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Texas Upstream Jobs Rebound in December

Oil and natural gas employment in Texas reversed from a November slump to gain 3,200 jobs in the upstream sector for the final month of the year, according to the Texas Workforce Commission.

Upstream jobs were added in the state’s oil and gas extraction sector and in support jobs for the mining industry. The employment tally does not include jobs added or lost in refining, petrochemicals, fuels wholesaling, oilfield equipment manufacturing, pipelines and gas utilities.

“Hundreds of thousands of Texans who work in the oil and natural gas industry are securing our economy, our environment and our future,” said President Todd Staples of the Texas Oil & Gas Association. “Upstream employers continue to demonstrate agility and innovation by creating good jobs for Texans, even in a challenging price environment.”

The December employment gains offset a 300-job decline reported a month earlier, the workforce data indicated.

Since the high point in state employment was set in December 2014 at 308,900 jobs, and the low point set in September 2016, Texas has recovered about one-half of the jobs lost. Texas upstream sector jobs have grown by an estimated 58,700 since then.

According to the Texas Independent Producers & Royalty Owners Association (TIPRO), crude oil production in the state hit an estimated 1.35 billion bbl through November, representing an increase of 209 million bbl of oil produced in the same timeframe in 2017, with a total of 1.5 billion bbl forecasted for the full year. Natural gas production increased slightly for a total of 7.5 Tcf through November.

TIPRO said most of the increased output and related activity came from West Texas, as Permian Basin production surged.

“With lower crude oil prices and increasing service costs, many operators are understandably looking at scaling back spending to stay within cash flow until market conditions improve,” TIPRO President Ed Longanecker said.

Many exploration and production (E&P) companies are reducing capital expenditures for 2019 following the plunge in oil prices during 4Q2018.

However, “Texas oil and gas production is expected to rise in the coming months,” Longanecker said, as additional pipeline capacity comes online in the Permian, production cuts by members of the Organization of the Petroleum Exporting Countries take full effect, oversupply concerns ease “and progress is made with U.S.-China negotiations” in the trade war.

More than 10,000 net new oil and natural gas jobs were added to the state’s economy through November versus 2017, for a total of 336,000 workers directly employed by the industry, according to TIPRO. Upstream sector jobs accounted for most of the employment growth last year, with a total of 78,000 oil and gas extraction jobs and 142,000 oil and gas support activities jobs in the state through November.

“Job growth in the Texas upstream sector was essentially flat in November compared to many months of consecutive growth,” Longanecker said. “A slowdown in employment was expected due to the impact of takeaway capacity constraints in West Texas, lower crude oil prices, added expense to E&P projects from increasing service costs, as well as rising material costs resulting from steel and aluminum tariffs.

“Ongoing innovation and efficiencies being utilized in the industry, expanding pipeline capacity and an expedited resolution to trade disputes will support increased energy production and job growth for the state of Texas.”

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