OPINION: It wasn’t that long ago that oil prices were sub-zero and oil supplies were astronomically high.

Eighteen months later, resurgent demand in big economies such as China and the US is running up against the results of lower investment levels, helping drive oil price to their highest point since 2014.

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In the US, oil traders are sounding the alarm that crude supplies at the Cushing, Oklahoma storage hub were sitting at 31.2 million barrels in mid-October, the lowest point since October 2018.

The number sits in stark contrast to the 65.4 million barrels the hub held at the end of the first week of May 2020.

Relief may be coming from US and Canadian shale producers, but how quickly can they make a difference?

One Canadian drilling contractor, Calgary-based Precision Drilling, signalled that the cavalry is indeed on the way

“Following the significant drilling activity reduction during the pandemic and now with energy demand firmly rebounding, we are very encouraged by the strong spot and future strip oil and gas commodity prices,” chief executive Kevin Neveu told a third quarter earnings call.

In the US and Canada, there is little sign that the market-listed oil and gas producers are about to ditch their new mantra of capital discipline, but oil prices have recovered so strongly, helped by the supply discipline demonstrated by the Opec+ group, that final investment decisions are starting to get easier.

In Neveu's view, energy transition has not come close to pushing the shale producers out of the picture.

“While many have written off the shales as a swing producer, when you look at the shale industry structure from logistics capability, infrastructure perspective, it's functionally structured to be one of the fastest responding sources of incremental oil and gas production,” he noted.

But, while low supply paired with high demand could be considered an ideal market environment for shale players, their ability to rapidly ramp up production and capture a higher market price is being challenged by the same headwinds other industries are facing, namely labour constraints and rising unit costs.

According to Neveu, inflation has occurred in its material costs surrounding the start-up and re-mobilisation of land rigs in its fleet and is something the contractor is working to address with its supply chain partners.

Staffing up rigs will continue to be a challenge for the industry, especially if demand continues to remain high, he said.

“The industry has a good history of staffing and getting rigs fired up,” he said. “But it’s a big challenge now.”

Contractors' job fairs promising high pay and better benefits are becoming increasingly common, but by all accounts, the response tends to be underwhelming.

The difficulties that oil companies and their contractors face in recruiting personnel are perhaps exacerbated by the perception among younger people that this is not an industry with a good future.

In addition to competing with renewables as an energy source, the oil and gas industry clearly has new competition for qualified personnel.

Competition usually helps make industries stronger and can improve working conditions.

If remuneration holds the key, higher oil and gas prices will increase this competition. It is a good time to be an energy worker.

(This is an Upstream opinion article).