(Source: The Texas Tribune)
As productivity in the oil and natural gas industry increases, Texas faces yet another challenge: ensuring employment levels don’t dip at the same time.
The Texas oil and natural gas industry is at a place where technological advancements and shifting policies are converging. Recent data spotlighted significant progress in operational efficiencies, but it also describes the challenges and opportunities facing the industry.
The rise in operational efficiencies is a defining trend in the U.S. shale patch, particularly in Texas. Rig technology and drilling practices have recently experienced significant improvements. Producers are now extending wells up to three miles, employing multi-well pads, and using advanced fracking techniques, which altogether boost production without a proportional increase in spending.
Chevron’s deployment of triple-fracking technology and Diamondback’s increased drilling efficiency are just examples of some of these gains. Chevron’s innovative approach has reduced costs by over 10% and shortened completion times by 25%. Similarly, Diamondback is drilling wells 10% faster than earlier in the year, significantly raising production efficiency.
The impact of these advancements is readily apparent. The U.S. Energy Information Administration reports a 20% increase in rig productivity year-over-year across major shale basins. This efficiency led to a boom in U.S. crude oil production, reaching 13.3 million barrels per day in July, compared to 12.3 million barrels per day last year. Texas alone contributed a substantial 5.6 million barrels per day to this total, reflecting a 1.9% increase in crude oil production.
Despite these advancements, the oil and natural gas industry faces a conflict. While production efficiency is soaring, upstream employment has been volatile. The Texas Workforce Commission (TWC) initially reported a decrease of 2,000 upstream oil and natural gas jobs in June, which marked the fifth decline in the last six months. However, this was later revised by TWC to reflect a gain of 1,400 jobs in June, along with an increase of 1,600 jobs in July. Even with this revision and the jobs gained in July, at 194,100 total upstream jobs, compared to the same month last year, July 2024 jobs were down by 4,900, or 2.5%.
The national rig count has also fallen by 14% from July 2023 to July 2024. Yet, despite fewer rigs and stagnant job growth, productivity has not only maintained, but increased, demonstrating a shift towards a leaner, more efficient operational model. This evolution reflects the industry’s adaptability, but also signals a need for caution when it comes to workforce impacts.
Upstream jobs, which are among the highest-paying in Texas with an average salary exceeding $124,000, are critical. However, the trend towards fewer rigs and greater efficiency may challenge job stability in the sector.
To sustain Texas’s position as a leader in energy production, policy decisions must strike a balance between encouraging industry growth and addressing environmental and regulatory concerns. Todd Staples, president of the Texas Oil & Gas Association (TXOGA), recently emphasized the need for ever-evolving policies.
“Operational efficiencies are driving strong production with fewer rigs, which can translate to declining industry job numbers,” said Staples. “These productivity gains result in big benefits for consumers as prices have remained relatively stable despite geopolitical unrest.”
“Clearly, oil and natural gas companies are delivering more energy with greater efficiency and lower emissions than ever before. To maintain our energy leadership, we need state and federal policies that promote continued infrastructure development, streamline permitting and recognize companies have choices where they can invest their dollars. Smart, predictable, and science-based policies will ensure Texas continues to be the nation’s energy leader,” Staples concluded.
The Texas oil and natural gas sector stands at the forefront of technological innovation, showcasing efficiency gains and production achievements. However, the industry’s future will depend on a balanced approach that addresses the challenges of maintaining high employment levels and navigating evolving regulatory landscapes.
