A major shale oil company pleading for federal intervention in part to save jobs is actively striving for automation which will reduce jobs, The Young Turks has learned.
The company, Oklahoma-based Continental Resources, was founded by Harold Hamm, a major Trump donor and still the company’s executive chairman. Hamm had been pushing for federal help in response to falling oil prices even before the coronavirus.
Republicans last month failed to get a fossil fuel bailout as part of the most recent coronavirus stimulus bill. This week, Pres. Trump claimed to have engineered a deal by oil-producing nations to reduce output, but with the pandemic cratering demand for oil, the deal did little to help the industry.
As TYT previously reported, environmentalists expect the oil industry to take another shot at a bailout in the next stimulus package, when Congress returns. Trump met with Hamm and other oil executives earlier this month.
Ironically, environmental activists say the best way to help industry workers would be to transition them to sustainable energy. But Trump and the oil industry oppose such proposals.
Fossil fuel companies had already carried out massive layoffs before the coronavirus hit. Then, last month, Hamm told the Washington Post that while his company is in good financial shape, the still-emerging pandemic “could jeopardize [industry] jobs.”
But TYT has found that Hamm’s company is actively engaged in automation efforts across a number of fronts. And Continental Resources is by no means unique.
Shale oil companies added an estimated 725,000 jobs between 2005 and 2012. But the shale oil industry, which accounted for 63 percent of US domestic oil production last year, seems determined to reduce the number of jobs with automation, which could lead to permanent unemployment for some of its employees.
Continental Resources, for instance, employs automation engineers and is seeking to employ more. On April 10, Continental Resources advertised through Dice, a Denver-based tech careers website, for a “Sr. DevOps” (Senior Development Operations) Engineer. Responsibilities include, “…working on automation and Infrastructure as Code projects....”
Continental is hiring for automation at a time the industry is laying off thousands of employees. Continental engineers work on the Supervisory Control and Data Acquisition (SCADA) computer system. Its purpose, according to the system’s providers:
“…is automation. … Relying on precise machine control for monitoring equipment and processes virtually eliminates human error. More importantly, it automates common, tedious, routine tasks once performed by a human, which further increases productivity,…”
TYT asked Continental Resources in an email, “… will these automation personnel be used to reduce the number of staff required to operate drilling rigs and other equipment.” We did not get a response.
The company does tell investors about its strategic use of technology to improve profit margins. Its most recent annual report says, “We continue to manage our business in the volatile commodity price environment by focusing on improving operating efficiencies and reducing costs by exploiting technical innovations.”
The drive to automation is so important to the shale oil industry that it holds a conference entitled Future Upstream Automation, focused on “improving organizational productivity and well site efficiency through automation and technology.” This year’s conference is scheduled for September in Houston. At least one speaker was identifed as being affiliated with Continental Resources, which is also listed as a contributing member.
And if there is any doubt which direction the industry is going with automation, consider what Terry Spencer, the head of natural gas company ONEOK, said in 2018. The environmental activist group DeSmog quotes Spencer saying, “One of these days one of these big ol’ fracs will be operated with nobody there.” He went on to say, “We are as an industry working towards where we can operate 24/7 unattended.”
Oil industry downsizing has been accelerated by the unprecedented joint pressures of increased foreign oil supply and a historic, steep drop in demand. Last weekend, OPEC countries and Russia agreed to reduce oil production by 9.7 million barrels a day beginning in May -- roughly a 10% reduction. Trump took credit for the deal, which a Goldman Sachs Financial analyst called, “too little too late.” Due to the coronavirus pandemic, worldwide demand for oil has dropped by 25 million barrels a day.
Hamm, Continental’s founder, has donated more than $500,000 to Donald Trump’s reelection efforts. He has called for tariffs on foreign oil to save shale oil companies. Yet even in better days, shale oil companies have been a bad financial deal. They have gone through $250 billion in investments in the last six years without turning a profit for investors. Banks are now considering taking over operations of some shale oil companies to retrieve partial return on investments. Oil prices in the last decade were as high as $120 per barrel and now West Texas Intermediate, the industry standard, is roughly $20 a barrel. Industry analysts estimate WTI prices need to be somewhere between $40 and $50 a barrel for shale oil extraction to be profitable.
The president often lauded the shale oil industry for giving America enough oil to make it an exporter for the first time and give America what he called “energy dominance.” Sightline Institute, a think tank for sustainability in the Northwest, believes energy independence is a good policy for the United States. It just has to be the right kind of non-polluting energy, Policy Director Eric de Place told TYT.
“The infrastructure costs a little bit of money but the energy sources wind and solar, geothermal. It’s free. And it’s not going to go away and Saudi Arabia and Russia and nobody else can take that away from us. That’s energy independence, and …it’s not even complicated for us to do; we just have to decide to do it.”
Who is stopping this environmentally favorable plan? De Place says oil companies who have tried to make as much money as possible selling their product. So before taxpayer money is used to bail out the oil industry and, especially, the shale oil companies, there is a long list of concerns that should be considered.
In 2019, fracking was used in an estimated 1,022 drilling rigs to extract oil and natural gas from shale rock (since the pandemic, the number has fallen to 602). That’s according to the Baker Hughes Tool company count.
Fracking entails pumping large amounts of water and toxic chemicals under high pressure to force out the oil and gas. Recently, a study by the Environmental Defense Fund found that the process releases three times more methane than previously thought. Methane is a key component in the increase of carbon levels in the atmosphere. The study found that drilling operations in the Permian Basin (primarily in Texas) leaked into the atmosphere enough methane gas to supply the cities of Houston and Dallas for one year.
One answer for shale oil drillers may be geothermal energy, which also requires drilling. Geothermal is considered renewable because the magnetic flux in the Earth’s core keeps the magma rotating.
De Place believes building eco-parks of renewable energy like solar and wind where once were coal plants or oil refineries can protect the long term futures of fossil fuel workers and other manufacturing workers and communities.
“They’re well positioned to do it because they do have unionized industrial workers who are pipefitters... you’ve got electrical workers, you’ve got all the folks in the steel industry… refinery workers who have skills that are either directly related to or adjacent to building out new eco-industrial parks… This is not taking a coal miner and asking [them] to become a computer programmer. This is the sort of transition that can actually happen.”
As for how much this would cost, de place said it would be “way, way, way, way” less than the $2.2 trillion of the most recent stimulus.
On Wednesday, 41 Democratic members of the House and Senate wrote to Treasury Secretary Mnuchin and Federal Reserve Chair Powell opposing taxpayer money from the $2.2 trillion CARES Stimulus Act going to the oil and coal industries.
The letter was supported by environmental lobbyists from Food & Water Watch, Sierra Club, Oil Change International, Greenpeace USA, Union of Concerned Scientists (UCS), 350.org, and Oxfam America.