MAKING AN IMPACT
Production, employment data shows shale trend
Production, employment data shows technology's impact on oil production
Those who follow the oil and gas industry recognize that horizontal drilling and completions have transformed the industry, both in Oklahoma and across other parts of the nation.
Oklahoma, for example, has continued to set a string of monthly oil production records this year, with the most recent high mark set in May when its oil production neared 18.7 million barrels, data provided by the U.S. Energy Information Administration shows.
Those results have helped oil and gas companies survive, even during periods when commodity prices haven't been high.
That technology, though, also affects employment numbers within the industry. Generally, those numbers haven't grown as quickly as that record production, economists and industry officials observe.
Robert Dauffenbach, director of the Center for Economic and Management Research at the University of Oklahoma's Price College of Business, recently used 12- month moving averages of oil and gas industry field employment data from Oklahoma and Texas during the past 26 years and compared it to average monthly oil production numbers recorded during the same period from inside the two states.
At one glance, you can see how technology affected both the industry's production and employment.
It shows Oklahoma wells were producing a monthly average of about 800 barrels oil per field employee in January 1993, when there were 10,800 working in the field. At that time, the industry basically was just beginning to return to life after the Oil Bust of the 1980s.
But by May 2009, just as horizontal drilling and completions were beginning to take off in north Texas and in North Dakota, that peremployee monthly average of barrels of oil produced by Oklahoma wells had plummeted to less than 200.
In April this year, Oklahoma wells were producing a monthly average of about 510 barrels of oil
per field employee, with about 33,300 working in the field.
“We were really suffering in terms of output per worker prior to the discovery of these various shale plays,” Dauffenbach said. “There has been a lot of technology gain over that period, plus we have benefited from the experience we have gotten through learning along the way.”
Dauffenbach said he wasn't surprised that his research showed better monthly oil production averages per field employee in Texas, a state that has more and better rock.
“We are looking at multiple layers of rock in the Permian that are tappable,” Dauffenback said. “It is just miraculous when you look at how much oil has been produced from that area.”
Chad Warmington, president of the Petroleum Alliance of Oklahoma, said Dauffenbach's research provides another confirmation the oil and gas industry continues to evolve.
Warmington said dropping drilling and completion costs are making it possible for companies like Encana/Newfield and Continental to continue to cut operating rigs.
Despite those trims, the companies continue to boost production from shale fields inside Oklahoma.
“It is a technological revolution that's going on,” Warmington said. “Dauffenbach's data lays that out perfectly. Before 2005, it appeared that Oklahoma had produced all the oil it was going to produce, until new technology completely changed that narrative.
“Drilling and completion designs changed and we are still playing with it and figuring out how to maximize it here in Oklahoma. We can make it work, and we are getting better at making it work.”
Dauffenbach agreed, noting that revolution has changed narratives across the globe.
“We used to be talking about peak oil in the early 2000s. Now, we are talking about peak oil demand,” he said.