Pandemic rocks Permian Basin as wells, rigs idled and workers laid off By Jens Gould

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Seth Aldridge was at the tail end of a 12-hour night shift when he got the call at 6 a.m.

The voice on the other end said he had just lost his job as an oil field pumper for Occidental Petroleum in the Permian Basin.

“It was a shock to get the call, for sure,” said Aldridge, a 34-year-old resident of Lea County. “You see it coming, but you never really think … or you hope it’s not you that gets that ax.”

The ax is falling throughout energy-rich southeastern New Mexico as crude prices have plummeted amid the COVID-19 pandemic. It’s a swift and stunning reversal for an area of the state that until last month had been riding high on the greatest oil boom in its history.

It wasn’t long ago that some of the largest oil companies in the world were flocking to Lea and Eddy counties to boost oil production, open regional offices and add high-paying jobs that attracted workers from across the country to cities like Carlsbad and Hobbs.

Within the span of just around a month, that boom has turned to a bust. Serious doubts have now been cast over the short- and even medium-term future of oil and gas production in the area, as producers shut down wells, idle drilling rigs and say goodbye to workers.

“We’re seeing layoffs, we’re seeing equipment stacked in yards and we are seeing primarily the lower-volume wells shut in,” said Rep. Larry Scott, who, in addition to representing Hobbs in the state House, is the owner of Lynx Petroleum.

Projections reflect that pessimism. Daniel Fine, an oil and gas researcher with New Mexico Tech, estimates oil output on New Mexico’s side of the Permian in the second quarter of this year will fall to less than half of what it was before the new coronavirus outbreak.

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Not good, as I am posting this reply (4/20), oil is sitting around 11.67 a barrel. Lowest it's been in 21 years.

As I understand it, the May contract pricing kicks in tomorrow. That forward metric is at $22/bbl?, so this low price today, actually a NEGATIVE price at close today, will jump tomorrow.

In any event, all things came together for a perfect storm the first four months of the year. High Unemployment will linger as some businesses will just not reopen, and those that have been able to weather the storm, may not be allowed to return to a business as usual for some time.

So are all the contributing factors random, or was there some larger plan at work here? I fear they are deliberate, but I HOPE they are random chance. Time will tell.


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