N. Dakota oil-field workers turn to Uber employment amid price plunge

A resident walks near buildings of guest rooms at the Target Logistics Management Bear Paw Lodge in Williston, North Dakota in September. Oil producers and services companies in the state, already hit by job cuts in the sector, are telling him more winnowing may be on the way. CREDIT: Bloomberg photo by Daniel Acker.

Lynn Helms, North Dakota’s top oil regulator, made a startling discovery when he recently used Uber Technologies Inc., the private car service: three of his drivers were laid-off oil and gas workers.

Oil producers and services companies in his home state, already hit by job cuts in the sector, are telling him more winnowing may be on the way.

“They’re all saying that the first six months of this year, there’s going to be quite a few pink slips,” Helms, the director of the Department of Mineral Resources for North Dakota’s Industrial Commission, said on a call with reporters Wednesday.

North Dakota, which pumps more crude than any state outside of Texas, has seen its fortunes change as oil prices have plummeted by about 70 percent since mid-2014. The state’s rig count has dropped to 41, the lowest level since July 2009, and the price of North Dakota sweet crude — $16.50 a barrel — is at a 14-year low. Helms said operators in the state are telling him they’re adjusting to a “lower for longer” price environment.

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North Dakota produced about 1.15 million barrels a day of oil in December, according to preliminary figures. That’s a 2.5 percent drop from the previous month and 6.5 percent less than the monthly record of almost 1.23 million barrels a day set in December 2014. The state forecasts output to fall below 1 million barrels a day in early 2017.

“What we’re seeing is the first real production decline,” with wells being put on inactive status, Helms said. The rig count is already down 36 percent, from 64 in December. Another 10 or 11 rigs may be idled if prices stay at current levels, according to Helms.

“Operators are now even more committed to running fewer rigs as oil prices remain at very low levels,” the state’s Department of Mineral Resources said in a statement announcing production numbers for December. The agency said it expects prices to be relatively low at least until the third quarter of 2016.

While North Dakota’s unemployment rate is still the lowest in the country — 2.7 percent in December, according to the U.S. Bureau of Labor Statistics — the state shed 4,000 jobs that month. Among U.S. states, North Dakota had the largest month-to-month and year-over-year percentage decline in employment during the last month of 2015, according to the bureau.

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North Dakota’s oil industry boomed earlier in the decade when producers used techniques such as hydraulic fracturing to tap into the state’s Bakken shale play. In the coming months, banks will be scrutinizing the finances of some of those operators, with a wave of debt “redetermination” hitting the industry, according to Helms. Banks

“We still anticipate that we’re going to see bankruptcies and financial problems for some of our smaller, more leveraged Bakken operators,” he said.