Oilfield Safety a Concern as Companies Cut Costs During Downturn

A deadly oil well explosion in Texas’s Permian Basin this week offers a cautionary note of the industry’s challenges as companies cut costs during a market downturn.

Even as deaths in the industry have climbed much less than the breakneck pace of hiring for the U.S. shale boom, the three fatalities in Upton County on Tuesday are a reminder of the many risks facing workers.

“Even in downturns like this, people tend to want to watch their bottom lines, but safety is just as important now as it was when things were busy,” said Kenny Jordan, executive director at the Association for Energy Service Companies, a Houston-based industry organization. “That’s one of the concerns.”

The oil and gas industry saw 112 workers die in 2013, the latest figures available from the U.S. Bureau of Labor Statistics. That’s up 31 percent from 2003. Meanwhile, producers and drillers doubled their workforce in the same period, to 507,000.

This week’s explosion that killed three workers occurred at a well owned by Parsley Energy Inc. The workers were employed by Mason Well Service Ltd. of Odessa, Texas, said Lisa Elliott of Dennard-Lascar Associates, an outside communications firm speaking for Parsley, who confirmed the deaths. She didn’t return phone and e-mail messages today seeking further comment.

The U.S. Occupational Safety and Health Administration is investigating, Diana Petterson, a spokeswoman for the Department of Labor, said in a phone interview. She was unable to give more information about the accident.

The Permian is the biggest oil-producing region in the U.S. and remains one of the most active drilling areas despite the downturn in the oil market. Oil rigs in the Permian Basin of Texas and New Mexico make up more than a third of the U.S. total and 31 percent of those drilling in all of North America, according to data compiled by Houston-based Baker Hughes Inc., the world’s third-largest field-services company.

The industry has announced more than $40 billion in spending cuts and is eliminating 100,000 jobs globally as crude prices have fallen by more than half since June.

The industry could get safer in a downturn, as some of the younger, more inexperienced workers leave oil and gas, Jordan said.

Oilfield deaths fell by 43 percent in 2009 to 68, the lowest amount in a decade, as a collapse in natural gas prices led to drilling cutbacks, according to the Bureau of Labor Statistics. The number of active drilling rigs, a measure of workload, fell 57 percent from August 2008 to June 2009, according to Baker Hughes data compiled by Bloomberg.

Parsley, based in Austin, Texas, is run by Bryan Sheffield, the 36-year-old son of Scott D. Sheffield, who is chairman and CEO of Irving, Texas-based Pioneer Natural Resources Co., another Permian operator.