last year.

More staff cuts could be on the horizon. Natural gas firms including Chesapeake Energy, Comstock Resources and Antero Resources have warned they were dropping rigs and frack crews as ultra-low gas prices slammed profits.

U.S. gas futures slumped this week to a 3-1/2-year low, their weakest close since June 2020 when COVID-19 quashed demand. They were trading at $1.67 per million British thermal units on Thursday, down 6%.

Oilfield companies last year added jobs in all but two months, and even those months with cuts were relatively small: just 117 positions in July, and 271 in February, according to the Energy Workforce.

“It’s going to be an interesting year for the oilfield if you don’t have exposure to oil. For companies in the Haynesville and Marcellus, it will get tough and people will lose their jobs,” said Mark Marmo, CEO of oilfield firm Deep Well Services.

In the latest wave of consolidation, hydraulic fracturing company NexTier merged with rival Patterson-UTI in September, and said this month it would close a facility in Mansfield, Pennsylvania, affecting some 104 employees.

Patterson-UTI said the closure came because it had two completion service facilities operating in that region, which services the Marcellus gas field.

That company, which operates super-spec drilling rigs, expects to be better insulated from a pullback in activity because its high-end equipment sees strong demand, CEO Andy Hendricks said in an interview.

Chesapeake Energy, soon to be largest U.S. gas producer with its pending acquisition of Southwestern Energy, is cutting its drilling budget by 20% and dropping a rig and hydraulic fracturing crew in both the Marcellus and Haynesville operating areas.

The gas rig count in Haynesville has averaged 42 so far this month, down sharply from 70 in the same period last year, according to data from Baker Hughes.

Late last month, offshore rig operator Diamond Offshore announced it would lay off 176 employees in Louisiana starting next month after it permanently closed its West Auriga rig in the Gulf of Mexico, according to a filing.

Diamond offshore had been managing operations at the Auriga rig on behalf of its subsidiary Seadrill Limited since May 2021, said Kevin Bordosky, Diamond’s senior director of investor relations and management of the rig will return to Seadrill following the rig’s current contracts.

He reiterated that all Diamond Offshore employees on the Auriga will be impacted.

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