Roy and Erika,
Here's the article. I think it is important and should be made available here on SI where we discuss Royale Energy..
Wayne
****** ****** Oil patch exodus ****** ******
****** ****** ---- 7/23/97 ---- ****** ******
By ROBERT PRICE
Californian staff writer
Roger Walker bled black.
His father Leo, a well-tester and purchasing agent for Phillips Petroleum, was in the oil industry for more than three decades. Roger himself obtained his master's degree in mechanical engineering and, in 1974, went to work for what is now Conoco.
In 1980, he joined Santa Fe Energy Resources as a Bakersfield-area facilities engineer. He weathered the oil price crunch of 1986, but when prices bottomed out again in 1993, the ax came his way. In April 1994 executives of Santa Fe let Walker and 32 fellow employees go.
Walker might have started looking elsewhere in the vast international oil industry. But he and many others came to wonder whether it was worth it to stay in an industry plagued by such dramatic up-and-down cycles.
``I'd been in oil 20 years and I'd seen the volatility and how people moved around a lot, and I just decided I'd like to try an industry, a growing industry, that was a little more stable,'' Walker said. ``I wanted to try an industry that's less regulated, and one that's not on the downslide.''
Walker landed a job with Bolthouse Farms as a mechanical engineer. The pay and benefits are not quite as good, but he enjoys the job. And, barring catastrophe, he is more certain his job will be there tomorrow.
Walker hasn't been alone. Oil engineers and geologists all across the industry, laid off in droves as oil companies were forced to pare fat, then muscle, then finally bone, made similar decisions. Among the former Santa Fe employees laid off with Walker in 1994, at least two have returned to college for advanced degrees; three are in oil-field contracting; and two are in agriculture a typical scorecard for the post-layoff oil industry.
Then, last year, just as most expected it would, the industry turned around. And, just as many oil executives feared, a shortage of engineers and geologists has put a crimp in their plans. Compounded by a shortage of oil-field equipment, many companies still find themselves scrambling to meet performance goals.
``We have been hiring,'' said Jerry Hoffman, president and chief financial officer of Berry Petroleum. ``But it has been more difficult to identify good high quality people, especially on the professional level, especially on the technical side the geologists and engineers. We knew, `Hey, if this (price depression) ever turns around, it's going to be hard to staff (our companies).' And that's been the case.''
That's obvious enough to Scott Firth, president of DCI Technical Services, an oil-industry staffing company. DCI has openings for chemical engineers, mechanical engineers, petroleum engineers, structural detailers, land clerks, mechanical and electrical estimators, petroleum technicians, piping designers, instrument designers, electrical designers and assorted other jobs, most them in Kern County.
Firth said that if 40 well-qualified oil professionals walked through DCI's doors today, he would
have jobs for them in the $40,000 to $80,000 pay-range within two months. In fact, less-than-impeccable credentials might even do the trick in this hiring environment: Many employers, according to DCI, are lowering their expectations in order to get all the work done. Some companies even have had problems finding experienced people to fill blue-collar jobs as well.
``The oil fields have been so up and down, people have stopped trying to make their living in the oil patch,'' said Gary Green, secretary/treasurer of Gary Drilling Co. ``We're talking about blue collar, salt-of-the-earth people who use their muscle and perspiration to keep things going. Some have moved out of the area, some have different types of jobs. Right now it's hard to attract those people.''
Oil prices are low at the moment, but most companies have set significantly ambitious goals for the year, and thus expect to stay very busy.
``In 1996 and part of 1995 we experienced a relatively high crude price on the West Coast, and as a result everybody's capital programs have picked up substantially,'' Hoffman said.
Berry, for example, increased that portion of its budget 67 percent, from $9.8 million in 1996 to $16.4 million this year. It drilled 46 wells in 1996, and plans to drill 90 more this year.
Another factor contributes to the heightening need for workers and equipment: The acquisition of many oil properties, primarily the result of smaller independents buying from larger multinationals.
``Almost without exception, the level of activity by the acquirer is going to be much greater (for that property) than it would have been,'' Hoffman said. ``Mobil, Chevron, Unocal and others have sold substantial new properties, and the buyers are likely to get busy.''
As measured by active drilling rigs, the oil patch is relatively robust. At 1994's most recent low ebb, the industry was down to about 500 active rigs, just 20 percent better than 1987-89's all-time low, Green said. Today, that number is in the 1,200 to 1,300 range nowhere near 1983's high of about 4,500, but three times the level of a decade ago.
``If we had all the equipment and workers we needed, things would be different,'' Green said. `There's more room for expansion. There's good demand for new wells, exploratory wells, development wells.
``We're still as busy as we can be,'' he said. ``But it's difficult now to put crews and equipment together. There is no drilling equipment. We've got an 18-month backlog. They quit manufacturing it years and years ago in this country because there was such a depression in the oil patch. Now manufacturers are just starting to catch up, but the replacement costs on equipment is out of sight.''
Hoffman said oil companies have been spoiled over the past decades by the easy availability and relatively low price of oil-field equipment and hardware.
``You could get anything you wanted because so many things were idle,'' he said. Unfortunately, the same seems to be true for oil-field professionals. The come-home call has gone out, over and over, to oil's prodigal sons and daughters. Some will answer.
But for many, like Roger Walker, the uncertainty will outweigh the desire.
Copyrightc 1997, The Bakersfield Californian |
