U.S. Oil Patch Sheds Jobs as Producers Face Weaker Prices

The U.S. shale patch is seeing the deepest jobs cuts in three years as producers respond to lower oil prices with slowing drilling activity and greater efficiencies through consolidation and cost cuts.

Employment in the industry fell by 1.7% in August, per data from the Bureau of Labor Statistics (BLS) cited by Bloomberg.

In contrast, total U.S. nonfarm payroll employment changed little in August and has shown little change since April, BLS said in its most recent publication. In August, employment in mining, quarrying, and oil and gas extraction declined by 6,000 after changing little over the prior 12 months, the BLS data shows.

The number of jobs in the oil and gas sector has fallen to levels last seen in 2022, when the shale patch faced another oil glut.

This year, oil prices have declined by about 12% year to date, and analysts and industry executives expect there is room for further slides amid a market oversupply expected to materialize as soon as the fourth quarter.

U.S. oil producers are on the hunt for consolidation, synergies, efficiencies, and cost cuts to be able to sustain shareholder payouts at U.S. oil prices in the low $60s per barrel, and possibly lower later this year.

As the price of oil is dangerously close to breakevens for many smaller independents, the U.S. shale patch is in a wait-and-see mode. U.S. oil producers are trimming capital expenditure budgets, relying on efficiency gains from current drilling activity to keep output levels.

They expect to ride the price decline with minimal tweaks to strategies, for now.

The first tweaks include deferring well completions and pumping more with less—meaning jobs have to go.

The biggest producers are cutting headcount, too, in the thousands, following blockbuster acquisitions in recent months.

Chevron, which bought Hess Corporation for $53 billion, has said it would reduce its workforce by 20% by the end of 2026 as part of wide cost cuts. This includes 800 jobs in the Permian.

ConocoPhillips, which acquired Marathon Oil Corporation last year, plans to slash workforce numbers by up to 25% across functions and geographies to simplify the organization and cut costs.

Various industry associations have also flagged reduced job numbers in the U.S. oil patch, although they remain generally upbeat about the future prospects of the sector.

Yet, the number of oil and gas upstream jobs in Texas and total U.S. oilfield service jobs has dropped in recent months amid lower oil prices and slowing drilling activity.

Data from the Texas Workforce Commission showed upstream oil and natural gas employment fell by 1,400 in July compared to June, the Texas Oil & Gas Association (TXOGA) said in August.