Oil-field workers get no relief as the energy industry cuts deeper in 2016

America's oil-field workers already took a hit last year. This year, they're taking another one, and worse.

U.S.-based energy companies announced plans to send 103,000 workers packing in the first 10 months of 2016, compared with 90,000 in the same period last year, according to global outplacement firm Challenger, Gray & Christmas.

Signs have emerged in the last few months that the worst may be over. Employment in the American oil and gas extraction sector appears to be bottoming out, and U.S. energy layoffs fell 75 percent last month from a year ago. But the industry has been shaken by the depth and length of the downturn in oil prices, and the job cuts that have followed this year.


"Especially in the beginning of a big downturn, you just don't know where you're going to end up, and so companies make changes, and they hope that they're done with them, that it's a blip," Challenger, Gray CEO John Challenger said.

The oil bust has been anything but a blip. Crude prices fell from more than $100 a barrel in mid-2014 to the upper $20 range last winter, forcing energy companies to revisit their staffing levels quarter after quarter as they sought to reduce costs.

For oil-field workers, that means the hits have kept on coming. About half of the 20 biggest layoffs that have struck the sector since the downturn began occurred this year.


Not all the layoffs announced by companies based in the United States hurt American workers, because many firms operate internationally.

Still, the turning of the tide has been stunning. In the years following the financial crisis, total U.S. employment in the oil and gas extraction, drilling and support services more than doubled over a 10-year period to reach about 644,000 jobs at the end of 2014, according to a CNBC analysis of Bureau of Labor Statistics data.

Through the first quarter of this year, those same sectors have shed more than 200,000 positions since OPEC's fateful policy meeting in November 2014.

At that meeting, top OPEC exporter Saudi Arabia rejected the production limits that have historically been used to cap output, burn through oversupply and prop up crude prices. Instead, Riyadh guided OPEC toward a new hands-off policy, which allowed prices to continue falling.

Now, all eyes are once again on the Organization of the Petroleum Exporting Countries as the members prepare to meet Nov. 30 to hammer out a deal to limit production. An effort to freeze output earlier this year failed in April, and prices have remained stuck in roughly the $40 to $50 a barrel range.

Oil giants like Chevron and Shell, as well as smaller independent producers, have cut significantly, but it's the companies that provide services to these drillers that have slashed to the bone. Those include the big three U.S. oilfield services firms: Schlumberger, Halliburton and Baker Hughes.

Not only has the drop in exploration activity depressed demand for their services, but they've also been forced to offer deep discounts.

Companies that manufacture oil rigs, such as National Oilwell Varco have also had to hand out thousands of pink slips as drilling activity dwindled.

Around the world, the total number of announced layoffs has swelled to nearly 297,000 over roughly the last two years, according to a count kept by Airswift, a global recruiter for the energy, chemicals, mining and infrastructure industries.

The key to turning a corner would be a rebound in capital spending, said Janette Marx, global chief operating officer at Airswift. Chevron's announcement in July that a $37 billion expansion of Kazakhstan's Tengiz oil field will move forward was significant, according to Marx, but the industry needs to approve more such projects if it's going to move the needle on employment.

About a year of design and engineering work usually follows a final investment decision, so project announcements typically won't immediately produce job gains in construction and on-the-ground work.

Through the first half of the year, companies had deferred or canceled $1 billion in exploration and production spending planned for 2015 to 2020, according to research and consultancy group Wood Mackenzie. The Lower 48 states have seen the deepest cuts, particularly for high-cost unconventional projects that require advanced drilling methods.


Still, there is some hiring activity brewing in America's oil patch. Jeff Bush, president of CSI Recruiting, said he had zero placements just a few months ago, but his office is now busy filling positions for high-skilled oil-field workers, engineers and executives.

The uptick in CSI's recruitment is being driven by small companies that need to drill acreage before their leases expire, and by small, private equity-backed firms that have acquired reserves and lack the staff to start producing them.

That type of activity is a leading indicator for hiring, but larger, publicly traded drillers need to start hiring in order to spark a turnaround in employment and put hard-hit oil field services firms back to work, Bush said.

"There might be pockets of activity, but if you're looking for a broad-based recovery, you need those big guys to come back online, and we're not seeing that yet," he told CNBC.