Oilfield automation may slow job growth but it doesn't have to

Last week, I wrote about the race to create a digital platform to help drillers deploy and track trucks and other equipment to service their wells in the most efficient possible way, with shorter trips and seamless billing an Uber for the oilfield, if you will.

Efficiency, of course, means making things cost less. Cost comes in two varieties: Capital and labor. So which one is being cut?

In the case of software programs for running oilfield operations, the answer is theoretically both. Service providers will need fewer trucks to do more jobs, which could mean fewer truck drivers, not to mention fewer administrative staff shuffling paper tickets. A few weeks ago, the New York Times looked at how technology was muting oilfield job growth even as drilling returned, which my colleague Jordan Blum had done back in December.

As always, however, the correlation between automation and payroll isn't perfect. A company that lowers its cost of doing business may be better positioned to expand faster than its competitors, and ultimately hire more people than it would have with its old labor-intensive methods.

That's what Dee Atkin, CEO of a digital dispatching platform called OmniSolutions, thinks many of his customers have done after cutting back on paper.

"For the back office process, it reduces personnel requirements significantly," says Atkin, who is based in Utah and has been most active in the Bakken shale of North Dakota. He says one company he worked with had 11 people doing dispatching and invoicing, and was able to redeploy most of them to other functions, like customer service.

"I haven't seen anybody actually laid off," Atkin says. "Our goal with Omni Dispatch is to remove the mundane and release the human to do the creative."

Increasingly, companies are being founded with technology already baked into their operations. One of Omnisolutions' customers, Purity Oilfield Services, started up in 2012. The company never had a huge paper-shuffling operation, having digitized its record-keeping from the beginning. That efficiency allowed Purity to avoid layoffs through the downturn, and it has since focused on diversifying into new business lines which is easier to do with the help of a software program that knits them all together.

That's the optimistic vision of how automation can actually help employment: Robotics and artificial intelligence amplify human efforts, allowing newly competitive businesses to hire more people in new roles. For example, manufacturers have been able to build incredibly advanced factories in America that compete on a cost basis with Chinese production. They employ a fraction of the workers they used to, but still more than they would if the factory didn't exist.

More broadly, some research has found that automation often glibly referred to as "robots" has little impact on aggregate employment, while decreasing slightly the share of low and middle-skilled jobs.

Of course, the decision of whether to reinvest the earnings from higher productivity into new job opportunities is up to each company's leadership. They might just decide to put their profits into a bigger house, or bigger investor dividends.

And today's technological advances may pale in comparison to the ones coming down the road, like trucks that drive themselves. When that happens, businesses may not be able to expand fast enough to replace jobs that are lost.

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Oilfield automation may slow job growth but it doesn't have to ... - Chron.com