State’s energy industry keeps forward focus despite better times
A post-pandemic economic bounce has boosted the outlook for many players in the Oklahoma oil and gas industry, but there’s trepidation about how far the industry can soar.
Tax collections on the industry jumped more on a percent-change basis than any other industry in recent months. Some companies are hiring. Things look good, for the moment.
But some of this is attributed to increased prices for oil and gas. Those were recently inflated following the hurricane activity in the Gulf of Mexico. And as the COVID-19 pandemic continues throughout the nation and world, there’s been a slight jump in jobs, but the industry is not expected to carry the same workforce it once did.
“Really, it is about sustainability for the future,” Marathon Oil CEO Lee Tillman told a group of industry members last month at an annual Petroleum Alliance of Oklahoma meeting.
“We still are in a nascent recovery from what was a true black swan event last year,” he said. “But when you look at
supply and demand, the market feels balanced, if not a little short. If the industry and sector stays with the mandate of capital discipline, I think there is a really exciting time ahead of us.”
Energy demand drives revenues, activity
Oklahoma State Treasurer Randy McDaniel said the average values of West Texas Intermediate crude being bought and sold at Cushing and natural gas sold through the Henry Hub nearly doubled what producers were getting a year earlier.
Economists linked the stronger prices to a surge in energy demands generated by the restart of the economy before the Delta variant of COVID-19 began sweeping across the nation.
The opportunity to capture those better prices put some Oklahomans back to work.
Bureau of Labor Statistics data from July shows there were 27,900 jobs in Oklahoma’s oil fields — the most since June 2020.
But that number is still significantly fewer than a peak of 65,000 in December 2014, which may never be reached again as technological advancements have eliminated many jobs throughout the industry over the years.
Another general indicator of increased and improved economic activity in the sector is the rig count. There were 32 rigs drilling wells across the state, up from 12 the same week a year ago, according to data provided Friday by Baker Hughes.
The increased activity translated to the biggest percentage jump in state revenues, data shows. Oklahoma collected $103.1 million in gross production taxes from well operators for produced oil and natural gas in June, an increase of 150% from the year prior.
This jump comes at a time of increased economic activity for many, as the state emerges from COVID-related restrictions and lockdowns. Oklahoma’s total monthly gross receipts in August was $1.17 billion, a 19.5% increase from the same month in 2020.
“Oklahoma’s economy is doing well, but there’s concern about the resurgence of the coronavirus. In regard to the energy industry, demand continues to be strong worldwide,” Oklahoma Treasurer Randy McDaniel said.
Growth occurring in other parts of the energy industry
Economic recovery, both in the oil and gas industry and elsewhere, has led to some increased activity for other companies as well, not just those in exploration.
Oklahoma City-based Kimray, which manufactures and distributes oil and gas control equipment across North America and other parts of the world announced in mid-March it planned to add about 100 workers to its staff of 460 to meet increased demands for oil and gas control equipment.
Since then, it has added more than 100 and is still looking for more, a company spokesman said this week.
“Many people lost their livelihoods during the pandemic through no fault of their own, and Oklahomans are ready to get back to work,” Kimray’s Vice President of People and Culture/Organizational Development Kelly Jennings said.
Corken Inc., a builder of industrial compressors and pumps, told state officials it planned to expand its Oklahoma City operation by 120 jobs during the coming five years by relocating a part of its manufacturing operations from Chicago.
Halliburton, which provides well completion services to numerous clients around the world, held a job fair this year as it sought to add dozens of positions within its 500,000-squarefoot Duncan manufacturing center.
About 700 workers build and overhaul high-pressure hydraulic fracturing fluid valves and outfit trailers that combine those valves with motors and other associated gear to support its well completion operations.
The company was preparing for growth after restructuring its operations to account for changing business conditions, said Manufacturing Director Mike Gray.
“We basically had to reinvent ourselves just a little bit here ... going from building a lot of new equipment to sustaining our North American fleet from a maintenance perspective,” Gray said.
“It is coming up nicely from what everyone had to work through when COVID-19 arrived,” he said.
Exploring new frontiers
During these profitable times, some prominent companies are expanding their business ventures overseas, while others are working to introduce new technologies into their ventures.
Tulsa-based Helmerich & Payne announced this week a joint venture agreement with Abu Dhabi National Oil Company worth nearly $200 million. The international company is acquiring eight of H&P’s land rigs, and in return H&P is investing $100 million in the United Arab Emirates-owned company in hopes of long-term dividends.
Halliburton has been rolling out equipment capable of using artificial intelligence and real-time simultaneous measurements across multiple wells to improve well completion results for customers by cutting costs and boosting production rates.
It has highlighted its use of those technologies on wells in several basins, including the Permian in August.
Halliburton also has developed fleets of hydraulic fracturing equipment that can be powered exclusively by electricity, using power taken directly from a grid, said Michael Segura, the company’s production enhancement vice president. He believes it can help producers complete wells while meeting emissions requirements.
“Oklahoma’s economy is doing well, but there’s concern about the resurgence of the coronavirus. In regard to the energy industry, demand continues to be strong worldwide.” Oklahoma Treasurer Randy McDaniel