Employment and wages in Texas’ natural gas and oil industry continued to surge upward in the first quarter, according to new analysis by the Texas Oil and Gas Association (TXOGA).
Direct employment in the industry rose 8.1% year/year to 482,557 jobs, according to the TXOGA report based on U.S. Census Bureau and Texas Workforce Commission data.
Industry wages showed even stronger growth, rising 22% y/y to about $19.5 billion, versus $16 billion in 1Q2022.
“Employment in Texas’ oil and natural gas industry expanded for an eighth consecutive quarter, and the Q1 2023 growth rate of 8.1% y/y stood among the strongest 15% of all quarters since 1990,” said TXOGA Chief Economist Dean Foreman, who prepared the analysis. “Notably, the $19.5 billion of total wages was the industry’s highest outlay on record, which shows this industry’s resilience in the face of continued challenges with labor supply and cost escalation.”
Support activities for oil and gas operations led the job gains during 1Q, adding 15,415 jobs, up 16.3% y/y, Foreman highlighted. “Other leading industry segments with job gains included drilling oil and gas wells (+19.9% y/y), oil & gas pipeline construction (+11.9% y/y), and oil & gas machinery and equipment manufacturing (+9.3% y/y),” TXOGA noted.
The strong numbers come amid a drop in Lower 48 drilling and slumping natural gas prices.
“Despite a slowdown in rig count which could have a downward impact on these numbers in the future, this analysis gives rightful cause for optimism and is continued evidence of the demand for oil and natural gas’ irreplaceable role in our modern society,” said TXOGA President Todd Staples. “However, growth is not guaranteed, and it is critical that we remain committed to fostering policies that promote domestic production, keep jobs and benefits here at home, and reduce our reliance on foreign nations to meet our energy needs.”
Price action in the first two days of bidweek trading, which runs from Aug. 25-29, illustrated the sharp decline in gas prices this year versus last.
NGI’s Waha Bidweek September fixed price, for example, was trading around $1.905/MMBtu, down from the $7.950 average recorded in September 2022 month-ahead trading.
Basis differentials to Henry Hub at the Waha and Houston Ship Channel hubs have narrowed substantially this year. The trend has been driven in part by the return to service of the Freeport LNG terminal and El Paso Natural Gas Line 2000 pipeline, as well as slowing production growth, according to Energy Information Administration (EIA) research citing NGI prices.
EIA, meanwhile, is forecasting a net sequential production decline of 147 MMcf/d to 98.3 Bcf/d from the seven main Lower 48 onshore plays in September. The Permian Basin, however, is seen increasing output by 35 MMcf/d, researchers said in EIA’s latest Drilling Productivity Report.
