Oil companies are set to struggle rehiring workers they laid off during the crash

There’s renewed demand for oil workers who left the industry or were laid off during the most recent price crash.

Hiring in oil and gas extraction increased for three straight months through April, the longest stretch since April to July 2014, which was right around when oil prices peaked.

But as companies revamp production — having adjusted to a world in which oil doesn’t cost close to $US100 per barrel — sustaining this pace is not going to be cheap.

“Attracting back workers into the US shale sector will prove costlier than previous up cycles due to the severity of the most recent downturn, a tighter labour market and greater levels of uncertainty surrounding a sustained market recovery,” BMI Research, a Fitch Group company, said in a note on Tuesday.

The US unemployment rate fell to 4.4% in April, the lowest in a decade, showing that the US labour market is tighter than it’s been since the recession hit nearly a decade ago. More evidence of tightness that can be found in industries like construction, where builders have long grumbled about a shortage of qualified workers to meet the demand for new housing.

This tightness is not escaping the US shale sector, BMI Research said. It contrasts with the boom from 2011 onward when the labour market was looser than it is today and more people were willing and able to work.

One area where recruiting has been notably sluggish is frac crew members who help with well completion and bringing wells online, BMI Research noted.

In this kind of labour-market, the cohort that left during the downturn would require higher incentives to return. Some of them have already picked up new skills in other jobs. Hiring them back could raise labour costs for oil field services companies like Schlumberger and Baker Hughes, which have been among the hardest hit by the crash.

Workers considering a return to the oil industry would need to be convinced that the industry’s recovery is sustainable, and that there’s a long-term future for the use of fossil fuels.

But even if these concerns go unanswered, oil companies have need of fewer workers because the downturn spurred new technologies and more efficient ways of production, BMI Research said.

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