Harsh weather conditions, remoteness of work all play a factor in what shale play emploeyes get paid in each region.
For the past decade, out-of-state workers have flocked to the northwestern part of North Dakota.
Recruits have found a lucrative opportunity that is hard to pass up in the oil and gas industry. The Bakken Shale, one of the top producing oil and gas plays in the United States, has been booming in the small Midwestern towns. Workers want a piece of the action.
However, North Dakota’s cold climate half the year and rural surroundings haven’t made for the coziest and most luxurious of living conditions. Something has to be the driving force behind all the workers who started their new life in the Peace Garden State.
ATTRACTING THE WORKFORCE
As they say, money talks. That’s certainly true in the Bakken.
In most cases, those working in the Bakken Shale play are paid significantly higher wages compared to those in the Eagle Ford Shale play in southern Texas and the Marcellus Shale play in Pennsylvania and Ohio. All three plays are among the top six producing oil and gas plays in the United States.
“It’s a means of trying to attract workforce to live and work up here,” says Tessa Sandstrom, director of communications for the North Dakota Petroleum Council, about the higher wages in North Dakota. “With the high cost of living that resulted from the dramatic growth, it helps pay for that as well and attract good, quality workers.”
Thomas Tunstall, Ph.D., senior research director at the Institute for Economic Development at the University of Texas at San Antonio, has done extensive research of the Eagle Ford over the years. He has conducted four economic impact studies on the shale dating back to 2011.
“My brother’s in the business and he was telling me that when things got going in the Bakken, a lot of the Louisiana boys went up there to work,” says Tunstall, whose dad was a petroleum engineer. “Basically, they held out for a year and then went looking for other opportunities because it was too cold. I’m sure that’s part of it, because it gets really cold up in North Dakota compared to Louisiana or Texas. Another thing is there’s less diversion for the workers. I think the population is more dense in south Texas; it’s not necessarily hugely dense, but there’s things to do, and San Antonio is not that far away. Those are my two hypotheses.”
There’s quite a big difference in the temperature ranges of the three shales. The average temperature in the Bakken boomtown of Williston, North Dakota, is 41.45 degrees; in the heart of the Marcellus, Towanda, Pennsylvania, has an average temperature of 48.03 degrees; one of Eagle Ford’s boomtowns, Karnes City, Texas, averages 69.05 degrees.
“There are quite a few people (working the Bakken) from Texas, Louisiana, but companies tried to recruit from places that had similar climates to North Dakota because it made it that much easier to keep them here, especially once winter hit,” Sandstrom says. “So there are quite a few workers from Montana, Minnesota, Washington, Idaho and Oregon as well.”
In Louisiana, Texas and Oklahoma, there’s a large contingent of folks who have only ever worked in that industry, Tunstall says. That bode well during the Eagle Ford boom because workers didn’t have to travel far for work.
Cost of living also plays a factor in the higher wages paid out in North Dakota, notes Sandstrom. However, small towns in Texas and Pennsylvania that were affected during their respective booms also saw a spike in their cost of living.
“Very similar to North Dakota, they were, at least in Pennsylvania, more rural areas that had kind of been struggling economically for a while, and then all of a sudden you have all this activity and people moving back in,” Sandstrom says. “I think the cost of living has been a challenge for just about every shale play just because of the rapid growth that came with it.”
TELL-ALL FIGURES
According to an employment and wages report for 2014 conducted by Job Service North Dakota, first-line supervisors of construction trades and excavator workers (rig supervisors) in North Dakota made on average $77,320 per year ($37.17 per hour). For experienced supervisors in that field, pay jumps to $92,980 per year. In the far west region of North Dakota — which includes oil- and gas-rich Williams, McKenzie and Dunn counties — a first-line supervisor made on average $88,770 per year; for an experienced worker in that area, the wage was at $103,390.
In Pennsylvania in 2014, first-line supervisors of construction trades and excavator workers on average made $69,430 per year, according to the Center for Workforce Information & Analysis through the state of Pennsylvania. In the Eagle Ford region of Texas, that same occupation during the second quarter of 2015 had workers making $26.15 per hour or roughly $54,400 per year, according to Workforce Solutions of the Coastal Bend.
Derrick operators in North Dakota made an average of $58,750 per year ($28.25 per hour), while an experienced operator made $69,460. In Texas, derrick operators took in $22.57 per hour or roughly $47,000 per year. In Pennsylvania, their wage was $46,240 per year.
Below is a list of how other gas and oil occupation wages compared in the three shale plays:
- Roustabouts: North Dakota, $44,980/year ($21.62/hour); Texas, roughly $32,800/year ($15.77/hour); Pennsylvania, $39,000/year.
- Service unit operators: North Dakota, $54,350/year ($26.13/hour); Texas, roughly $42,000/year ($20.17/hour); Pennsylvania, $43,040/year.
- Rotary drill operators: North Dakota, $66,390/year ($31.92/hour); Texas, roughly $55,500/year ($26.67/hour); Pennsylvania, $50,750/year.
- Helpers – excavation workers: North Dakota, $34,080/year ($16.39/hour); Texas, roughly $37,700/year ($18.13/hour); Pennsylvania, $35,710/year.
- Pump operators: North Dakota, no figures available; Texas, roughly $54,200/year ($26.06/hour); Pennsylvania, $46,750/year.
- Operating engineers and other construction equipment operators: North Dakota, $51,770/year ($24.89/hour); Texas, roughly $33,700/year ($16.18/hour); Pennsylvania, no figures available.
- Heavy and tractor-trailer truck drivers: North Dakota, $50,810/year ($24.43/hour); Texas, roughly $36,100/year ($17.37/hour); Pennsylvania, no figures available.
The wages workers earn in the Eagle Ford and Marcellus shales are pretty similar in most instances.
“The premium that the energy industry pays is already significant and I think generally well acknowledged,” Tunstall says. “For the Bakken, they probably have to pay somewhat of a premium above that, but it’s not hard to attract workers today in the industry. It’s a place where comparatively low-skilled folks can go and don’t need a college education, but you can make the type of money you can’t make in any other industry with that skill set. And if you are skilled, a petroleum engineer or a geologist, you can really clean up.”
UNCERTAIN FUTURE
Only time will tell if the wages in the Bakken are superior to the other shale plays in the United States.
“Prior to the downturn, a lot of people were interested in coming here for the higher wages, but also just the opportunity that really didn’t exist anywhere else,” Sandstrom says. “The shale plays, all of them, were different from the Bakken where the economic recovery wasn’t going quite as quickly, so people needed those jobs.”
Now Sandstrom says the challenge is with the crude oil price downturn.
“A lot of people are going to return to their home states and work there,” Sandstrom says. “When things pick back up again, the question is will they be able to get a lot of those workers back or not. We certainly have attracted a lot of people (in North Dakota) with the higher wages, but I think the higher cost of living may keep some people home.”
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