Industry suffers another week under pandemic
Exxon Mobil, one of the largest employers in the Houston area, said last week it has no immediate plans to lay off workers in response to the coronavirus-driven oil bust.
The Irving-based oil and gas producer plans to cut operating expenses by 15 percent this year after oil prices plunged along with demand for petroleum products during the global pandemic.
However, CEO Darren Woods told shareholders at the company’s annual meeting Wednesday that those cost reductions do not include any layoffs of Exxon employees. The oil major employs nearly 16,000 employees locally, according to a Houston Chronicle survey.
“As you all know, we work hard to avoid layoffs,” Woods said. “Today, we have no layoff plans.”
Woods, however, did not rule out layoffs in the “medium- to long-term horizon” as the company continues to look for ways to streamline its business and organization.
Pandemic drives record-setting job losses
The oil and gas industry shed a record-breaking 26,300 jobs in Texas during April as shutdowns related to the coronavirus pandemic cut demand and sent commodity prices to record lows.
Drilling, completion, production and related sectors employed 192,600 people in Texas last month, a 12 percent drop from the 218,900 jobs in March, new figures from the Texas Workforce Commission show.
The 192,600 upstream oil and gas jobs held at the end of April are at a low not seen since November 2016 while the 26,300 layoffs mark the largest drop of industry jobs in a single month, a review of figures going back to 1990 show.
The oil field service sector, one that includes drilling rig operators, hydraulic fracturing crews and equipment manufacturers, has been the hardest hit by the downturn.
The service sector accounted for 22,300 of the industry jobs lost in April, figures from the Texas Workforce Commission show.
Power use continues to lag as state opens
The Texas economy is slowly reopening as retailers, restaurants and gyms restart their businesses, but Texans aren't using more electricity.
The state's grid manager, the Electric Reliability Council of Texas, reported that Texans used 3 to 4 percent less electricity last week than expected based on a model drawn up before the coronavirus pandemic forced much of the economy to shut down.
The rate of reduction of electricity use is about the same percentage drop seen for the past several weeks, including weeks in which much of Texas was under stay-at-home orders to avoid the spread of coronavirus.
One of the biggest changes seen in electricity use is from 6 a.m. to 10 a.m., when most people are waking up and getting ready for work. But last week, during those hours, electricity use fell by 6 to 12 percent less last week during those early morning hours, ERCOT said.
Normal oil output may be more than year away
U.S. oil production is expected to bottom out in June and not recover to pre-pandemic levels until late 2021, a new report from Norwegian energy research firm Rystad Energy says.
American oil producers are expected to pump out 10.7 million barrels per day in June, a decline of 17 percent from the 12.9 million barrels they produced in March, Rystad said after oil companies shut in or reduced production at existing wells or scaled back drilling and completion activities.
If oil prices remain at $30 per barrel oil this year, U.S. crude production is expected to recover slightly in the fall and end the year at 11.1 million barrels per day in December.
Under a scenario where oil prices close 2021 at $39 per barrel, Rystad projects that the United States will end 2021 with a production rate of 11.7 million barrels per day.
Permian helps industry pay off for Texas
Oil and gas companies paid at least $13.4 billion in state taxes and royalties in 2019, 14 percent more than in 2018, according to an industry trade group.
The industry paid $11.3 billion in taxes and $2.1 billion in royalties to the state in 2019, the Permian Basin Petroleum Association said in a new report. About 62 percent of those funds came from operations in the Permian Basin, the report showed.
But the 2019 taxes and royalties were assessed when oil was trading around $50 per barrel. The coronavirus pandemic began in January and within weeks slashed demand for oil and forcing companies to slash production. After a plunge into negative territory in April, oil is trading at about $34.