Although the Texas upstream oil and gas industry remained in contraction in the third quarter, signs have emerged in employment and rig counts that the sector may have already seen the worst of the downturn and could be headed to recovery, the Texas Alliance of Energy Producers said in its latest Texas Petro Index (TPI) this week.
The exploration and production activity index in Texas declined for the 19th month in a row in September, falling to 145.4 from 150.4 in August, and down by 27.5 percent compared to the September 2019 index. The TPI saw a recent peak in February 2019, and has lost around 32 percent since then, including more than 23 percent since February 2020.
"While the index continued its decline, September was an important month because it provides some important signals of the coming recovery in the Texas upstream oil and gas economy," the Texas Alliance of Energy Producers said.
The industry added around a few dozen jobs in September and the number of working rigs in Texas slightly rose.
"Normally there is very little reason to get excited about the addition of three rigs and 30 industry employees statewide from one month to the next," said Karr Ingham, Petroleum Economist for the Texas Alliance of Energy Producers, and the creator of the Texas Petro Index. Related: Four OPEC+ Members Favor Extended Cuts
"But when they represent the first increases in over a year and a half, and on the heels of the worst demand contraction on record thanks to COVID, the numbers are very exciting because hopefully they signal the beginning of the end of this nasty downturn," Ingham said.
The number of rigs across the United States has started to grow in recent weeks, too. The number of active oil and gas rigs in the United States increased last week by 9, with oil rigs rising by 10 and gas rigs falling by 1, Baker Hughes said on Friday.
Data from the Texas Workforce Commission showed that the Texas upstream oil and gas sector added 700 jobs in September, the Texas Oil & Gas Association (TXOGA) said last week.
"At a time when some question the future of oil and natural gas, this small but positive job growth is an indicator of better days ahead," Todd Staples, president of the Texas Oil & Gas Association, said in a statement.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More