As oil boom continues, there’s no end in sight for job growth

1:57 pm | August 27th, 2014

Article from DallasNews

Texas has surpassed 300,000 jobs in the oil and natural gas sector as the oil boom drives job growth for a fourth straight year.

According to the data released this week by the U.S. Bureau of Labor Statistics, the state gained more than 20,000 oil and gas jobs since July 2013, its largest increase since April 2013.

With hydraulic fracturing and horizontal drilling opening up vast reserves, the state has been drawing oil field workers from around the country eager to jump on rig crews where salaries start at around $70,000 a year.

And it’s not just Texas. Over three months between April and July, more than 10,000 new oil and gas jobs were created around the country.

“We have a lot of production increasing in the shale areas of Texas and North Dakota. And we’re seeing an upswing in the number of rigs in the gulf,” said Paul Caplan, president of Rigzone, which runs an online job board for the industry. “The competition for people is getting tough.”

McMullen County in the Eagle Ford Shale has the lowest unemployment rate in Texas, at 1.8 percent. And across the Eagle Ford and the Permian Basin, unemployment rates below 3 percent are becoming the new norm. Economists consider full employment somewhere between 3 and 4 percent.

Retaining skilled employees has become a constant game of salary increases and promises of promotion. At Fasken Oil and Ranch in Midland, operations manager Jimmy Davis Jr. has taken to promoting the fact that the company owns the land it drills, a considerable economic advantage, to keep workers from chasing higher salaries elsewhere.

“What I tell the guys is, ‘If the bust hits, I’m not going to say we won’t shut down. But we will be the ones to turn the lights off,’” Davis said.

The question of when the boom comes to an end is ever-present. A number of energy analysts foresee oil prices falling off beginning in 2017, as countries including China, Mexico and Argentina begin to jump on board the shale drilling revolution, which so far has been limited outside the United States.

Most oil companies put the break-even point for hydraulic fracturing at about $80 a barrel.

Right now the U.S. benchmark West Texas Intermediate is hovering around $95, but if it falls close to $80, drilling is expected to slow significantly.

But for now, “things look good,” said Michael Plante, senior research economist at the Federal Reserve Bank of Dallas.

“Considering the expectations from the [U.S. Department of Energy] and looking at the data suggests oil production is going to keep increasing in the Eagle Ford and Permian at least for the next year or two,” he said.

In the meantime, oil and gas companies are rushing to figure out how to keep their staffs filled.

And not just in the oil field itself. Depressed oil prices in the 1990s turned many professionals away from the industry, resulting in what has now turned into a shortage of engineers and executives. Companies are working with universities and even high schools to get more people trained, a high-stakes process insiders refer to as “the great crew change.”

“You’re starting to see the industry come under a lot of stress,” Caplan said. “It’s probably the No. 1 topic right now: How do we bring more people into the industry?”