By Collin Eaton
After cutting thousands of jobs during the coronavirus pandemic,
the oil industry is accelerating its embrace of remote drilling and
fracking, changes that will reshape its workforce permanently.
Schlumberger Ltd., Halliburton Co. and Baker Hughes Co., the
world's three largest oil-field service providers, are shifting
more tasks from drilling specialists at well sites to remote
engineers working from offices or, increasingly, their homes.
The companies, which do much of the on-the-ground work for oil
and gas producers, say they are retooling for what they project
will be a leaner U.S. fracking market. But the changes are poised
to be lasting, an example of how the pandemic is pushing industries
to rethink how they do business.
Before the pandemic, many oil producers had been wary of moving
away from traditional means of drilling, with on-site specialists
to steer drill bits deep into the earth or interpret real-time well
data. But the current situation has prodded them to look for new
ways to reduce costs while minimizing the risk of spreading
Covid-19, executives said.
"It's been an eye-opening experience for a lot of executives
working from home," said Eric Carre, executive vice president of
global business lines at Halliburton. The pandemic has proven that
operating remotely "isn't as challenging as it looks."
The shift will mean more oil-industry workers will have to adapt
to new technologies, and companies will eventually focus on hiring
more data-analytics specialists and subject-matter experts to
remotely support multiple operations, according to executives and
analysts.
Some traditional roles in the oil patch, particularly manual
field, operational and manufacturing jobs, will gradually
disappear. "A lot of jobs won't exist," Mr. Carre said.
The virus has been a catalyst for a sped-up adoption of
automation and other technologies in many industries, including at
companies like meatpacking giant Tyson Foods Inc., which has
shifted more work to robotic butchers, and manufacturer AptarGroup
Inc., which is putting money behind machines that can assemble soap
and hand-sanitizer pumps faster.
In the oil patch, more than two-thirds of Schlumberger and Baker
Hughes's second-quarter drilling activity was supported by remote
operations, up 25% for Schlumberger and 20% for Baker Hughes,
sequentially.
Halliburton, the largest U.S. fracking company, said it has cut
the number of engineers monitoring fracking jobs by shifting work
to real-time operation centers.
The companies said relocating operations and closing facilities
has helped them save money at a time when work continues to be
scarce in the oil patch following a crash this spring in crude
prices. The coronavirus led to a historic drop in the world's
thirst for oil, as millions around the world stayed home and
avoided flying and driving, and demand is still recovering.
Before the meltdown in energy prices, U.S. crude production had
climbed above that of Saudi Arabia and Russia, even though American
frackers had fewer working rigs and fewer oil-field workers than
they had in 2014, when oil traded above $100 a barrel. According to
Bureau of Labor Statistics data, employees in support activities
for oil and gas operations at the end of 2019 numbered 26% lower
than at the most recent peak six years ago.
Many jobs didn't come back because the U.S. shale industry had
figured out how to extract more oil with fewer people after prices
plunged in 2015 and 2016. Executives and analysts believe advances
in remote drilling and automation could now leave the industry's
workforce leaner still, as companies are forced to innovate to
survive yet again.
Olivier Le Peuch, chief executive of Schlumberger, the world's
largest oil-field services company, told investors July 24 that it
aims to double the size of its digital business, which includes
remote operations, digital inspections in maintenance and
manufacturing and other technologies designed to reduce costs.
Spokesman Giles Powell called the accelerated uptake "the
foundation for a new normal in our industry."
Schlumberger, which has corporate offices in Paris, Houston,
London and The Hague, had drilled 1,250 wells with support from 250
remote engineers in the second quarter. At the same time, it is
cutting 21,000 jobs and is shutting down 150 operational sites,
engineering and manufacturing facilities and offices globally.
Halliburton is closing 100 facilities, and credited a large part of
its recent cost cuts to the technological advancements.
Baker Hughes is seeing a wave of companies adopting its remote
operations services for the first time, accounting for about 40% of
those using the services this year, said Paul Madero, the company's
vice president of global drilling services. Because of travel
restrictions, many companies wouldn't have been able to drill some
of their wells without remote specialists, he said.
Oil companies had been slow to adopt remote operations in recent
years because cellular infrastructure was often inadequate in
far-flung regions where they were drilling wells, and many were
uncomfortable with having fewer people at rig sites to deal with
any problems that arose, said James West, an analyst at investment
bank Evercore ISI.
There was "a general view of 'this is how we've always done
it,'" Mr. West said, though he added that increased adoption seems
to have eased some of those concerns.
U.S. oil giant Chevron Corp. is among those that have benefited
from the flexibility of remote drilling this year. As the pandemic
got under way, the company was able to shift a remote team, mostly
based in Houston, to their homes to continue supporting directional
drilling in the Permian Basin of West Texas and New Mexico and
other operations.
Remote drilling also has enabled specialists to make faster
decisions and has made it easier to communicate lessons learned
across teams, said Jeff Newhook, a Houston-based manager of one of
Chevron's remote operation centers.
"They're steering more than one well at a time, and they're [in
prepandemic conditions] sitting in the same room" or chatting over
Microsoft Teams, he said.
Working remotely has made life simpler for Joost de Vreugd, a
Baker Hughes remote operations manager in the Middle East.
Before, he would commute on a helicopter for long stints on
offshore rigs. Now, he works in the United Arab Emirates at an
office overseeing remote drilling across the region. That has
allowed him to drive home after work and spend more time with his
family, while still being on the forefront of what he calls an
industrywide transformation.
"In the oil-and-gas industry, we tend to be hesitant to change,"
he said. "We see a lot of change coming in right now."
Write to Collin Eaton at collin.eaton@wsj.com
(END) Dow Jones Newswires
August 02, 2020 08:14 ET (12:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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