Due To Fracking, Excess Supply & Falling Prices, Texas Oil Industry Loses 3,300 Jobs In January

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http://paxonbothhouses.blogspot.com/2015/02/bloomberg-keystone-pipelines-policy.html

HOUSTON — The Texas Petro Index declined seven points to 299.6 following the rapid drop in crude oil prices, the rig count, and drilling permits indicating further weakness in the Texas oil and gas economy.

Industry employment has now entered into a state of decline as well as companies begin to shed jobs in response to lower prices.

Crude oil prices declined 51.3 percent from last year’s $91.32 to $44.46 per barrel and are down by more than 55 percent compared to the June 2014 peak. Total oil and gas employment declined by about 3,300 jobs in January from an estimated workforce of 305,000 jobs in December.

Every economic indicator decreased last month, including the drilling rig count, oil and gas completions and drilling permits.

“January 2015 employment data was just released in March as a part of the Texas Workforce Commission annual revision process and the estimates appear to indicate what we knew was coming — that the number of oil and gas jobs in Texas was going to begin to decline at some point, and it looks like that is now the case,” said Karr Ingham, Consulting Petroleum Economist for the Texas Alliance of Energy Producers and the creator of the Texas Petro Index.

“Several thousand jobs were lopped off the original industry employment estimates for the latter part of 2014, and it now seems likely that upstream oil and gas payroll employment in Texas peaked in December at about 305,000 jobs. The January monthly decline very likely represents the onset of industry employment contraction on the way to what will ultimately be tens of thousands of jobs lost,” said Ingham.

“Even at that, the industry still added nearly 25,000 jobs in Texas in 2014, pushing total upstream employment to over 300,000 for the first time and stimulating the creation of thousands of jobs elsewhere in the state’s economy,” said Ingham. “But for now that run is over, and 2015 will be a year of dramatic contraction in Texas oil and gas employment.”

Noting that leading indicators of the economic health of the upstream oil and gas industry in Texas continue to decline, Ingham cautioned that the economic contraction gripping oil and gas exploration and development in Texas still is in the early stages.

“The TPI only peaked in October,” Ingham said. “Production continues to climb, inventories are stacking up, and the expectation simply must be that future pressure on price will be downward, not upward, until this situation of oversupply begins to correct. These trends will continue for months to come, and we should be prepared to settle in for a fairly long period of downturn before the industry begins to recover.

“Now that this process has been set into motion, there is no stopping it until the events driving it have played out.”

A composite index based upon a comprehensive group of upstream economic indicators, the Texas Petro Index in January was 299.6, which was 0.8 percent higher than in January 2014 but 7.1 points (2.3 percent) less than the TPI in December of 306.7 (which was revised in accordance with updated industry employment data). Before embarking upon the current economic downturn, the TPI peaked at a record 310.5 in November, the zenith of an economic expansion that began in December 2009, when the TPI stood at 187.7.

Among leading TPI indicators during September:

Crude oil production in Texas totaled an estimated 102.1 million barrels, about 20.3 percent more than in January 2014. With crude oil prices in January averaging $44.46/bbl., the value of Texas-produced crude oil totaled about $4.54 billion, 41.4 percent less than in January 2014.

Estimated Texas natural gas output was nearly 687.4 billion cubic feet, a slight year-over-year monthly decline of about 0.1 percent. With natural gas prices in November averaging $2.93/Mcf, the value of Texas-produced gas declined 36 percent to about $2 billion.

The Baker Hughes count of active drilling rigs in Texas averaged 773, about 7.5 percent fewer than the 836 active rigs in January 2014. Drilling activity in Texas peaked in September 2008 at a monthly average of 946 rigs before falling to a trough of 329 in June 2009. During the economic expansion that began in December 2009, the statewide average monthly rig count peaked at 932 in May and June 2012.

The number of Texans on oil and gas industry payrolls totaled 301,700, according to statistical methods based upon Texas Workforce Commission estimates, about 7.2 percent more than in January 2014. Average upstream oil and gas employment in Texas peaked in December at an estimated 305,000, increasing steadily from a nadir of 175,700 in October 2009.

The Texas Petro Index is a service of the Texas Alliance of Energy Producers, the nation’s largest state association of independent oil and gas producers.