The crackdown on illegal immigration is hurting US oil drillers

US crude oil production growth may have slowed down this year, but the largest oil-producing counties in the Permian basin continue to feel a shortage of labor.

The predicament for small oil services business owners in New Mexico is aggravated by the surge in worksite audits, investigations, and arrests as part of US President Donald Trump’s tougher stance on illegal immigration.  

A growing number of owners of oil-related businesses in the second-biggest oil-producing county in the United States, Lea County in New Mexico, now avoid hiring undocumented immigrants for oil field work, fearing the clampdown on immigration will affect their business, Reuters reporter Andrew Hay writes.

There are still oil field services business owners who continue to hire an illegal labor force.  

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Yet, those who want to play by the rules find themselves between a rock and a hard place. On the one hand, President Trump’s pro-oil policies clash with impact from the crackdown on immigration, which makes business owners idle drilling rigs and equipment not because they have drilled out all the shale wells in Lea County, but because they can’t find legal immigrant workers to do some of the dangerous difficult jobs on the oil field that some Americans shun.

Oil field business owners say that the lack of a system to get illegal oil workers documented or given working visas is impeding the oil industry from having enough labor force to take full advantage of the unprecedented—albeit slowing—oil boom in the United States.

“They’re demanding more rigs, more swabbing units, but you don’t have enough employees,” Johnny Vega, who runs Mico Services in New Mexico, told Reuters’ Hay.  

Vega’s company generates some US$17 million in revenues per year. But right now, during the period of booming oil production in New Mexico, the firm has equipment idled, because there aren’t enough legal immigrant oil workers to operate it. That idled equipment could make Mico Services as much as US$700,000 per month. The lack of documented workers, however, has had Vega thinking about hiring out the company’s idled equipment.

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Other oil field businesses also feel the labor shortage, especially as oil production in the US and New Mexico continues to grow.

Lea County in New Mexico is the second biggest oil producing county in the United States, second only to McKenzie County in North Dakota.  

“Our production has roughly tripled in the last five years,” Steve Vierck, former CEO and president of the Economic Development Corporation of Lea County, told Hobbs News-Sun in May this year.

“It really reflects not only how much oil production there is, but how much growth there has been in oil production to move up the chart as fast as Lea County has,” Vierck added.

New Mexico, as a whole, is the third-largest oil producing state in the US after Texas and North Dakota. In 2018, New Mexico’s oil production accounted for 6.3 percent of total American production, EIA data shows.

But at the same time, the US Immigration and Customs Enforcement (ICE) has significantly stepped up criminal investigations, business audits, and arrests. In the fiscal year 2018, Homeland Security Investigations (HSI) opened 6,848 worksite investigations, initiated 5,981 I-9 audits, and made 779 criminal and 1,525 administrative worksite-related arrests—all of these categories surged by 300 to 750 percent over the previous fiscal year, ICE said.  

In New Mexico’s oil industry, business owners playing by the rules feel the labor shortage, while those who turn a blind eye to oil workers’ documents (or lack of thereof) fear the immigrant clampdown.  

This article was originally published on Oilprice.com