A Bullish Bakken Jobs Market

Low oil prices have played a major role in the decreased rig count within the Williston Basin, but according to several sources, the price of oil has yet to impact the demand for workers.
By Patrick C. Miller | March 03, 2015

What does it say about the employment situation in the Bakken when the Job Service North Dakota office in Williston imports help from other offices around the state because it’s short five workers?

Contrary to some reports, it means that while the demand for some positions in certain areas—such as exploration, drilling and fracking—has softened, the overall demand for jobs remains bullish throughout North Dakota, in general, and the Bakken, in particular.

“It’s not really doom and gloom, which is what a lot of people may think with the slide in the oil prices,” says Shawn Wenko, executive director of Williston Economic Development. “We look at this from our office as more of a market correction than anything. I think the industry knows that as well.”

Cindy Sanford, Job Service customer service office manager in Williston, notes that her office continues to see a strong demand for workers. She then rattles off a string of six employers scheduled to meet with her the next day and lists several different sectors short of employees, including the office she runs.

“Who isn’t stretched?” she asks. “We’ve been short since I’ve been here. If people want to work, there’s a job here.”

Asked what she’d consider a cause for concern, Sanford quickly replies: “If we didn’t see anybody in our office, then I’d be worried, whether it’s looking for jobs or applying for unemployment.”

But given the fact that 165 people had been in the office seeking help the previous day and the spring Williston job fair has no shortage of employers seeking recruits, it’s not a scenario that appears likely to occur any time soon. And even when someone comes in to apply for unemployment, Sanford is not yet concerned.

“What we're seeing for unemployment is that a lot of it’s seasonal,” she explains. “Many of those getting laid off—like some of the frack guys—are still attached, which means they’re laid off and they have an estimated time to come back. It’s not permanent.”

Michael Ziesch, manager of North Dakota’s Labor Market Information Center, routinely fields calls from news media outlets inquiring about how the low oil prices are affecting employment in the Bakken. He’s received calls from at least 10 foreign countries—some in the Middle East—requesting employment statistics.

“It’s kind of fun to see who is curious,” he says.

Among the factors Ziesch examines are the unemployment rate, the monthly jobs estimate and unemployment claims. For the most current data, he says none of them show any negative effect from lower oil prices.

“Those data are also relatively stable for the year,” Ziesch notes. “We’re not seeing the effect yet of any large-scale layoffs or large-scale events in northwest North Dakota.”

However, the longer low oil prices persist, the more noticeable the effects will be in the state’s employment statistics.

“We do expect to see some change,” Ziesch says. “When rigs are being stacked, we will see some shift in employment levels, but we haven’t seen anything drastic yet.”

Tim Rasmussen, public relations manager for MDU Resources, says, how oil and gas producers deal with low prices varies from company to company.

“If they have a producing oil well, they’re going to keep producing that oil well, and it’s going to take people to do that,” he says. “If there’s any slowdown, it’s on the drilling side and the exploration side. Some companies aren’t going to the fringe areas. They’re staying in the core areas. They’re doing less drilling.”

Wenko notes that some effects of the low prices are noticeable.

“We’ve seen a cutback on some of the amenities, specifically, a lot of companies are starting to drop their housing stipends where normally they would supply housing for their employees,” he says. “Some of the E&P operators have come back to the service companies and asked for a rebid on their cost, seeking anywhere from a 10 to 18 percent reduction in their cost for services. You’re also seeing some of the overtime being shaved off.”

Sanford relates with a chuckle a story about an oilfield worker who came into the Job Service office to apply for unemployment because his hours per week were cut from 80 to 40.

As Gene Veeder, public relations director for McKenzie County Development, relates, “Nobody likes slumping oil prices. It just means we have to be a lot more efficient. We’ve been through it before.”

Veeder believes the huge backlog of infrastructure work left to complete on public and private projects such as pipelines, housing, roads, bridges, transmission lines, substations, utilities, retail stores and gas processing facilities as something of a buffer to industry cutbacks.

“We have a lot of catching up to do because we grew so quickly in such a short amount of time,” Wenko explains. “Construction is still going fairly strong, and I think we’ll see that going into the spring and summer. Any of the servicing jobs are still strong. For Williston, we’re starting to develop a restaurant and retail base we’ve never had. We’re seeing a lot of interest in retail development in the area.”

Ziesch agrees and notes, “If you look at some of those counties in northwest North Dakota, they have unemployment rates around 1 percent and they have more than twice as many job openings as they do job seekers in the area. Even if things slow down, that would be an opportunity for other industries looking to absorb those workers.”

Veeder, Wenko and others agree that a slowdown in oil and gas production at this point isn’t all bad.

“I tell people that we’re about five years behind,” Wenko explains.

Nancy Hodur, a researcher at the North Dakota State University Agribusiness and Applied Economics Department,” says she believes a slowdown could be good for North Dakota’s economy in the long term.

“From an economic perspective, there are bad things that happen when you have a white-hot economy,” she explains. “There’s wage inflation and you have a super-tight labor market. Nobody else can hire anybody to work.”

And, she asks, “How do you grow any type of balanced economy? Do you crowd out other industries? Some businesses in the state considering expansion might just say, ‘To heck with this. We’re going somewhere else.’ To have a more measured economic growth is a good thing.”

Patrick Bertagnolli, human resources director for B&G Oilfield Services, says, “I can’t tell you that the current climate hasn’t created some obstacles. We’ve got challenges just like everybody else, but we’re doing the best we can to take care of our people and our communities. We’re optimistic about the outcome.”

He sees the situation for B&G—a Williston-based company formed in 1966—as an opportunity to separate itself from the competition by emphasizing the strengths of its leadership team, how the company treats employees, its strong role in the Bakken’s communities and the benefits of living and working in western North Dakota.

B&G not only participates in community activities, but also puts great emphasis on safety—even away from the oilfields—while keeping its employees happy and satisfying its customers, all factors Bertagnolli believes will carry the company through tough times. 

“We talk to our employees about making sure our customers are happy with our work,” he says. “We have several positive stories where our crews have done such a tremendous job with our efficiencies that they’ve taken on additional work with the oil companies.”

With employee recruitment as part of his HR duties, Bertagnolli uses his personal experience to sell potential employees on working for B&G and living in North Dakota. He came to the Bakken from Montana in 2011 following a 22-year career with UPS. Although he liked his former job, he had more important goals in life.

“The fact that my wife and I can be with our son and daughter at the end of the day is a stroke in the win column,” Bertagnolli explains. He also wanted to be involved in helping the U.S. become more energy independent, another goal he’s realized.

“I am 100 percent sold on the opportunities in North Dakota,” Bertagnolli says. “I think the education system is undersold. They have an incredible education system here from grade school up through college. If people knew more about North Dakota, there’d be a lot more people coming to North Dakota.”

Once hired by B&G, the company provides employees with skills training, as well as education on such topics as budgeting and debt management, which helps position them for home ownership if they want to and put down roots in the community. Bertagnolli says it’s one reason why 60 percent of the B&G’s employees have been referred by other employees.

“A lot of our success is because we have very skilled people out there who are very professional and have brought new work to our organization,” says Bertagnolli, who also serves as a member of the North Dakota Workforce Development Council, which works to develop workforce training and a strategic plan for the state.

B&G is also working with NDSU on an oil and gas workforce study being conducted by Hodur and Dean Bangsund, another economics researcher at the school. Bertagnolli believes the research will be beneficial to the Workforce Development Council.

NDSU is looking for other employers in the Bakken to participate in the study, which is aimed at gaining a better understanding of the motivations and goals influencing oil and gas employees.

“It’s a project to try to get a little better handle on some of the perceptions, tensions and characteristics of the workforce,” Hodur says.

The study seeks to address issues associated with the rapid growth in western North Dakota, including employee retention, community development and the allocation of government services. Hodur says the research gathered will help communities and employers plan for and provide the appropriate mix of public and private services for residents.

“What’s valuable about it is that it gives the frontline folks an opportunity to express the things that they like and the things that they’d like improved,” Bertagnolli explains.

The question many would like answered is: How long are the low oil prices going to last and how will they impact employment in the Bakken?

“A lot of interesting dynamics could play out in the next six months to two years,” says Bangsund, who also conducts economic impact studies for the North Dakota Petroleum Council.

“What will be interesting is that there is a backlog of wells that haven’t been fracked,” he says, “We might not initially see it so much in the fracking employment, but when the slowdown in drilling occurs, if low prices are maintained through the end of the year, I would expect that we’ll see lower employment. How much lower? I don’t know.”

But Bangsund is optimistic about the Bakken’s future.

“I don’t believe that we’re going to see $50 oil for the next 25 years,” he says. ”The technology is in place, and there’s a considerable amount of oil left to be retrieved out of the Bakken and Three Forks. We could still have a tremendous number of wells compared to what we have now. By some estimates, we’re not even a quarter of the way done.”

With an increase in oil prices, Bangsund believes production in the Bakken would rapidly rise. 

“If economics were to return to something similar to what we’ve seen in 2013 and the majority of 2014, I think we’d see the companies go back and we’d see active well drilling for a considerable period. I don’t think anything’s changed in the long term.”

Wenko agrees with Bangsund’s assessment and adds: “We’re confident that this is more or less a correction, and we’re going to see it rebound. One of the best comments I’ve heard is that there’s 60 to 70,000 wells out there that need to be drilled. If you don’t drill them this year, you’re going to drill them eventually. We’re still looking at a long-term future to this thing.”

Author: Patrick C. Miller
Staff Writer, The Bakken magazine
701-738-4923
pmiller@bbiinternational.com