The oil patch will have fewer jobs in the not-so-distant future as drilling rigs become increasingly automated, with companies putting the latest advances in drilling technology into the field next year.
These new rigs, using sophisticated software and robotics, could reduce the number of people working in the oil patch by up to 40 percent over the next few years, energy analysts said, while requiring more people in information technology to remotely monitor operations and troubleshoot problems. As with manufacturing and other industries that have become increasingly automated, the advances mean that oil and gas companies will likely need more brains, less brawn, and fewer workers overall.
It also means that many of the more than 215,000 U.S. jobs lost in the two-year oil bust — including about 100,000 in Texas — may never return as the industry recovery gains strength.
“That’s always been the Holy Grail to not have to touch the pipe and totally automate the process,” said Byron Pope, an energy analyst at Houston investment bank Tudor, Pickering, Holt & Co. “They’re automating more of the process and eliminating some of the human variability and error.”
Among the automated systems coming into operation next year is the “iRig” of the Houston oilfield services company Nabors Industries. Nabors’ technology, which it calls “iRacker,” uses automated robotics to lift long pieces of pipe from racks, piece them together and drive them into drilled holes to build the wells. Schlumberger, the world’s biggest energy services company is launching its “Rig of the Future,” which aims to drill more holes and deeper horizontal wells from a single location in West Texas shale fields, meaning the industry will require fewer rigs and fewer crews.
The technology is here, and the oil sector only need embrace it to save money and increase safety, said Chris Papouras, president of Nabors drilling solutions division. Papouras said the systems developed by Nabors and other companies mean that dangerous jobs, such as running steel pipe down wells, that required four or five workers, can be done with a push of a button, increasing efficiency and dramatically reducing the risk of injuries near the wellhead.
“The rig is still treated as dumb iron,” Papouras said. “The oil and gas industry still operates using old models. This is not a technology challenge. This is really a culture shift.”
Within a few years, the number of people on site for each rig at any given time could fall from an average of 25 people to 15, analysts said. In addition, small “mom and pop” services companies that run pipe casing or attach drilling tools for larger companies could be forced out of business in the years to come. The rigs will automate most of the work of the casing crews as well as that of directional drilling crews that drive attachments to the rig and guide them during drilling, allowing companies like Nabors to do more of the work themselves, rather than hire third-party contractors.
ABB, a Swiss technology company, last year opened two new automation and robotics integration offices in Houston to work more closely to energy customers, said Brandon Spencer, ABB’s vice president of oil, gas and chemical in North America.
Houston’s oil patch
Advances in wireless and sensor technology mean that even when wells are producing oil in remote fields, the temperatures and pressure levels can be monitored remotely from Houston without routinely having to send workers out to sites hundreds of miles away.
This technology is already used for deepwater drilling in the Gulf of Mexico, and is now making its way to onshore production.
“They’re running all of the Eagle Ford from Houston,” said Spencer. The Eagle Ford shale play is located in South Texas, about 250 miles from Houston.
New technologies, however, don’t necessarily mean fewer jobs, Spencer said.
ABB, for example, is teaming up with Microsoft to build what’s touted as the world’s largest cloud-based computing platform for industrial customers, including energy firms, allowing them to collect and analyze massive amounts of data to monitor performance, improve precision, and develop better techniques and processes. This will require large teams of computer scientists, software developers and other highly-skilled technical workers.
“It’s about redeploying the manpower; it’s different skill sets,” he said. “All of this big data still requires a lot of manpower.”
More data and information technology specialists also will be needed as the oilfield services sector consolidates and integrates the systems, products, and services of different companies, said Chris Wolfe, who leads the oilfield services practice group at the Dallas-based law firm Haynes and Boone. Schlumberger, for example, bought Houston-based Cameron International in part to boost its technology offerings, while Paris-based Technip is merging with Houston’s FMC Technologies for much of the same reasons.
General Electric is buying a majority of Houston’s Baker Hughes to marry a lot of the drilling and services work with the GE digital platform.
“A lot of investments in analytics are coming,” Wolfe said. “Information services has been underfunded in the oilfield services historically.”