America's hottest oil play just needs a few thousand truckers - Albuquerque Journal

America’s hottest oil play just needs a few thousand truckers

When the price of oil collapsed in 2014 and disrupted drilling operations all across Texas’ massive Permian Basin shale formation, truckers were among those hardest hit. Rendered unnecessary by the slump in output, they were fired in scores.

Now, with oil prices inching back higher and production in the Permian — which extends into New Mexico — soaring once again, the drillers want the truckers back. The feeling, though, isn’t mutual. The pain of the 2014 bust remains fresh for many who went on to find driving gigs in other industries and who worry that companies will remain tightfisted with pay as they re-hire.

The result is a growing trucker shortage that threatens to limit just how high drillers can push production. The problem is most acute in the western fringe of the Permian, known as the Delaware Basin, where shale companies are aggressively moving as prices climb. Given the off-the-beaten-path location of these wells amid the sprawling 75,000-square mile Permian, the need for truckers to haul the oil over primitive roads to pipelines is greater than in more centrally located spots.

“We are able to sell the trucks to the crude haulers,” said Wade Black, a salesperson with Premier Truck Group in Amarillo, Texas, just north of the Delaware Basin. “But there’s no one to drive them.”

However, some say the shortage is temporary.

Trucking companies are redeploying assets to where there has been a large increase in output to meet demand, said Robert McEntyre, a spokesman for the New Mexico Oil and Gas Association.

Permian production is surging, thanks to improving oil prices. Output may reach 2.79 million barrels a day in January, 30 percent higher from the year before, according to the latest government forecast. Led by Permian growth, total U.S. oil output is set to surpass 10 million barrels a day in June 2018, potentially eclipsing OPEC’s Saudi Arabia.

About 3,000 truckers are hauling oil around the Permian, more than the 2,000 to 2,500 just before the 2014 price bust, Willie Taylor, Chief Executive Officer for Permian Basin Workforce Board in Midland, Texas, said in a phone interview. But companies will need to hire more than 3,000 additional drivers at the rate the patch is growing, he said.

Those drivers are sorely needed, especially in the fast-growing Delaware Basin, which has become the Permian’s second-largest section. There are as many as 2,000 trucks just servicing the Delaware, each able to transport about 180 barrels, Joey Lee, General Manager with Premium Truck of Odessa, said in a phone interview.

The problem? Drivers are worried they won’t get paid much, given that most operators are still in austerity mode with prices well below their 2014 peak, according to Lee. Oil truck drivers are paid about $100,000 per year, some 10 percent to 20 percent below 2014-2015 salaries, according to Joseph Triepke, founder of Tennessee-based oilfield research firm InfillThinking.com.

The shortage won’t cause any kind of slowdown in production or shut-ins, said Lee, adding that more staff will likely be added steadily next year as prices rise. “Rehiring will be a slow process. It won’t happen as fast as you need it.”

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