Two years ago, oil and gas companies in Texas were laying off employees in the midst of the steepest recession in industry history. This year, job growth in America’s oil and gas stronghold has been so strong that a labor shortage has prevented expansion in the industry.
According to the latest data, Texas added 2,600 new oil and gas jobs in August in the exploration and production sector. That was down from July when the upstream industry added 3,100 new jobs, but it’s still a solid number and the latest evidence that oil and gas companies are weathering the pandemic.
“Upstream business opportunities are steadily growing along with global demand for reliable and affordable energy. The Texas Oil and Gas Association President said: comment On figures released by the Texas Manpower Commission.
The data shows that since September 2020, the lowest level of the last downturn, the upstream industry in Texas has added jobs at an average monthly rate of 1,943, for a total of 44,700 jobs added over the past two years. As of August, the total number of people employed by upstream companies in Texas was 201,700.
Employment of upstream oil and gas is grow Strong in New Mexico, too: Texas and New Mexico share the Permian Basin, which is seen as the best performing shale patch in the United States. The New Mexico Department of Workforce Solutions expects employment in this sector to expand 10.8 percent by 2028.
Even with such strong rates of employment growth, US oil and gas suffers from a labor shortage that conflicts with growth plans, as frugal as such plans are. Much of the shale patch’s limited production growth has been blamed on shareholders’ insistence they see some cash back after years of subsidizing drillers, but labor shortages have also played a role.
Back in April this year, The Wall Street Journal mentioned That the Permian “was running out of workers, money, and equipment to produce more oil.” Author Colin Eaton noted that many workers laid off during the pandemic simply did not return to their old jobs when they became available. He noted that some left mid-project to seek higher wages elsewhere.
Since then, the number of oil and gas jobs has continued to grow, but not fast enough, apparently, exacerbated by the shortage of materials and equipment as well. Shareholders in public companies remain the biggest culprit, according to analysts and the companies themselves.
“Investors generally don’t want shale companies to follow a growth model,” Ben Dale, CEO of private equity firm Kimmeridge Energy, said. Tell Financial Times this month. “Capital availability is very limited.”
According to data from Baker Hughes and Primary Vision, US shale patch drilling activity is slowing from strong post-pandemic growth. Even in the Permian, which is cited as the largest growth engine in the shale patch, the number of active rigs in the basin declined two consecutive weeks before the latest data was released.
Modern Wall Street Journal attributed This slows down private drilling that is running out of low-cost drilling sites. If this is indeed the case, it does not bode well for the immediate future of the industry. Indeed, this appears to be the case, based on Enverus data cited by the WSJ: Private Permian drillers hold an average of about six years’ stock of low-cost sites.
What all this means for employment in the US oil industry is that growth there may slow at some point in the near future as analysts expect the limited stock of private drillers to trigger another consolidation wave. For now, it’s going well, but it won’t last forever.
By Charles Kennedy for Oilprice.com
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