Texas Oil Production Hits New Highs Amid Decline in Upstream Sector Jobs

U.S. oil production has reached new highs, with significant growth seen in Texas, which houses the Permian Basin—the largest shale basin in the country. Despite this surge in production, employment in the upstream sector of the oil and gas industry has declined in five out of the six months of this year.

This drop is attributed to increased operational efficiencies, allowing companies to boost production with fewer rigs and workers, as highlighted by the Texas Oil & Gas Association (TXOGA).

The recent data from the Texas Workforce Commission reveals a continuing decline in upstream oil and gas jobs, with a reduction of 2,000 positions in June compared to May. This marks a troubling trend of job losses over most of the year, contrasting sharply with March’s employment data, which showed a notable increase of 4,500 jobs—an unprecedented single-month growth since 2011.

Since the low point in September 2020, Texas saw a generally positive trend in upstream employment, with a significant number of increasing months compared to decreases. However, the current year has seen a reversal of this trend, largely due to advancements in operational efficiency within the industry.

Operational efficiencies are driving the increase in oil and gas production despite a reduced workforce and fewer rigs. National rig counts have fallen by about 14% over the past year, while productivity has risen significantly.

The U.S. Energy Information Administration reports a more than 20% increase in rig productivity across major shale basins, underscoring the industry’s ability to produce more energy with fewer resources.

Texas continues to lead in oil and gas production, with the state accounting for 42.8% of U.S. crude oil and 28.3% of natural gas production in June 2024. The Permian Basin is expected to maintain strong production levels, although growth rates are anticipated to slow.

According to Goldman Sachs Research, technological and efficiency improvements will sustain robust production levels, with an expected decline in annual average production growth from 520,000 barrels per day in 2023 to 270,000 barrels per day by 2026. This continued growth is attributed to advancements in drilling efficiency and reduced production times.