Oil industry not booming, despite high prices

Published: Jul. 19, 2022 at 9:10 PM CDT
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LUBBOCK, Texas (KCBD) - Oil prices remain high, but the oil industry isn’t seeing the boom you might expect, thanks to supply chain issues and labor shortages.

“With high oil prices, the desire to drill oil and gas wells is certainly there, but the problem primarily is with both labor and equipment,” Department Chair of Petroleum Engineering at Texas Tech, Marshall Watson, said.

Watson says right now equipment isn’t easy to come by.

“There’s a shortage in oil field tubulars, the steel pipes that we put into wells. There’s also a shortage in sand that we use to hydraulically fracture the wells, and without the sand the hydraulic fractures do not stay open and they’re useless,” Watson said.

Saskia Allen is vice president of Standard Energy Services, a company that provides equipment and staff for the oil field.

Allen says the problem started when operations were shut down during COVID.

“There’s a lot of maintenance and parts to get that out and running. There’s a lot of service work that needs to be done to get these wells up and running to full capacity,” Allen said.

Now Allen says there is a high demand for all of the parts to fix the equipment. So, the company decided to order brand new parts, but that hasn’t been better.

“We’ve invested in some new equipment to try to get stuff straight out in line, but even that’s been difficult. It’s seven months from the time you ordered a Ford pickup to the time it gets delivered,” Allen said.

Standard Energy Services also lost a lot of employees.

“COVID put everybody on the bench and a lot of the skilled that was getting up there in age decided well hey, why don’t you just retire, we’ll call this my retirement plan,” Allen said.

Now the company is having to take extra time to train new employees to be safe in the field. Allen says she has seen many oil booms and busts, but nothing compares to the last couple of years.

“This was a sharp boom or sharp bust that hit us really fast, really hard and it put everybody on the sidelines. Really quickly, we saw that price shoot back up,” Allen said.

Watson says it would be best for everybody if oil prices stabilized lower than they are now, because those prices have had the greatest effect on inflation.

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