OilPrice.com. Two years ago, oil and gas companies in Texas were laying off employees amid the most severe downturn in the industry’s history. This year, job growth in America’s oil and gas heartland has been so strong that labor shortages have prevented the industry from expanding.
According to the latest data, Texas added 2,600 new oil and gas jobs in August in the upstream sector. That was a decline from July when the upstream industry added 3,100 new jobs, but still a robust number and the latest proof that oil and gas companies are over the pandemic.
Upstream employment is growing steadily alongside the world’s demand for affordable, reliable energy. The Texas oil and natural gas industry continues to play its leadership role in enhancing national and energy security in our nation and for our trade allies around the world,” said the president of the Texas Oil and Gas Association, commenting on the numbers released by the Texas Workforce Commission.
The data shows that since September 2020, the trough of the latest downturn, the upstream industry in Texas has added jobs at an average monthly rate of 1,943, for a total of 44,700 jobs added over the past two years. As of August, the total number of people employed by Texas upstream businesses stood at 201,700.
Upstream oil and gas employment is growing strongly in New Mexico as well: Texas and New Mexico share the Permian Basin, seen as the top performer in the U.S. shale patch. The New Mexico Department of Workforce Solutions expects employment in that sector to expand by 10.8 percent by 2028.
Even with these strong employment growth rates, U.S. oil and gas is being plagued by a labor shortage that is interfering with growth plans, as frugal as these plans are. A lot of the limited production growth in the shale patch has been blamed on shareholders insisting they see some cash returns after years of backing drillers, but the lack of workers has also had a part to play.
Back in April this year, the Wall Street Journal reported that the Permian was “running out of the workers, cash and equipment needed to produce more oil.” Author Collin Eaton noted that many workers who were let go during the pandemic simply did not return to their old jobs when those became available. Some, he noted, left mid-project to look for higher wages elsewhere.
Since then, the number of oil and gas jobs has continued to grow, but not fast enough, it appears, compounded by shortages of materials and equipment, too. Shareholders in public companies are still the biggest culprit, according to analysts and to the companies themselves.
Related: Report Claims Permian Basin Will Contribute Nearly 1 Million Jobs by 2050
“Investors generally don’t want shale companies to pursue a growth model,” Ben Dell, chief executive of private equity firm Kimmeridge Energy, told the FT this month. “The capital availability is extremely limited.”
According to data from Baker Hughes and Primary Vision, drilling activity in the U.S. shale patch is slowing down from its strong post-pandemic growth. Even in the Permian, cited as the biggest growth engine of the shale patch, the number of active rigs in the basin fell two weeks in a row leading up to the most recent data release.
A recent Wall Street Journal attributed this slowdown to private drillers running out of low-cost drilling locations. If this is indeed the case, it does not bode well for the near future of the industry. And it does appear to be the case, based on the Enverus data the WSJ cited: private drillers in the Permian have an inventory averaging some six years of low-cost locations.
What all this implies for employment in the U.S. oil industry is that growth there may well slow down at some point in the near future as analysts expect the limited inventory of private drillers to prompt another consolidation wave. For now, the going is good, but it won’t last forever.
By Charles Kennedy for Oilprice.com