That COVID-19 has affected some industries, devastated others, and has generally been playing peek-a-boo with the world’s economies for the past 24 months is no secret. And like those living with post-COVID syndromes, the oil and gas sector, too – even those in it who survived – could be considered “long haulers.”
In 2020, according to Deloitte, a professional services network, the oil, natural gas and chemicals industry in the United States eliminated 107,000 jobs between March and August, which was the fastest rate of layoffs in the industry’s history.
Fast forward to 2022.
Oil prices are the highest level in seven years, but only about 50 percent of those lost jobs have come back.
Taking a deeper dive in to the numbers, according to a series of studies done by American Geoscientists Institute, in February 2020, just as the pandemic was awakening, 76 percent of employers expected their financial performance for the year would be similar or higher than 2019. This sharply changed once the pandemic began to take a grip. Fully 50 percent or more of employers expected worse financial performance through December 2020. These numbers improved during 2021, until around August, and then dipped again when the Delta and Omicron-variant waves hit. As the virus progressed, fully 91 percent of companies, according to the AGI study, offered remote work options. On the employment front, temporary and contract staffing through the pandemic was more volatile than permanent staffing. But they weren’t spare either.
According to the report: “Pandemic-related staffing impacts such as layoffs, furloughs, and reductions to benefits and salaries declined steadily through 2020 and into early 2021 with a temporary peak in March 2021 timed with the end of PPP loan coverage for many employers.”
Market Retreat
Two industry veterans, Amy Henry, CEO and co-founder of Eunike Ventures, and Susan Nash, director of Innovation and Emerging Science/Technology for AAPG, agreed there has been a lot to unpack over the past two years – not only the reality of what actually occurred, but the fear of what could happen.
“It was tough because of all the uncertainty, it was difficult to impossible to bring in more industry partners to fully fund our model,” said Henry. “Our team had to continue to put their own skin in the game.”
Her company, Eunike Ventures, is a hybrid energy accelerator/venture backed by those in oil and gas industry, whose model, she said, had to pivot and adjust along with its industry partners.
“At the beginning or right before COVID, we had discussions and meetings with family offices to formally have them participate on the investment side of the model,” added Henry.
She said as soon as COVID hit, however, there was a general retreat, due to all the changes in the market.
“Another thing is there were startups, a lot of them, not having a lot of runway in terms of working capital during this time period. There were many solid companies that gave up or shut down,” Henry said.
Adaptation and Innovation
For her part, Nash said the changes, while devastating throughout the industry, including those in the workforce, did provide some with an impetus to expand their horizons.
“The collapse of oil and gas prices that accompanied the COVID-19 pandemic resulted in layoffs of geologists, but many geoscientists pivoted and started to move into different industries,” she said.
As for how and where the work was being done, companies, too, she said, accelerated their use of cloud-based applications to allow geoscientists to work from home. Many meetings moved online, which, admittedly, affected convention business, certainly for AAPG.
In academia, she pointed to an interesting, almost quaint shift in its paradigm.
“There was, in some cases, a rise in field studies as professors and researchers could spend time in the open air in relative safety as opposed to time in their labs,” said Nash.
To that end, she said AAPG launched endeavors to help geoscientists and educators faced with such “dizzying” changes, including a new way of communicating with like-minded professionals, which was part of AAPG Pivoting 2020 and Pivoting 2021 webinar conferences.
Recovery In Sight?
Henry said the light at the end of the tunnel we’re starting to see is not only evident, but also recognizable, which means it has to be approached with the same due diligence with which such recoveries always are.
“I am optimistic about the next 12 months, but cautious,” she said, as the people at her company have been through these waves of changes before.
“We are having so many good discussions and more potential partners,” said Henry, “but we want to see how many can get this executed within their organizational structures.”
Speaking of those changes, according to the International Energy Agency, while world markets have bounced back after COVID-19 – which caused an unprecedented collapse in demand in 2020 – there still might not be a return to normalcy anytime soon. Changes in behavior from the pandemic and a stronger drive by governments toward a low-carbon future have caused a dramatic downward shift in expectations for oil demand over the next six years. Companies don’t want to leave resources in the ground, but at the time, even with oil prices north of $90 or $100, nobody wants it to sit idle above ground because post-COVID demand has peaked.
Specifically, Henry sees good things ahead due to the very changes that are causing so much of the uncertainty.
“We are going back to looking at the production side including reservoir technologies, enhanced oil recovery, geothermal – which have tie-ins to the geosciences. This is what is promising,” she said.
Ultimately, said Nash, the pandemic did what any cataclysmic event in any industry does: it stopped the world from spinning quite so fast.
“There was widespread reassessment of what it means to be alive, and where one’s priorities lie. Many geoscientists decided to retire and to spend time with families and nature,” she said.