Texas’ crude oil output down 7% in 2020
Texas crude production fell by 117 million barrels in 2020 after the coronavirus pandemic and subsequent collapse in petroleum demand forced oil companies to idle hundreds of drilling rigs.
Oil companies produced 1.7 billion barrels of crude in the state last year, a decline of about 7 percent from the previous year, according to the Texas Independent Producers & Royalty Owners Association. The trade group in its annual state of energy report published this week called 2020 “one of the most challenging periods” in the history of the oil and gas industry.
Global demand for oil — at 100 million barrels per day before the pandemic — plunged by 25 percent as consumers around the world hunkered down at home to slow the virus’ spread. As a result, demand for gasoline, diesel and jet fuel plummeted, forcing oil drillers and refineries to pull back production.
The number of drilling rigs operating in Texas fell by 57 percent to 181 in December, down from 418 at the start of the year. Companies operated 215 rigs on average in the state during the year.
The rig count, a leading indicator of the nation’s oil and gas production, bottomed out in August before climbing again in recent months as prices rebounded
above $40 a barrel. As crude prices approach $60 a barrel, more rigs are expected to come online.
West Texas Intermediate, the U.S. benchmark, settled up 1 percent at $56.85 on Friday in New York.
Nationally, drillers added eight rigs this week, bringing the count to 392, according to oil field services company Baker Hughes and Enverus, which provide the weekly tally. The industry has just about half of the 790 rigs operating in the United States a year ago.
The coming year doesn’t offer much of a reprieve for drillers. Average crude production is expected to decline by about 690,000 barrels per day in 2021, according to Enverus, as oil companies plan to keep capital spending flat through the pandemic recovery. Production is expected to grow by about 200,000 barrels per day in 2022.
The declining number of operating rigs and slashed crude production have led to mass layoffs in the energy sector. Oil and gas production, pipeline, equipment, refinery and petrochemical companies in Texas lost nearly 74,000 jobs in 2020. The state’s oil and gas industry employed 347,529 workers, down 21 percent last year from the previous 12 months.
Nationally, the oil and gas industry employed 902,223 workers, a decline of more than 160,000 jobs. The industry paid an average wage of $113,600 in 2020, the association said.