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  • Writer's pictureDave Boyer

Upstream O&G "Efficiency"

As a follow-up to previous posts about Oil and Gas upstream employment, I expanded upon the employment "efficiency" slide.

I put the ratio together to show the relationship between US hydrocarbon production vs. upstream employment.

Early shale development was inefficient and driven by numerous factors. E&Ps expanded into new basins while lacking the operational learning curve, used older equipment, and many more. This expansion led to a boom in oil field services hiring and created an era of high employment with growing production volumes.

As production grew into the Peak-shale era, commodity prices dropped, and employment fell through years of lay-offs. Older equipment was retired while new tools and industry practices were developed. Companies also focused on core assets with fewer employees. This effect has led to an "efficiency" peak of low employment and high production.

Can shale "efficiency" continue to grow with new technology, or will it drop off as companies move back out beyond core inventory?

Service companies are expanding automation, like Schlumberger's "Rig of the Future," to drive more hands off the pad site. EKU is developing systems to increase completion operation efficiencies. Will the industry evolve enough to make shale an investable asset in the future?

None of this is bullish for upstream employment. But, companies and workers must adapt if US shale is to play a role in the future oil and gas global industry.

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