Oil boomtown: ‘We could see 20,000 layoffs by June’

CNN – by Steve Hargreaves

Oil prices have been sinking for months. And while that’s good news for most Americans, what happens to towns like Williston, N.D., that have built an entire economy around the oil industry?

The drop in crude prices, while beneficial for drivers, has already cost thousands of oil jobs. Schlumberger (SLB) was among several companies to take a hit, laying off 9,000 people last week.  

“They said things aren’t good, that oil prices are low, and they aren’t going to be drilling as many wells,” said John Roberts, who was recently laid off as a crew van driver for Schlumberger. “They gave me 24 hours to leave my house.”

Roberts, who was given housing by the company, is now staying on his friend’s couch. All his belongings are packed in his car. He’s not leaving Williston though, and is looking for a new job so he can continue sending money back to his wife and four kids in Liberia.

Roberts is the first of what many fear will be waves of layoffs in the U.S. oil patch as firms respond to the recent and largely unexpected plunge in crude prices.

In North Dakota, the number of rigs drilling new oil wells dropped from 187 this time last year to 161 this week — the lowest level in five years.

“My prediction is we’re down to 50 rigs by June,” said Jim Arthaud, CEO of MBI Energy Services, based in nearby Belfield, N.D.

Arthaud, a North Dakota native who’s been active in the state’s oil industry since the late 1970s, said he isn’t particularly concerned for his company, which employees some 2,000 people repairing oil field equipment, increasing the oil flow at wells, and trucking oil out of the fields to nearby rail hubs.

He’s been through this several times before, and instead of laying people off, he plans on using the downturn to hire employees away from other firms that aren’t as prepared to deal with it.

In pictures: An oil boomtown on the brink?

But the effects of less drilling are likely to hit the entire area hard. As drilling companies cut back, there will eventually be less work for companies that provide ancillary services like fracking or trucking.

“I’d say we’ll lose 20,000 jobs by June,” said Arthaud.

That’s a big number for an area with a relatively small population. It could also be scary for a region that’s been growing so rapidly over the last few years, and building infrastructure to handle the boom.

In neighboring Watford City, Mayor Brent Sanford used a personal example to illustrate the growth: When his daughter was born in 2000, there were three other babies born in the county that year. Now there are 90 kids in her class.

“Half the students are living in RVs,” said Sanford, speaking to the acute shortage of housing that still plagues the area. “It’s inhumane.”

To cope, private developers are adding housing units by the thousands, and the city has borrowed money to build a new high school, events center and hospital.

Some residents are concerned about paying for these things if the oil boom goes bust, but most of the people in town aren’t too worried.

“I hear about people getting laid off, but there are still so many people everywhere,” said Josslyn Dodds, owner of a local pharmacy. “There are so many people who have made this place their home.”

Sanford noted that there are still thousands of job openings that need to be filled.

Back in Williston, sales at the town’s big work supply store are actually up over last year.

Mayor Howard Klug said the city is looking at refining, tourism or returning to its agricultural roots if the oil boom dries up. But he doesn’t see that happening.

“I’m not worried, because it’s going to come back,” said Klug.

http://money.cnn.com/2015/01/22/news/economy/oil-boomtown-layoffs/