Hot Commodity in the Shale Boom: Truckers

0 23

Santiago Rivera earns round six figures hauling water in America’s hottest oil subject. He was at a truck cease in Midland, Texas, final month when a person in a grey polo shirt walked up and provided him extra.

“How a lot are you making an hour?” the person requested. He promised a 25% increase on the spot and handed Mr. Rivera a enterprise card.

Almost half of all rigs working within the U.S. are at the moment deployed within the Permian Basin. However a scarcity of truckers to move crude, in addition to the sand and water utilized in fracking, is threatening to gradual a drilling growth that has helped carry U.S. oil manufacturing this 12 months to all-time highs.

Pipelines stuffed to the brim are forcing some producers to truck oil a whole lot of miles to markets in Oklahoma and alongside the Gulf Coast, setting off a bidding conflict for certified truckers on this nook of West Texas and New Mexico, the place many drivers already make greater than $100,000 a 12 months.

“For those who’re a driver, you possibly can go wherever right here,” stated

Everardo Flores,

who makes $800 to $1,100 each day hauling crude inside the Permian for Calgary, Alberta-based

Gibson Vitality
Inc.

The 35-year-old unbiased contractor has been making an attempt for months to recruit one other driver for his truck, however most candidates ask for an excessive amount of, together with free housing.

It doesn’t assist that the trucking business nationwide is struggling to rent and retain drivers, with the general freight market one of many strongest in years.

With U.S. unemployment at an 18-year low of three.eight%, carriers are having a tough time competing with jobs in development or different energy-sector jobs that provide extra nights at dwelling or higher pay. Truckers typically spend weeks on the street, sleeping of their cabs and subsisting on truck-stop meals.

Permian operators have responded with larger wages and bigger signing and retention bonuses. “Now hiring” indicators line roads all through the area, promoting for drivers.

Badlands Tank Traces, an Omaha, Neb., firm with greater than a dozen vans within the Permian, has elevated driver pay twice in latest months, providing raises of about 10% every time, founder

Roger Johnson

stated. The corporate’s common Permian crude driver now makes about $105,000 yearly, Mr. Johnson stated, practically double the $57,000 a 12 months the common long-haul trucker makes at for-hire carriers, in keeping with the American Trucking Associations, an business group.

Some energy-transportation firms are even bringing folks on and not using a industrial driver’s license after which sending them to get licensed, stated

John Rojas,

director of transportation coaching companies at Del Mar School, a neighborhood faculty in Corpus Christi, Texas, the place enrollment in commercial-driving programs has soared since February.

Many drivers left the business when crude costs plunged in 2014, a hunch that additionally left firms with extra gear, stated

Rob de Cardenas,

a senior vice chairman for Houston-based

Crestwood Fairness Companions

LP, which operates a number of shale-related companies.

Now “all the things is kicking again up,” Mr. de Cardenas stated, including that used crude trailers that offered for $25,000 to $35,000 apiece final 12 months now fetch $45,000 to $50,000.

The shift has additionally given transportation firms extra leverage with shale drillers. “The individuals who have the vans are locking in offers for six months” or longer as an alternative of month to month, Mr. de Cardenas stated.

The competitors for drivers within the Permian is so fierce—and the price of doing enterprise rising so shortly—that some trucking corporations are reconsidering whether or not working there’s value it.

“All the prices have began going again up, however the pricing is lagging,” stated Harold Sumerford Jr., chief govt of J&M Tank Traces Inc., which hauls sand. The corporate’s administration group meets month-to-month to debate whether or not to divert vans to much less aggressive oil fields elsewhere, he stated.

There was loads of pipeline capability to maneuver oil out of the Permian when costs have been decrease, however output has risen sooner than firms have constructed new pipelines.

If forecasts maintain, vans would wish to haul 300,000 to 400,000 barrels of crude out of the Permian each day by the center of subsequent 12 months, earlier than new pipelines open, in keeping with Goldman Sachs. That will require one other three,000 to four,000 vans to start touring the dusty roads of West Texas and New Mexico, greater than an eight% improve over present each day demand.

Matthew Portillo,

a managing director at power funding financial institution Tudor Pickering Holt, is skeptical that that many certified drivers might be imported to the world, calling it “an enormous limiter.

Oil in Midland just lately has offered for $20 a barrel lower than in Houston, in keeping with funding financial institution

Credit score Suisse
.

That displays the extra prices some face transferring crude to the Gulf Coast.

Even bigger producers have begun reconsidering their Permian manufacturing plans. “The dialog within the firm is, ought to we cease?” ConocoPhillips Chief Govt

Ryan Lance

stated at a convention final week. “Why ought to we maintain spending capital there and be subjected to $10, $15 [differentials] after we can reallocate that to one thing else?”

For now, it’s a good time to be a trucker within the Permian like Mr. Rivera, 52 years previous, who has been driving for greater than a decade. A local of El Paso, he sleeps in his truck and heads dwelling each different weekend. He thought of the provide from the person within the grey polo, he stated, however finally concluded the 25% increase sounded too good to be true. “I wasn’t satisfied,” he stated.

In the meantime, Mr. Flores, the unbiased contractor, just lately educated a driver who jumped ship as quickly as he was on top of things.

“Any person is available in and offers them a greater value,” he stated.

Write to Rebecca Elliott at rebecca.elliott@wsj.com and Jennifer Smith at jennifer.smith@wsj.com



Supply hyperlink – https://www.wsj.com/articles/hot-commodity-in-the-shale-boom-truckers-1528459200?mod=pls_whats_news_us_business_f

You might also like

Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.