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Fifth Circuit Holds Highly Compensated Oilfield Workers Paid a Day Rate are Entitled to Overtime
The day-rate tool pusher earning $963.00 per day is not exempt from the overtime provisions of the Fair Labor Standards Act (“FLSA”) – in other words, he or she is entitled to overtime pay. So holds the Fifth Circuit.
The oil and gas industry has waited anxiously for the full (en banc) Fifth Circuit to re-consider the Hewitt v Helix Energy Solutions Group decision. Yesterday, the majority held that the Highly Compensated Employee (“HCE”) overtime exemption was not applicable to an employee paid a day rate, even when his or her total compensation exceeds the HCE salary threshold (then $100,000 per year) and the worker performs exempt duties. An individual paid a day rate (even a very high day rate) does not meet the “salary basis” prong required of the U.S. Department of Labor’s overtime exemption regulations. The decision can be accessed by this link.
'Eye of fire' in Mexican waters snuffed out, says national oil company
A fire on the ocean surface west of Mexico's Yucatan peninsula early on Friday has been extinguished, state oil company Pemex said, blaming a gas leak from an underwater pipeline for sparking the blaze captured in videos that went viral.
Bright orange flames jumping out of water resembling molten lava was dubbed an "eye of fire" on social media due to the blaze's circular shape, as it raged a short distance from a Pemex oil platform.
The fire took more than five hours to fully put out, according to Pemex.
The fire began in an underwater pipeline that connects to a platform at Pemex's flagship Ku Maloob Zaap oil development, the company's most important, four sources told Reuters earlier.
Judge drops key charge in rig fire that killed 5
A federal review commission has dismissed the main charge that worker safety officials brought against an oil and gas company for a 2018 Oklahoma well explosion that was one of the deadliest episodes of the shale drilling era.
In a ruling that became final late last week, an administrative law judge ruled the Occupational Safety and Health Administration (OSHA) failed to prove Patterson-UTI Drilling Co. violated what's known as the "general duty clause" — a catchall provision that requires employers to provide a safe workplace, even if no OSHA standard was violated.
The decision highlights the absence of a federal safety standard for oil field work, a gap advocates and OSHA have sought for decades to close. Patterson will still pay a fine for other, specific safety violations.
"This is one more example of a tragic weakness in the OSHA law: The agency's standard-setting process is broken," said David Michaels, a professor at the George Washington University School of Public Health who ran OSHA during the Obama administration.
Shale Rig Owner Touts New Price Model as Drilling Speeds Up
The biggest provider of oil and gas rigs to the U.S. shale patch is pushing a new pricing model as speedier drilling cuts into contractors’ revenue.
Rigs are typically rented out at a daily rate for a period of a few months, which has meant less money for oilfield service providers as drilling becomes quicker and more efficient. So Helmerich & Payne Inc. is touting a new pricing model based on overall well performance, and almost a third of its U.S. rigs are now being leased on that basis, Chief Executive Officer John Lindsay said Wednesday on an earnings call.
“The industry really has to evolve,” Lindsay said. “We’re really focusing on a lifetime value of that well bore for the next 10 or 15 years, and I think that is really drawing some attention. We’re seeing some opportunities to continue to grow these new models with our customers.”
After the worst crude-price crash in history pummeled the oil industry, the tussle between producers and contractors over the cost to drill and frack wells has taken on greater urgency. Explorers are under increasing pressure to cut spending and return cash to shareholders, and drilling is becoming vastly more efficient as a result.
Fracking Ramps Back Up As Crude Oil Becomes A Hot Commodity Again
The slow but steady growth seen by the U.S. oil and gas industry throughout the final four months of 2020 intensified in January, as oil prices saw double-digit increases.
Since January 1, the price for West Texas Intermediate has risen from $48.52 to over $58 as of this writing on February 9, a gain of more than 20%. According to Otavio Costa, a portfolio manager at Crescat, this is the strongest year-to-date performance for crude oil prices in the last 30 years.
The stronger price scenario has, as it generally does, led to rising numbers of active drilling rigs and frac spreads in the U.S., as upstream companies redirect more capital spending to their drilling programs. Last week, Baker Hughes reported that its rig count rose for the 11th straight week, and 22nd of the last 23 weeks. The total number of active oil and gas rigs in the U.S. as of last Friday is now 392—or 398 less than the same week last year.
Thus, the industry has now recovered to almost half the active rigs of a year ago, but that is more than twice the number of rigs that were active as of September 1, 2020. That’s an obvious sign of recovery, and the same is true in the Primary Vision count of active frac spreads currently working. That count as of Feb. 5 sat at 175 active fracking crews and equipment arrays working in the U.S., up from 85 as of Sept. 1, but 45% below the level of a year ago.
Oil and gas workers fight to regain footing during oil bust
Merlin McCalister has worked in oil for 23 years. He’s been here before.
“It’s not my first time going through the roller coaster of the oil and gas industry,” McCalister said,
But he hasn’t been here before.
“I didn’t think it was going to be this bad, but once COVID crossed over the water and got to us here, I knew we were in trouble,” he said.
COVID-19 caused an already bad situation to get worse. In April, crude prices went belly-up, falling more than 300% in a single day.
“The personnel on the rigs started getting let go,” McAlister said. “Some of our rigs started stacking up. Some of the guys started getting sick on the rigs. So, there was no work for us.”
By the middle of summer, McCalister lost his job as a safety specialist. With five kids to support, money got tight.
“Very little Christmas and no birthdays this last year, pretty much.”
And while his children took it in stride, it was McCalister who worried.
