Permian Roughneck Shortage Clouds Outlook for Oil Output Growth

Evercore sees ‘significant challenges’ for drilling revival Labor scarcity likely to limit growth in next two years

Oil Rig Hands - ENB

Oil drillers set to increase U.S. production in the coming years face considerable headwinds from labor shortages in America’s most prolific shale patch, according to industry consultants Evercore ISI.

The Permian Basin straddling Texas and New Mexico will be the main driver of an estimated 750,000 barrel-a-day increase in U.S. oil output this year, but producers “could face some significant challenges” to go beyond that and repeat the same growth in the coming two years, Evercore said in a research note to clients.

Surging oil prices have sped up a revival of shale drilling as a bounty of cash helps producers shake off a pandemic-driven downturn. Crude prices have surged 40% since early December to more than $90 a barrel, and drillers added the most rigs in four years last week.

Citing a meeting with Lance Robertson, the chief executive officer of Endeavor Energy Resources, Evercore said the shale explorer is already relying on out-of Permian staff for roughly 60% of its field work, a level previously only seen at activity cycle peaks.

Endeavor didn’t immediately reply to requests for comment.

Earlier this week, the U.S. government reported that the Permian reached record volumes of oil supply for three consecutive months.