Midland: Weathering the Downturn in Crude Oil Prices
“Over 130,000 jobs have been directly added to the upstream oil and gas industry in Texas over the course of the expansion now coming to an end. A realistic assessment suggests that we are going to lose at least 50,000 of those jobs over the course of this contraction, and frankly that number could be higher,” Ingham told attendees at a media luncheon in Houston Feb. 2.
Ingham added that before the contraction is over, operating rigs in the state are likely to number as few as 300, well under the November 2014 average of 904.
“In other words, we stand to lose two-thirds of the rigs at work over the course of this downturn,” Ingham said.
Like Barnett, Ingham suggested that a short-term contraction could allow cities like Midland, which has been subject to rampant growth due to the expansion of activity in the Permian Basin, to “catch its breath” for a while, but that a prolonged contraction in activity would be unwelcome.
Peaks and contractions are nothing new to the industry. Much of one’s perception of the market could depend on the length of time they have in the industry, a professor who had worked in the industry told Rigzone.
“So many people in the oil patch are scared. Older guys like me remember 1986 vividly. Young guys have only known good times. The propensity to save might not have been strong during this boom.”
Although Midland has fared well so far, prolonged low oil prices are likely to prompt more rig shut-ins and lay-offs, and it is not unreasonable to assume that Midland will eventually feel the pinch. Ultimately, it depends on when prices stage a recovery, and on this, few people claim to have a crystal ball.
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