According to the U.S. Bureau of Labor Statistics, approximately 57% of US upstream jobs lost in 2020 were not recovered in 2021. With current oil prices reaching their highest level since 2014 and natural gas prices trending upward to pre-pandemic levels and beyond (Figure 1), many are probably wondering if staffing will return to pre-pandemic or even pre-late 2014 price crash conditions in 2022.

Figure 1: Historical Brent and Henry Hub Prices [1]

For many companies, the answer will be a resounding “no”, at least not for the same types of jobs as before. According to CNN Business [3], US oil producers are experiencing issues sourcing equipment and staff required to ramp up production and are feeling pressured by their investors to keep activity levels flat to deploy less capital, pay dividends, and do share buybacks. In addition to the general desire to maintain capital discipline and manage debt, one of the justifications for keeping production headcount low is the success of exception-based surveillance/operations practices. RIF events accelerated adoption of “operate by exception” production strategies, and in some cases the reverse was also true. Operators have been doing more with less as MBOE/employee numbers reached historical highs by the end of 2020 (Figure 2). Presumably, as rig counts continue to trend upward from their 2020 lows (Figure 3), D&C personnel headcount will scale accordingly. For some operators, however, production personnel will likely not follow suit because they have become accustomed to the benefits of using technology for manage by exception, predictive maintenance, and dynamic routing.

Figure 2: Oil & Gas Upstream Employment Analysis (December 2021) Dave Boyer – Murdock Energy [2]

Figure 3: Historical Rig Count [1]

Benefits

Not all software used for "operate by exception" is the same, but in general these companies seek to provide some combination of the following benefits to operators:

• Visibility and Centralization: A user interface allows managers and personnel to see captured field data and action items in a central location
• Prioritization: Locations can be ranked and given higher or lower priority according to their value to the organization
• Insights and Alerts: System can flag issues and give insights about the condition of the asset
• Scheduling: Maintenance schedules, inspections, and dispatches are optimized based on physical location and priority
• Dynamic Routing: Personnel can focus on the highest priority tasks, drive fewer miles with better optimized routes, and ultimately make production more efficient

Challenges

A few of the challenges for operators moving toward an exception based production strategy include:

• Paper run tickets requiring regular wellsite visits, regardless of site condition, to collect
• Upfront cost of field infrastructure (connectivity, instrumentation)
• Employee buy-in and integration

For Darcy members, this Exception-Based Surveillance - Market Map is a good place to start for building an integrated exception based system.

Coming Soon!

At the March 16th Darcy Live Event, Ensign Natural Resources will share their experience and the success they have seen implementing a digital field management solution provided by Salesforce.

Sources: [1] U.S. Energy Information Administration (U.S. EIA) [2] Boyer, Dave. “Upstream Oil and Gas Employment - by Profession.” Mudrock Energy, Mudrock Energy, 10 Dec. 2021, https://www.mudrockenergy.com/post/upstream-oil-and-gas-employment-by-profession. [3] Isidore, Chris. “More Oil Supply Could Stop Massive Price Spikes. but Us Producers Won't Fill That Gap.” CNN, Cable News Network, 2 Mar. 2022, https://www.cnn.com/2022/03/02/energy/us-oil-production/index.html.