Trucker shortage threatens oil production
From Staff and Wire Reports
Dec. 30, 2017 at 11:10 p.m.
When the price of oil collapsed in 2014 and disrupted drilling operations all across Texas' massive Permian Basin shale formation, truckers were among those hardest hit. Rendered unnecessary by the slump in output, they were fired in scores.
Now three years later, with oil prices inching back higher and production in the Permian soaring once again, the drillers want the truckers back. The feeling, though, isn't mutual. The pain of the 2014 bust remains fresh for many who went on to find driving gigs in other industries. And what's more, they worry that companies will remain tightfisted with pay as they rehire.
The result is a growing trucker shortage that threatens to limit just how high drillers can push production. The problem is most acute in the western fringe of the Permian — known as the Delaware Basin — which shale companies are moving back into aggressively as prices climb. Given the off-the-beaten-path location of these wells amid the sprawling 75,000-square mile Permian, the need for truckers to haul the oil over primitive roads to pipelines is greater than in more centrally located spots.
"We are able to sell the trucks to the crude haulers," said Wade Black, a salesman with Premier Truck Group in Amarillo, just to the north of the Delaware Basin. "But there's no one to drive them."
Some Longview-area energy companies are facing a truck driver shortage as well.
Like other energy companies, Momentum Pressure Control has a shortage because workers in the energy industry who lost their jobs during the downturn went into other lines of work, said Dirk Lee, director/president. Based near East Texas Regional Airport, Momentum supplies snubbing rig assist units and other equipment to well sites.
Lee said Momentum could use dozens of people to drive trucks to haul and operate the equipment at well sites as far away as Pennsylvania and North Dakota
"We would love to have 30 drivers, but realistically we can expect 10, just (because of) the shortage)," Lee said.
The transportation division of Martin Resource Management Corp. in Kilgore is seeing a shortage of qualifying truck drivers, said Johnnie Murry, division vice president. However, he said open positions are tied to making deliveries to and from oil refineries and chemical plants, not to oil and gas sites.
"We are a diversified tanker company," Murry said. "We haul a lot of chemicals. Petroleum products and chemicals are what we are dealing with."
Permian production is surging, thanks to improving oil prices. Explorers are tapping oil in the furthest regions of the field, which extends from West Texas across into New Mexico. Output may reach 2.79 million barrels a day in January, 30 percent higher from the year before, according to latest government forecasts. Led by Permian growth, total U.S. oil output is set to surpass 10 million barrels a day in June 2018, potentially eclipsing OPEC's Saudi Arabia.
About 3,000 oil truckers are hauling oil around the Permian, more than the 2,000 to 2,500 just before the 2014 price bust, said Willie Taylor, chief executive officer for Permian Basin Workforce Board in Midland. But companies will need to hire more than 3,000 additional drivers at the rate the patch is growing, he said.
Those drivers are sorely needed, especially in the fast-growing Delaware Basin, which has become the Permian's second-largest section. There are as many as 2,000 trucks just servicing the Delaware, each able to transport about 180 barrels, Joey Lee, general manager with Premium Truck of Odessa, said in a phone interview.
The problem? He said drivers are worried they won't get paid much, given that most operators are still in austerity mode with prices well below their 2014 peak.
Oil truck drivers are paid about $100,000 per year, some 10 percent to 20 percent below 2014-15 salaries, according to Joseph Triepke, founder of Tennessee-based oil-field research firm InfillThinking.com. Typically, oil truckers got paid more than hydraulic fracturing sand drivers because of the additional skills needed to haul a hazardous substance like petroleum, he said in a phone interview. But that salary disparity is narrowing as demand grows for frac sand.
Momentum tries to make jobs more attractive by paying employees to attend trucking schools to earn commercial driver's licenses, Dirk Lee said. He said pay ranges from $16 to $20 a hour, with employees also being eligible for lucrative incentives based on their safety performance.
Truckers also are concerned about the implementation of digital log books this month that compute the hours of operations more accurately, instead of the manual logs where drivers got to pen down the hours themselves. Drivers, who get paid by how much time they spend time in a field, "could manipulate the system with manual entries," Joey Lee said.
The shortage won't cause any kind of slowdown in production or shut-ins, Joey Lee said, adding that more staff will likely be added steadily next year as prices rise. "Rehiring will be a slow process. It won't happen as fast as you need it."
While the race to expand production in the more distant reaches of the Permian boosts demand for truckers, technological developments may slow the hiring.
Advances in horizontal drilling allow fewer wells to produce the same amount of oil and gas, reducing the number of trucks needed to transport the oil to market, Stephen Robertson, executive vice president for Midland-based Permian Basin Petroleum Association, said by email.
Also, with so much production coming from a centralized pad site, it's cheaper to set up flow lines to transport the oil to storage hubs, Robertson said. "Trucks are still greatly needed to transport people and equipment; it's just that we have been able to reduce the number of trips needed to produce an equivalent amount of hydrocarbons."
The Delaware Basin is far from most major cities, with the few hotels and man-camps the primary form of accommodation. Infrastructure is poor and trucks travel mainly on dirt roads, which can be bad for equipment, according to Premier's Black. The rutted roads keep travel speeds at under 10 mph to destinations that are as many as 50 miles away.
The manpower shortage is expected to ease soon. Trucking companies are redeploying assets to where there has been a large increase in output to meet demand, a spokesman for the New Mexico Oil and Gas Association, Robert McEntyre, said in a phone interview from Santa Fe.
The oil industry will simply have to pay up to get more drivers, Joey Lee said. "It's offering better incentives like more time off or bigger bonuses. This is the competitive nature of the business."