Texas Oil Patch Job Prospects Are Merry and Bright

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Hiring remains resilient across the U.S. economy, with Texas upstream employers adding more jobs even against concerns about shale oil's momentum, data show.

The national unemployment rate stood at 3.7% through November, with an estimated 263,000 new jobs added to payrolls during the month. Most of the new hires were in leisure, hospitality, healthcare and government.

U.S. Federal Reserve Chairman Jerome Powell warned earlier this year, however, that jobs may be an unfortunate casualty in the fight against inflation, though job losses have yet to materialize.

Fears of a recession are apparent, though a true recession would see the unemployment rate rise. Meanwhile, word of shale's death may be exaggerated too, given the uptick in new hires upstream.

The Texas Independent Producers and Royalty Owners Association (TIPRO) found 2,600 new jobs were added to the payrolls of upstream producers in Texas in November. Year-on-year and there are 37,600 more jobs in the state's oil and natural gas industry, data show.

The companies that hired the most, meanwhile, were John Wood Group (Aberdeen, Scotland), Baker Hughes Company (NASDAQ:BKR) (Houston, Texas) and KBR (NYSE:KBR) (Houston), respectively. Upstream, along with the rest of the sector, has performed well against a backdrop of higher energy prices. Baker Hughes reported revenues during the third quarter were up 5% from year-ago levels.

"The macro outlook has grown increasingly uncertain as the global economy is dealing with strong inflationary pressures, a rising interest rate environment, and sizeable fluctuations in global currencies," Baker Hughes Chief Executive Lorenzo Simonelli said at the time. "Despite these economic challenges, we remain positive on the outlook for oil and gas."

The outlook should be positive for would-be employees too given that TIPRO put the average wage for the upstream sector at around $139,000 per year. Those companies, meanwhile, paid $570 million in tax revenue, up 19% from year-ago levels.

Based on third quarter reports, optimism should prevail. Among the biggest energy companies in the country, if not the world, both Chevron (NYSE:CVX) (San Ramon, California) and Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) unveiled spending plans that could in theory provide tailwinds to U.S. shale oil production at a time of ongoing supply-side concerns.

Chevron said it would spend $14 billion next year, with most of that--some $8 billion--targeting upstream growth in the United States. Half of that U.S. investment goes to the Permian.

ExxonMobil, for its part, said its near-term investment strategy for upstream should keep production at around 3.7 million barrels of oil equivalent per day so long as Brent holds above $60 per barrel.

Economists at the Organization of the Petroleum Exporting Countries (OPEC) in their monthly market report for December put Texas oil production at around 5.1 million barrels per day (BBL/d), up 163,000 BBL/d from year-ago levels.

For next year, OPEC revised its estimate for total U.S. liquids production lower by around 44,000 BBL/d, though the outlook for Texas remains bright.

"Higher drilling activities and fewer supply chain/logistical issues in the prolific Permian, Eagle Ford and Bakken shale sites are assumed for 2023," OPEC said.

The latest drilling productivity report from the U.S. Energy Information Administration put Permian oil production at 5.5 million BBL/d for December and 5.6 million BBL/d for January.

The price for Brent crude oil, meanwhile, is expected to average $92 per barrel next year, up about $12 per barrel from current levels and--assuming Chevron's sentiment is a bellwether--remain supportive of the shale oil patch.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).