Federal Reserve Bank economists see weak rebound in oil jobs


Paula Dittrick
OGJ Online

HOUSTON, June 18 -- The US rig count has rebounded to the highest level since the mid-1980s, yet upstream employment as of December 2000 lagged 10.9% below its peak, said two analysts at the Houston branch of the Federal Reserve Bank of Dallas.

"Job growth in oil and natural gas extraction remains surprisingly weak," Robert W. Gilmer and Albert Mitchell said in a recent report.

"Texas was down 13.4% and Louisiana down 16.4%. Lafayette, a major jumping-off point for offshore activity in the Gulf of Mexico, was 25.1% below its previous oil employment peak, and Houston remained 8.6% under its 1998-99 peak," Gilmer and Mitchell said, citing the latest available Bureau of Labor Statistics.

Gilmer told OGJ Online that fewer jobs exist in oil production because of oil company consolidations and also because technology has enabled the industry to employ fewer people.

"The decline in producer employment is part of a long-term trend. Employment in 2000 was only two-thirds of what it was in 1990," Gilmer and Mitchell wrote.

"Although productivity growth remains at work, the data strongly suggest that reduced job growth may be closely related to the string of mergers among the major oil companies," they wrote. "This conclusion leaves us without a firm answer to whether much oil-related job growth lies ahead, either in Houston or elsewhere, but the possibility of more oil jobs in 2001 remains solid."

Independents
Meanwhile, the independents are driving US drilling and helping oil sector employment.

John Duncan, director of human resources for Apache Corp., Houston, said employment in the industry is affected by numerous factors.

"I think the mergers have taken some people out of the business, and the megamergers have slowed exploration. The last downturn in commodity prices was so severe that everybody is still gun shy about hiring. Also with technology, we can probably do more with fewer people," Duncan said.

He said attrition rates at Apache are higher than in previous years, explaining that competing oil companies are recruiting. Higher levels of drilling activity have raised the demand for land administrative work, land negotiation, and reservoir engineering, he said.

Apache has resumed college recruiting for the first time in 10 years. Apache has hired both college recruits and summer interns this year.

"The life blood of the business is geophysicists, geologists, and petroleum engineers," he said.

Meanwhile, Anadarko Petroleum Corp., Houston, is known within the industry for building loyalty among employees. Anadarko has never had an across-the-board layoff.

Richard Lewis, Anadarko vice-president of human resources, said Anadarko's employment totals have spiraled since 1999, adding the growth stemmed partially from the acquisition of Union Pacific Resources Co. (UPR), Fort Worth, Tex. (OGJ, Apr. 10, 2000, p. 34).

Anadarko had 3,498 regular full-time employees of of Dec. 31, 2000, compared with 1,433 regular full-time employees as of the end of 1999. Through May 31, Anadarko had 3,895 employees. The company has hired in excess of merger-related employment growth.

"It's been an interesting, challenging time. We have had success in recruiting with 70% of hires coming from referrals," Lewis said. "We do college recruiting, but you can't grow a huge program through college recruiting.

"We've been able to go out and recruit high-quality technology people. Is it easy? No. Have we been able to find quality people? Yes," Lewis said.

He said management's decision to "keep people when times were hard ... has contributed to our turnover rate of less than 3%."

Anadarko now has 210 domestic openings, of which 25-30% are for petroleum engineers, geologists and geophysicists.

Contact Paula Dittrick at paulad@ogjonline.com

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