Cutbacks In The Bakken: Baker Hughes Layoff Of 117 Employees Biggest Signal Yet Of Slowdown

Baker Hughes' Dickinson facility.
Baker Hughes’ Dickinson facility.

Falling oil prices and the resulting oil drilling slowdown in the Bakken Oil Patch has led one of the world’s largest oilfield services companies to make major cutbacks at its Dickinson office.

Baker Hughes sent a letter of notice to Dickinson Mayor Dennis Johnson on Wednesday, stating it was permanently terminating 117 employees here — most of them field operators and specialists.

In the letter, Baker Hughes stated that falling oil prices “have negatively impacted the market and reduced the overall need for the services provided by Baker Hughes.”

The Work Adjustment and Retraining Notification Act requires companies that plan to terminate more than 100 employees alert area and state workforce services, as well as the mayor of the city where the layoffs occur. Baker Hughes did not release how many workers it still employs at its Dickinson office.

Johnson said, in his 15 years as the city commission’s president, he cannot remember receiving a similar letter.

“Historically, at least for quite a while, there haven’t been any layoffs of that magnitude,” he said.

The most recent comparable mass layoff in Dickinson happened in May 2009 when American Express Business Travel announced it was terminating about 100 employees following months of smaller cuts. That decision was traced directly to the nationwide economic slowdown now known as the Great Recession.

 

“Layoffs of this size will be felt in the community,” Dickinson City Administrator Shawn Kessel said in an email. “The beauty of having a diversified economy is many of these newly unemployed can remain in town and become gainfully employed by another company, possibly in a different industry if they choose to.”

 

There were 1,228 job openings listed in southwest North Dakota counties at the end of August, according to Job Service North Dakota. However, job numbers in Stark County and the surrounding area have been declining throughout the year.

 

Baker Hughes cut 71 field operators and 23 field specialists, engineers and coordinators. The letter also listed the termination of 10 mechanics, as well as administrative staff, warehouse workers and lab technicians, and one person each in a management, sales, dispatching and inventory.

 

Melanie Kania, a media relations specialist for Baker Hughes, said Dickinson isn’t the only area where the company is making cuts.

 

“With market conditions remaining challenging, we have taken actions to strengthen our revenue and reduce our cost structure companywide to improve profitability and remain competitive in this environment,” she said in a statement. “Throughout 2015, we have lowered spending across the business, closed or consolidated facilities, and made the difficult decision to reduce our workforce. We’ve made efforts to minimize reductions through alternative cost-cutting measures when possible and impacted employees will be eligible for severance benefits.”

 

While Baker Hughes is the first major oilfield services company in western North Dakota to announce significant employee cutbacks, other major service companies including Halliburton and Schlumberger have already been making cuts worldwide but have not disclosed how many have affected the Bakken.

 

Baker Hughes wasn’t even the first North Dakota oilfield company to mass terminate employees this month.

 

In Minot, Pumpco Energy Services closed its office on Sept. 5 and laid off 70 people. Pumpco simply stated in its WARN notice that it was closing the office because of “the economic conditions caused by falling oil prices.”

 

Coming cutbacks

 

Russ Schank, president of the American Petroleum Institute’s Dickinson Chapter, said he hears many rumors about cutbacks at different companies in the area. Some, he said, are quickly dismissed. Others turn out to be true.

 

“It’s pretty much across the board,” he said. “I won’t mention anything specific, but generally speaking, that’s what’s going on. It’s pretty obvious and it’s probably going to continue through the winter.”

 

Halliburton and ConocoPhillips media representatives said Thursday that their respective companies either have or are making cutbacks worldwide, and that the layoffs may affect their Bakken offices.

Halliburton representative William Fitzgerald said the company has reduced its global workforce by about 19 percent, or 16,000 employees, since peak production in 2014.

 

“We have announced to our employees that we are regrettably making further adjustments to our workforce, primarily in North America, due to current business conditions,” Fitzgerald said in a statement.

 

He added that Halliburton cannot say where the next cuts will happen. However, on Sept. 22, the Williston Herald reported that the company confirmed recent layoffs at its Williston office. It had closed its Minot office in April and transferred some of those employes to Dickinson and Williston.

 

ConocoPhillips media relations representative Jim Lowry said the company recently announced 10 percent workforce reductions “across the board.” Additional information about where those cutbacks occur won’t be available for another two to three weeks, he said in a phone interview.

 

“We still have an active development program there,” Lowry said of its rural Dickinson office along the Stark-Dunn County line. “There’s been no announcement about any change.”

 

However, a representative from another major oil company with a Dickinson office said he doesn’t “foresee any (cutbacks) in the near future.”

 

Zachary Weis, a public and government relations manager for Marathon Oil Corp., said his company has not made any recent cuts at its Dickinson office, where there are about 190 employees.

 

“I think our mindset is pretty positive,” Weis said. “I think we really enjoy working in North Dakota. We enjoy being in Dickinson. We have a world-class asset in the Bakken and we don’t plan on moving out anytime soon. We’re in it for the long haul.”

 

Not just oil companies

 

BSNF Railway representative Amy McBeth said while the railroad company hasn’t made any layoffs, it has furloughed employees in western North Dakota because of the oil drilling slowdown.

 

The railroad, McBeth said, is at the mercy of its customers, and oil-related shipments account for 4 percent of its business nationwide.

 

“Low energy prices and a strong dollar have impacted some commodities,” McBeth said in a statement. “We have seen increases in agricultural products and intermodal shipments (consumer products), while our industrial products commodity segment, which includes crude oil, is down from last year.”

 

BNSF transports crude oil out of North Dakota and ships supplies into the state, most notably sand used in the hydraulic fracturing process. Fracking operations in North Dakota have declined signifi- cantly since oil prices began falling late last year.

 

In September 2014, there were 189 drilling rigs operating in the state. Last week, there were 66. The state’s oil production has plateaued at around 1.2 million barrels a day. The North Dakota Department of Mineral Resources estimates that every rig supports 120 jobs.

 

“As part of that, unfortunately, we have had to temporarily furlough some of our employees at different locations across our network,” McBeth said in a statement. “Many of these positions are in transportation. We expect to call the furloughed employees back as soon as business needs require.”