U.S. Frackers fear vaccine mandate will worsen workers’ crisis

U.S. frackers, who are already struggling to hire enough workers, fear the upcoming U.S. vaccine mandate will make matters worse at a time when oil and gas prices are rising.

Many truckers, rig workers and laborers who worked in Texas and other oil regions have found other jobs after crude prices fell last year at the start of the pandemic.

Oil service companies, which employ most of the ground-level workers who drill and finish wells, say many remaining employees are skeptical of the Covid-19 vaccination, and some have warned they will quit before they to get vaccinated.

SHARE YOUR THOUGHTS

How do you think the vaccination mandates could affect the labor market? Join the conversation below.

The proposed mandate does not require companies to fire employees who do not comply, but these workers would be subject to frequent testing. Some companies fear that such tests will frustrate unvaccinated employees and motivate them to quit their jobs.

Ann Fox, Managing Director of Nine Energy Service Inc.,

an oil services company operating in the United States, said it feared losing some of its 818 employees, most of whom are field workers. The company is already facing rapid turnover – around two in three new hires tend to leave after a short time, she said.

“This puts us all in leadership positions in extremely complex situations,” said Ms. Fox, estimating that less than 15% of the company’s field workers are vaccinated. Nationally, 65% of eligible people are fully vaccinated, according to the Centers for Disease Control and Prevention.

Nine Energy Service is already facing rapid staff turnover, with around two out of three new hires leaving after a short period.

Ms Fox said many in the industry were also concerned about weekly testing requirements for unvaccinated workers, saying it could be cumbersome to administer and manage, with so many small teams working in areas rural.

For now, companies are awaiting advice on how President Biden’s plan to require Covid-19 vaccines or weekly testing for all employers with 100 or more workers will be implemented. Mr Biden ordered the Occupational Safety and Health Administration, or OSHA, to impose such a mandate earlier this month.

But many oil service companies are already anticipating problems, based on vaccination rates in areas where they operate and feedback from their workers.

In Midland County, Texas, in the heart of the Permian Basin, America’s most active oil field, about 46% of eligible people have been fully vaccinated, according to the Texas Department of State Health Services, up from an overall rate of 61, 5% for the State. . The region is experiencing a plateau in Covid-19 hospitalizations after a multi-month increase that has pushed hospitals to near their limits, local health officials said.

Clint Concord, senior director of operations at Byrd Oilfield Services LLC in Odessa, Texas, said many residents of the oilfield were skeptical about the safety and effectiveness of Covid-19 vaccines, including himself . He said he would have to weigh his own options, but frequent testing for unvaccinated workers could lead him to quit.

“It’s our constitutional right not to put something in our body if we don’t want to,” Mr. Concord said. “They haven’t proven to me that it’s 100% stable.”

The Food and Drug Administration has said the vaccines it has licensed in the United States have been shown to be safe and effective.

Less than 15% of Nine Energy Service field workers are vaccinated against Covid-19, believes CEO Ann Fox.

Only a handful of employees at Smith Laydown & Casing Services LLC’s oilfields in West Texas are vaccinated, said Justin Clark, manager of field services there. Mr Clark said he had considered getting the vaccine and the latest wave of Covid-19 cases had opened his eyes. But he said he understood why many residents of the oilfield would resist mandatory vaccinations or avoid getting tested.

“I don’t like being forced to do anything,” said Mr. Clark, 42. “I almost want to do the opposite when someone tells me, this way, you have to do it.”

President Biden unveiled a six-pronged strategy to tackle the Delta variant of Covid-19 that increases vaccine requirements for employers of 100 or more workers, medical workers and federal workers. Photo: Brendan Smialowski / AFP / Getty Images

Executives say vaccination mandates may force companies to raise wages to attract workers, raising production costs as oil and gas prices are already at multi-year highs due to dwindling supplies. Europe is facing an energy crisis due to shortages of natural gas which have led to plant closures in the UK, and China is facing power shortages which have started to affect the production of semi -conductors and other key products.

Payrolls account for more than half of the costs of oil service companies, making retention and staffing their biggest challenge, according to consultancy Rystad Energy. The costs of some services, including trucking, rose 25% to 35% from the fourth quarter of 2020, while the daily rates for drilling rigs could climb as much as 15% next year, it said. the society.

“It’s going to push up the price of drilling these wells, just as the grocery store sees the shock of the stickers,” said Kirk Edwards, president of oil producer Latigo Petroleum LLC.

An EQT hydraulic fracturing site in Mannington, W.Va. Payroll accounts for more than half of the costs for oil service providers, according to consultancy Rystad Energy.


Photo:

Maddie McGarvey for The Wall Street Journal

A Federal Reserve Bank of Dallas survey released Wednesday showed that about 57% of oil service companies reported higher wages and benefits in the third quarter. About 51% of oil service executives surveyed said their companies had difficulty hiring workers, with more than two-thirds citing low numbers of skilled workers and 39% saying potential hires wanted more than what they paid. they had proposed.

“Salaries have increased by 20%,” said an executive who responded to the survey. “We are struggling to increase prices to match our increased costs. “

The labor shortage in the oil fields reflects intense competition for labor throughout the economy. For example, oil truck drivers have found companies like Walmart Inc.

and Amazon.com Inc.

are willing to fork out salaries that match the big oil field salary, while others are now working in construction, executives and managers said.

Demand is high for truckers to haul water, sand, and other fracking supplies across the Permian Basin, which straddles western Texas and New Mexico, but the lack of drivers has forced it GM Oilfield & Trucking Services LLC in Midland turn down jobs every day, said Abel Ortega, a 52-year-old operations manager there.

West Texas trucking companies like Mr. Ortega’s often offer drivers connection bonuses, benefits, and housing from $ 1,000 to $ 2,500, and drivers working 70 to 80 hours a week can earn $ 120,000 to $ 130,000 per year.

The company is trying to find enough drivers to double its workforce to more than 100, but that growth could be hampered by government demands to vaccinate workers, and weekly tests could be expensive, he said.

“It will be an obstacle anyway,” Ortega said, adding that some truck drivers would likely quit.

Oil truck drivers have discovered that companies like Walmart and Amazon are willing to pay wages that match the high levels of those in the oilfield.

Write to Collin Eaton at [email protected]

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

About Yvonne Lozier

Check Also

Analysis of the recent OIG advisory opinion on the employment of excluded people | Arnall Golden Gregory LLP

The Department of Health and Human Services, Office of the Inspector General (OIG) recently issued …

Leave a Reply

Your email address will not be published.