The number of oil and gas production jobs in Texas could fall to a 15-year low in the coming months and may never fully recover as the industry consolidates and produces more crude with fewer workers.
Battered by the coronavirus pandemic, drilling and oil-field services companies operating in Texas employed 162,350 workers in June, about half of the 297,100 workers at their peak of employment in December 2014, according to the Texas Alliance of Energy Producers, which represents some 2,600 independent oil and gas producers. Texas lost 46,100 jobs in production and oil-field services from February to June as the pandemic crushed demand for crude, and oil companies cut drilling budgets and halted production amid historically low oil prices.
Karr Ingham, the alliance’s petroleum economist, said he expects oil and gas production employment in Texas to fall to around 150,000 in the next three months, which would be the lowest since 2005. If rising coronavirus cases prompt governments to impose another round of business and travel restrictions, oil and gas extraction employment could fall further, he said.
“I hope it doesn’t get worse, but if COVID sends us down, the number could be worse than that,” Ingham said. “It’s difficult to imagine that oil and gas employment and the rig count will ever be as high as it was.”
The forecast came as Exxon Mobil, the largest U.S. oil and gas producer, is reportedly plannning to cut spending and jobs to protect its 8 percent shareholder dividend, despite CEO Darren Woods' statement this year that no layoffs were planned. Meanwhile, Chevron said it would lay off 7,000 workers and BP said it would cut 10,000 jobs.
Exxon in November changed its employee performance review metrics, increasing the number of workers in the lowest performance category and at risk of being let go, according to internal documents reviewed by the Houston Chronicle.
“There are no targets to reduce headcount,” Exxon spokesman Casey Norton said in an email, adding that the review only affects corporate employees. “We have a rigorous talent management process which routinely assesses employee performance. This is an annual process.”
The oil and gas industry was contracting well before the coronavirus pandemic broke out in the U.S. and brought the economy to a screeching halt. Employment in oil and gas production, including oil-field services jobs, was recovering from the previous downturn of 2014-16, climbing back to 228,500 jobs in December 2018, the alliance said. But then, Wall Street investment soured on the sector after years of underperformance, and the number of operating rigs and employment fell throughout 2019.
The coronavirus pandemic and a short-lived price war between Saudi Arabia and Russia this year exacerbated the industry’s financial woes, plunging crude demand just as OPEC countries ramped up production. The price of West Texas Intermediate, the U.S. benchmark, fell into negative territory for the first time, and the U.S. rig count — a leading measure of domestic oil and gas production — fell to 251 operating rigs in July, down from 946 a year ago, according to oil-field services firm Baker Hughes.
The energy industry, facing financial pressure, is now turning to new technologies and automation to improve efficiencies, which will likely lead to more job losses. At the same time, larger oil and gas companies are expected to gobble up smaller players, leaving the industry with fewer companies employing fewer people. Last week, Chevron announced plans to acquire Houston-based Noble Energy in an all-stock deal valued at $13 billion, including debt, adding that it plans to cut redundant positions.
“Crazy economic events tend to kind of speed those up sometimes,” Ingham said. “I think the outcome of that will be that the number of companies gets smaller, and probably the number of overall employees goes down as well. … That’s a shame because these are great, high-paying jobs.”
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The number of oil and gas production jobs in Texas could hit bottom this fall - Houston Chronicle
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