Oil and gas industry losses worldwide now exceed 233,000 and are expected to continue into 2016, according to energy sector job recruiter Swift Worldwide Resources.
The Houston-based firm said in mid-June that the number of job losses in the industry exceeded 150,000 (see Shale Daily, June 16). However, layoffs escalated through September.
"As the end of November draws closer, the number of job losses is shown to be over 233,000," the firm said.
Swift CEO Tobias Rad said the rate of job losses "has unfortunately increased, with almost 25,000 publicly announced job losses in the last two months alone." There's "limited incremental investment in the sector and no sign of an immediate turnaround," which means "the situation is likely to get worse." Total job losses now are forecast to exceed 250,000 in 2015, with more job losses expected in 2016.
"With very limited new job openings for either direct hire employees or contractors, this figure represents a real and substantial loss to the upstream industry, which will be hard to replace once the market recovers," Read said.
Swift has been tabulating global job losses using publicly available information from various sources. Where data is not publicly available, "Swift has kept its ear to the ground and made assumptions based on likely impact."
Because many of the job losses are not made public, they are difficult to track, Read noted. "These assumptions remain conservative, and the likelihood is that total job losses probably substantially exceeds Swift's forecast."
Dozens of U.S. and global employers have announced reductions to their workforces. Dozens more likely have made job cuts and not announced them.
The oil and gas industry "includes a huge silent community, upwards of 100,000, which comprise independent contractors, staffing businesses and small sub-contracting companies," Swift said. "These workers are often the first to be let go, and typically don't get reported in corporate layoff statistics. However, based on rig count reduction and percentage falls seen by Swift, we estimate 5,000 contract staff have been let go in the U.S. Outside the U.S., contractor job losses have yet to reach the level of the U.S. "
Numbers are difficult to track, but "based on supplier headcount reductions, we conservatively estimate the international contractor community has reduced a further 5,000."
With the exception of ExxonMobil Corp., "all the major operators are taking cost out of their upstream teams, initially and primarily in exploration and production."
Swift's team has heard "informally that in many cases the staff cutbacks are drastic -- from 25-35%. The data is not clear (or public) and much of this is done sympathetically through accelerated early retirement programs."
Some producers, including BP plc and ConocoPhillips, have said publicly they plan to cut investments by $1-2 billion "mainly from staff savings...However, we estimate that there will be at least a further 10,000 hidden job reductions globally" across the board through undisclosed staff reductions.
Houston, the epicenter of the U.S. energy industry, should see a stalled economy in 2016 because of the massive energy job reductions, said University of Houston's Bill Gilmer in his semiannual forecast. Gilmer chairs the Institute for Regional Forecasting.
"Many of the options to quickly get out of this downturn are receding rather quickly," he said.
Every time the energy sector lays off one employee in the Houston area, it impacts four jobs in the region's broader economy. About half of Houston's workforce is indirectly tied to revenues produced by oil and gas companies, Gilmer said.
"As soon as the price of oil falls, all of the sudden the job growth machine is broken."