More than 32,000 Texans were forced out of their jobs in the energy industry from January through July and thousands more face "inevitable" job losses, according to the latest Texas Petro Index (TPI). Meanwhile, Colorado is forecasting a 38% drop this year versus a year ago in applications to drill.
The Texas oil and gas industry "remains in free fall," TPI economist Karr Ingham said last week. Ingham created the TPI for the Texas Association of Energy Producers (TAEP), is considered the largest state association of independent producers in the nation.
Based on a group of upstream economic indicators, the TPI in July fell to 215.5, down almost 25% since peaking at 285.4 in September and October 2008.
"Producers and oilfield service contractors are shedding jobs to shrink the industry's workforce to the level required to operate 300 to 350 rigs in Texas," said Ingham. "That adjustment is not complete, so it appears that thousands more Texans will be sent packing before this cycle hits bottom."
Calgary-based Suncor Energy Inc. said Thursday it is cutting 1,000 people by mid-October, and Royal Dutch Shell plc, which is scheduled to announce a corporate restructuring Monday (Sept. 7), also is rumored to be cutting jobs (see related stories). Most of Shell's North American staff is based in the Houston area; Suncor also has some staff based in Texas.
Drilling activity in Texas has stabilized in the past few months, but at a "very low level" compared with the same time in 2008 when the state's oil and gas economy was peaking, said Ingham. According to the Texas Workforce Commission, the state's total oil and gas employment reached 240,000 workers in December, but in July the workforce had declined to 207,700.
One of every 10 Texans working in the oil and gas industry has lost his or her job this year, Ingham estimated.
The TPI's leading indicators in July reported:
In related news, the Colorado Oil and Gas Conservation (COGCC) staff reported 3,360 applications for permits to drill (APD) had been approved as of Aug. 6. Based on staff estimates, there should be about 5,000 drilling permits approved this year, down from a record of 8,027 approved in 2008. The 2008 APD approvals were 26% higher than in 2007, when 6,368 were approved, commission staff said.
This year's drilling permit decline "does not correlate with the 60% decline in rig count since the peak of last year but may be a reflection of the push to get permits in before the effective date of the amended rules," said staff. The COGCC overhauled the state's drilling rules in 2008, and the revisions were enacted by the General Assembly earlier this year (see NGI, April 27).
As in the past four years, gas-rich Garfield County in 2009 remains the biggest draw for drilling permits, with 1,247 APDs requested as of Aug. 6, or more than a third (37%) of the state's total APDs. At this time in 2008 there were 2,888 APDs for Garfield County, and in 2007 there were 2,550 on file. Weld County was the second highest draw for APDs also for the fourth year in a row, with 904 on file as of early August, compared with 2,340 at the same time in 2008. In early August 2007 there were 1,527 APDs filed for Weld County.
In related news, Tudor, Pickering, Holt & Co. Securities Inc. reported that the U.S. land rig count was higher for the week ending Aug. 29 with all three of its rig data sources showing gains of five-13 rigs. Nearly all of the added rigs were gas-directed, TPH said. Private explorers, which continue to drive activity gains, added 23 rigs for the week compared with the same period a year ago, TPH noted. The top 30 public exploration and production companies were down 12 rigs for the week from the same week a year ago.
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