Energy & Environment

Weekly Oil Market Crash Update: Shell Plans To Cut Up To 9,000 Jobs Worldwide

Shell employs around 8,000 people in the Bayou City, according to Houston Chronicle research.

Royal Dutch Shell said Wednesday Sept. 30, 2020, it is planning to cut between 7,000 and 9,000 jobs worldwide by the end of 2022 following a collapse in demand for oil and a subsequent slide in oil prices during the coronavirus pandemic.

Energy producer Royal Dutch Shell is planning to cut between 7,000 and 9,000 jobs worldwide by the end of 2022 following a collapse in demand for oil and a subsequent slide in prices during the coronavirus pandemic.

It is not clear how the move will impact Houston workers. Shell employs around 8,000 people in the Bayou City, according to Houston Chronicle research.

The company said around 1,500 employees have already agreed to take voluntary redundancy this year and that it’s looking at a raft of other areas where it can cut costs, such as travel, its use of contractors and virtual working.

"We have to be a simpler, more streamlined, more competitive organization that is more nimble and able to respond to customers,” Ben van Beurden, the company’s chief executive, said. "To be more nimble, we have to remove a certain amount of organizational complexity."

In June, rival BP said it was cutting around 10,000 jobs from its workforce to cope with the impact of the virus.

Shell also said that it expects third-quarter production to be between 2.15 million and 2.25 million barrels of oil equivalent a day, and that daily production levels have been impacted by between 60,000 and 70,000 barrels because of hurricanes in the Gulf of Mexico.

Meanwhile, the Delaware Basin in west Texas and southern New Mexico has a new big player – or, at least two former players now combined under one name. This week Oklahoma City-based Devon Energy and Tulsa-based WPX Energy announced they would merge in an all-stock transaction.

The combined company will keep the name Devon Energy, and the transaction means it now has acreage position totaling 400,000 net acres in the Delaware Basin. The deal is expected to close in the first quarter of 2021.

"The combined company will be one of the largest unconventional energy producers in the U.S.," says WPX's CEO Rick Muncrief in a statement. "We will create value for shareholders of both companies through the disciplined management of our combined assets and an unwavering focus on profitable, per-share growth."

The 2020 oil crash has forced other companies to consider mergers or sales as well. In July Chevron acquired Houston-based Noble Energy in a $13 billion deal. In August Spring-based Southwest Energy acquired Montage in an all-stock deal, and Houston-based oilfield services giant Schlumberger announced it would sell it's hydraulic fracturing business.

Also this week, major consulting firm Ernst & Young released a report about the digital transformation in oil and gas. Of the oil executives surveyed, 92% said retraining workers in order to increase technology in daily operations is crucial to the company's success. However, only 9% agreed that their company has a robust plan for how to reskill the workforce.

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