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Drillers Go Remote as Pandemic Reshapes Oil Business

08/02/2020 | 08:15am

By Collin Eaton

After cutting thousands of jobs during the coronavirus pandemic, the oil industry is accelerating its embrace of remote drilling and fracking, changes that will reshape its workforce permanently.

Schlumberger Ltd., Halliburton Co. and Baker Hughes Co., the world's three largest oil-field service providers, are shifting more tasks from drilling specialists at well sites to remote engineers working from offices or, increasingly, their homes.

The companies, which do much of the on-the-ground work for oil and gas producers, say they are retooling for what they project will be a leaner U.S. fracking market. But the changes are poised to be lasting, an example of how the pandemic is pushing industries to rethink how they do business.

Before the pandemic, many oil producers had been wary of moving away from traditional means of drilling, with on-site specialists to steer drill bits deep into the earth or interpret real-time well data. But the current situation has prodded them to look for new ways to reduce costs while minimizing the risk of spreading Covid-19, executives said.

"It's been an eye-opening experience for a lot of executives working from home," said Eric Carre, executive vice president of global business lines at Halliburton. The pandemic has proven that operating remotely "isn't as challenging as it looks."

The shift will mean more oil-industry workers will have to adapt to new technologies, and companies will eventually focus on hiring more data-analytics specialists and subject-matter experts to remotely support multiple operations, according to executives and analysts.

Some traditional roles in the oil patch, particularly manual field, operational and manufacturing jobs, will gradually disappear. "A lot of jobs won't exist," Mr. Carre said.

The virus has been a catalyst for a sped-up adoption of automation and other technologies in many industries, including at companies like meatpacking giant Tyson Foods Inc., which has shifted more work to robotic butchers, and manufacturer AptarGroup Inc., which is putting money behind machines that can assemble soap and hand-sanitizer pumps faster.

In the oil patch, more than two-thirds of Schlumberger and Baker Hughes's second-quarter drilling activity was supported by remote operations, up 25% for Schlumberger and 20% for Baker Hughes, sequentially.

Halliburton, the largest U.S. fracking company, said it has cut the number of engineers monitoring fracking jobs by shifting work to real-time operation centers.

The companies said relocating operations and closing facilities has helped them save money at a time when work continues to be scarce in the oil patch following a crash this spring in crude prices. The coronavirus led to a historic drop in the world's thirst for oil, as millions around the world stayed home and avoided flying and driving, and demand is still recovering.

Before the meltdown in energy prices, U.S. crude production had climbed above that of Saudi Arabia and Russia, even though American frackers had fewer working rigs and fewer oil-field workers than they had in 2014, when oil traded above $100 a barrel. According to Bureau of Labor Statistics data, employees in support activities for oil and gas operations at the end of 2019 numbered 26% lower than at the most recent peak six years ago.

Many jobs didn't come back because the U.S. shale industry had figured out how to extract more oil with fewer people after prices plunged in 2015 and 2016. Executives and analysts believe advances in remote drilling and automation could now leave the industry's workforce leaner still, as companies are forced to innovate to survive yet again.

Olivier Le Peuch, chief executive of Schlumberger, the world's largest oil-field services company, told investors July 24 that it aims to double the size of its digital business, which includes remote operations, digital inspections in maintenance and manufacturing and other technologies designed to reduce costs. Spokesman Giles Powell called the accelerated uptake "the foundation for a new normal in our industry."

Schlumberger, which has corporate offices in Paris, Houston, London and The Hague, had drilled 1,250 wells with support from 250 remote engineers in the second quarter. At the same time, it is cutting 21,000 jobs and is shutting down 150 operational sites, engineering and manufacturing facilities and offices globally. Halliburton is closing 100 facilities, and credited a large part of its recent cost cuts to the technological advancements.

Baker Hughes is seeing a wave of companies adopting its remote operations services for the first time, accounting for about 40% of those using the services this year, said Paul Madero, the company's vice president of global drilling services. Because of travel restrictions, many companies wouldn't have been able to drill some of their wells without remote specialists, he said.

Oil companies had been slow to adopt remote operations in recent years because cellular infrastructure was often inadequate in far-flung regions where they were drilling wells, and many were uncomfortable with having fewer people at rig sites to deal with any problems that arose, said James West, an analyst at investment bank Evercore ISI.

There was "a general view of 'this is how we've always done it,'" Mr. West said, though he added that increased adoption seems to have eased some of those concerns.

U.S. oil giant Chevron Corp. is among those that have benefited from the flexibility of remote drilling this year. As the pandemic got under way, the company was able to shift a remote team, mostly based in Houston, to their homes to continue supporting directional drilling in the Permian Basin of West Texas and New Mexico and other operations.

Remote drilling also has enabled specialists to make faster decisions and has made it easier to communicate lessons learned across teams, said Jeff Newhook, a Houston-based manager of one of Chevron's remote operation centers.

"They're steering more than one well at a time, and they're [in prepandemic conditions] sitting in the same room" or chatting over Microsoft Teams, he said.

Working remotely has made life simpler for Joost de Vreugd, a Baker Hughes remote operations manager in the Middle East.

Before, he would commute on a helicopter for long stints on offshore rigs. Now, he works in the United Arab Emirates at an office overseeing remote drilling across the region. That has allowed him to drive home after work and spend more time with his family, while still being on the forefront of what he calls an industrywide transformation.

"In the oil-and-gas industry, we tend to be hesitant to change," he said. "We see a lot of change coming in right now."

Write to Collin Eaton at


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