Despite an unprecedented array of challenges facing our industry, the Texas oil and gas sector remains one of the most significant economic contributors in the Lone Star State. Eugene Garcia, chairman of TIPRO
AUSTIN (PRWEB) July 29, 2020
A new report released Wednesday, July 29, 2020, by the Texas Independent Producers & Royalty Owners Association (TIPRO) shares data and analysis on oil and natural gas production and employment trends over the first half of the year. TIPRO's 2020 Midyear Texas Energy Report, part of the association's "State of Energy" report series, projects the oil and gas industry supported 321,455 direct jobs in the state of Texas during the first half of 2020, representing an estimated decrease of over 39,500 jobs compared to the previous year. Oil and gas jobs in Texas paid 130 percent higher wages than the private sector, with annual industry wages averaging $134,000 and state payroll totaling $43 billion, a decrease of $400 million in direct oil and gas payroll compared to 2019, cites new findings from the TIPRO report.
"Despite an unprecedented array of challenges facing our industry, the Texas oil and gas sector remains one of the most significant economic contributors in the Lone Star State, as evidenced by findings of the new midyear TIPRO report," said Eugene Garcia, chairman of TIPRO and president of San Antonio-based Hurd Enterprises. "In the first half of the year, the Texas oil and gas industry yet again accounted for 40 percent of all oil and gas jobs nationwide, and today is still the largest producer of oil and natural gas in the country by a substantial margin."
Texas oil and natural gas production increased in the first half of 2020 compared to the same period in 2019, with a clear decline in production when comparing midyear 2020 production to output from the third and fourth quarters of 2019. Statewide oil production totaled 909 million barrels between January and June of this year, a rise of 20 million barrels compared to the first half of 2019. Natural gas production in Texas also rose by 266 million cubic feet of gas in the first six months of the year compared to the same period in 2019. Oil production declined in the first half of 2020, meanwhile, by 46 million barrels compared to the third and fourth quarters of 2019, while natural gas production fell by 162 million cubic feet of gas.
According to a recent report from oil and gas analytics and data provider Enverus (formerly Drillinginfo), U.S. oil production is expected to fall significantly following the price crash earlier this year, which was prompted by the international oil price wars and other detrimental effects from the coronavirus (COVID-19) pandemic to energy demands and the overall economy. Operators started the year with conservative plans for production growth in order to achieve free cash flow and had already cut a notable amount of CAPEX. Crude prices going into the negative territory for the first time in history and trading below $30 per barrel for nearly three months sent shockwaves across the oil and gas industry. This unprecedented price crash resulted in nearly $50 billion in CAPEX cuts, forced large scale shut-ins across the U.S., plummeted the national rig count to its lowest level in the last six years (with the July average being 285 active rigs deployed) and caused numerous E&P bankruptcies.
Post-COVID and price crash, Enverus now expects U.S. crude production to decline roughly 0.5 million barrels per day (MMBbl/d) on an average annualized basis in 2020 compared to 2019, with exit to exit expectations being near the 2 MMBbl/d levels. Due to the magnitude of demand deconstruction and the possibility of an increase in COVID-19 cases restricting future demands and price recovery, Enverus expects a slight increase in production during 2021, and projects U.S. crude production will reach the 12 MMBbl/d threshold in the beginning of 2023. Although crude prices have been trading near the $40 per barrel range in the last month, we can expect a focus on balance sheet health and hedges to suppress near-term ambiguity rather than very rapid production increases. Recovery hinges on COVID-19 dissipating and the resurgence of demand for the near-term.
"As the nation's largest producer, the Texas oil and gas industry has borne the brunt of COVID-19 demand deconstruction and ongoing capital constraints," said TIPRO President Ed Longanecker. "To further illustrate the impact of these market factors, the Texas upstream sector experienced a decline of almost 40,000 jobs between January and June of this year, meaning the impact of the downturn will be more severe on an annualized basis," added Longanecker.
In the new midyear report, TIPRO also emphasizes that the Texas oil and gas industry remains one of the most innovative, resilient and impactful sectors in the state, and will emerge from this downturn stronger and more efficient as global demand continues to recover. As evidence of the importance of the Texas oil and natural gas industry, U.S. President Donald Trump this week is visiting West Texas and the Permian Basin specifically, including a stop to Double Eagle Energy in Midland and an oil rig tour.
Texas State Representative Tom Craddick, former speaker of the Texas House of Representatives and current chairman of the House Land and Resource Management Committee, signaled that while in Texas President Trump will unveil parts of a plan that will demonstrate his unparalleled commitment to a recovery in Texas and across all energy-producing markets.
"What does this mean for West Texas? It means new jobs, old jobs coming back, increased wages, more money for health care and education, and so much more," said Representative Craddick in an opinion article this week. "President Trump's commitment to making West Texas a great place to live and work will be evident today when he opens the doors of energy business. He is committed to making sure we do not ever see a market swing like we experienced in March of this year. He is committed to making sure Texans and energy producers can spend their time doing what they know best, working. Most of all, he is committed to making sure the American dream is attainable by all Americans. Jobs in the energy industry are certainly a part of the American dream."
"Texas oil and natural gas will continue to be a key economic driver for our state for decades to come, but we must have strong leadership at the state and federal level that recognizes the importance of this industry," said Longanecker. "We commend President Trump, Chairman Craddick and all energy-minded elected officials for their support of this industry. TIPRO will continue to educate all stakeholders on the importance of oil and natural gas, and will advocate for sound, science-based energy policies at all levels of government."
Key findings from TIPRO's 2020 Midyear Energy Report include:
- 321,455 Texans were directly employed by the oil and natural gas industry in the first half of 2020, including more than 202,000 individuals employed specifically by the Texas upstream oil and gas industry. Over 39,000 direct jobs were lost when comparing the average employment for the first half of 2020 to full year industry employment in 2019.
- The Texas oil and natural gas industry yet again represented 40 percent of all oil and gas jobs nationwide in the first half of 2020.
- Oil and gas jobs in Texas paid an annual average wage of $134,000, 130 percent more than the average private sector job in the state.
- The annual payroll for the Texas oil and gas industry exceeded $43 billion in the first half of 2020, a decrease of $400 million in direct oil and gas payroll compared to last year.
- The Texas oil and gas industry in its totality remains diverse, offering career opportunities across many different demographics. In the first half of 2020, more than 64,000 women were employed by the Texas oil and gas industry, and 31 percent of all sector jobs in the state were held by Hispanic or Latino workers.
- Approximately 52 percent of Texas oil and natural gas workers were between the ages of 25-44 in the first half of 2020. Roughly 38 percent were 45 years or older.
- Texas oil production increased by 20 million barrels during the first half of 2020 compared to the same time period in 2019, for a total of 909 million barrels of oil produced. Oil production declined in the first half of 2020 by 46 million barrels compared to the third and fourth quarters of 2019.
- Texas natural gas production also increased by 266 million cubic feet in the first half of 2020 compared to the first half of 2019, for a total of 5.3 trillion cubic feet of gas. Natural gas production decreased by 162 million cubic feet of gas in the first half of 2020 compared to the third and fourth quarters of 2019.
- Despite the decline in overall employment, during the first half of 2020, there were an estimated 19,024 unique job postings for the Texas oil and natural gas industry. This represented less than half on average compared to the same period last year.
- The top counties for oil and natural gas job postings in the first half of the year included: Harris County (7,453), Midland County (1,067), Dallas County (927), Bexar County (870), and Ector County (748).
The Texas Independent Producers & Royalty Owners Association (TIPRO) is a trade association representing the interests of nearly 3,000 independent oil and natural gas producers and royalty owners throughout Texas. As one of the nation’s largest statewide associations representing both independent producers and royalty owners, members include small businesses, the largest, publicly-traded independent producers, and mineral owners, estates, and trusts.