Texas trade group calls out bull case for US oil, gas despite bleaker forecasts
Amid declining forecasts for US oil and natural gas consumption, a different story is being told in the Texas shale patch, where oil and gas proponents are heralding record-high gas production and robust job creation as signs of the industry’s good health.
The Texas Independent Producers and Royalty Owners Association, or TIPRO, on Jan. 30 released its annual State of Energy Report, which compiles estimations of employment trends in US oil and gas, as well as long-term forecasts for production. According to TIPRO, a trade group representing oil and gas interests, the US upstream industry supported a total of 948,943 direct jobs in 2022, which represented a net increase of 39,721 direct jobs compared to 2021. Direct industry employment in Texas and New Mexico, comprising both sides of the Permian Basin oil and gas stronghold, rose by roughly 7% and 10%, respectively, in 2022 compared to the prior year, amid record-high gas production.
For Ed Longanecker, president of TIPRO, these job figures show the oil and gas sector still on the upward swing despite recent price volatility, as operators continue to restore jobs shed during the COVID-19 downturn.
“The jobs growth is notable,” Longanecker said in an interview with S&P Global Commodity Insights Jan. 30. “Historically, we’ve lost a lot of jobs during the more extreme periods of market volatility, and while we’re still not at pre-pandemic levels, we’re going in the right direction.”
US oil and gas employment in 2022 was still a far cry from the record-high 1.3 million jobs tallied in 2019, according to TIPRO’s survey. But those lower employment totals did not stand in the way of the industry’s latest production boom: S&P Global data indicates dry gas production across the US reached a record-high 96 Bcf/d last year, powered by 27.3 Bcf/d from the gas-rich Marcellus Basin shale play of the US Northeast, 15.4 Bcf/d from the Permian Basin and 15.1 Bcf/d from the Haynesville Basin of Texas and Louisiana.
TIPRO’s jobs analysis was based on a review of data from state agencies, the US Bureau of Labor Statistics’ and labor market analytics firm EMSI.
TIPRO’s report on the US oil and gas industry comes alongside a few recent, darker forecasts for the long-term relevancy of the industry. On Jan. 30, BP trimmed forecasts for so-called fossil fuel consumption in its latest annual outlook for oil and gas — a closely watched report evaluating the trajectory of traditional and emerging forms of energy. In a base case scenario intending to reflect current, prevailing trends, BP forecast that global gas demand in 2050 will be around 20% higher than in 2019 — down from the 30% forecast in the group’s report from last year.
The TIPRO trade group is understandably more bullish on the long-term growth story for oil and gas, pointing to increasing LNG exports from the US as one driver behind wider worldwide gas use in coming decades.
“We’re biased, but we see demand continuing to increase … we’re still in the early stages of a multi-year boom cycle for oil and gas,” Longanecker said. “Longer term, there will be variations in projected demand, but I think we’re going to be around for a really long time.”
Looking to the shorter term, Longanecker sees a recent bump in oil and gas-related job listings in November and December of last year as a sign that companies are “ramping up” for the year, despite concern from some in the industry that activity could end up flattish with last year due to ongoing capital discipline, inflation and supply chain issues.
S&P Global’s latest long-term demand forecast projects US gas demand, including LNG exports, will peak at 106.77 Bcf/d in 2028, before declining slowly but steadily to 98.35 Bcf/d in 2050.