TIPRO: State Of Energy Report

December 2014, Vol. 241, No. 12

The U.S. oil and gas industry employed 1,012,800 in 2013, an increase of 30,800 from the previous year. Job growth in the U.S. oil and natural gas industry continued to rise in the first quarter of 2014, adding an additional 12,400 jobs, for a total of 1,025,200.

This according to the Texas Independent Producers & Royalty Owners Association (TIPRO) State of Energy Report, which also found the industry paid an average wage of $103,400 in 2013, 108% more than the private sector. Payroll in the U.S. oil and gas industry totaled $105 billion in 2013, an increase of 1% from 2012.

In Texas, oil and gas industry employees totaled 411,600 in 2013, adding 23,100 jobs since 2012, which represented 75% of all new jobs created by the oil and natural gas industry last year. Other high-growth states included North Dakota (2,100 more jobs), Oklahoma (1,800 more jobs) and New Mexico (1,700 more jobs).

Employment growth continued in the first quarter of 2014 for many leading oil and natural gas producing states. Texas led the country once again, adding another 2,400 jobs in the first quarter, for a total of 414,000, followed by Colorado (2,200 jobs), North Dakota (1,900 jobs), New Mexico (1,200 jobs), and Oklahoma (820 jobs). California experienced the largest decline in oil and gas employment in the first quarter with a decrease of 340 jobs, followed by Arkansas with a loss of 330.

The report said seasonality plays a role in employment trends for the oil and gas industry as well as regulatory uncertainty at the state and federal level.

Continuing improvements in exploration and production methods, including innovations related to hydraulic fracturing and horizontal drilling, have increased production of oil and natural gas to near-historic levels. Independent oil and gas producers, who collectively drill up to 95% of the wells, continue to lead this growth.

Production for Texas equaled 923 MMbbls of oil in 2013, an increase of 198 MMbbls compared to 2012. Total natural gas production for the state was 8.3 Tcf in 2013, compared to 8.2 Tcf the previous year. The second largest producer was North Dakota with 313 MMbbls followed by California with 199 MMbbls. The second-largest producer of natural gas in 2013 was Pennsylvania with 3.3 Tcf, followed by Alaska with 3.2 Tcf.

“Texas leads the country in employment and production, due in part to our pro-business environment and progressive, yet sensible approach from a legislative and regulatory perspective,” said Ed Longanecker, president of TIPRO. “States that adopt overreaching regulations targeting oil and gas development will inevitably experience a progressive or even dramatic decline in these high-paying jobs and all associated benefits.”

Collectively, Texas oil and gas companies paid a record $13.6 billion in state and local taxes, and state royalty payments in fiscal year 2013, an increase of $1.5 billion compared to 2012. Texas oil and natural gas production also continues to directly benefit more than 2.5 million mineral owners in the state. Oil and natural gas royalties represent yet another important source of revenue for government entities, as well as 12.5 million mineral owners across the country.

“Tax and royalty revenue generated from oil and natural gas development continues to provide critical funding to all areas of our economy, including education, children’s protective services, road repair and maintenance, public safety, and more than $2 billion in funding for water conservation projects in Texas,” said Raymond Welder, president of Welder Exploration & Production, Inc. and chairman of TIPRO.

Predictably, the report warned that despite the contributions of the oil and gas industry, and many advantages associated with increasing domestic development, several state and federal issues threaten to slow progress and stifle economic growth. Agencies, such as the Environmental Protection Agency (EPA) continue efforts to implement regulations targeting domestic producers in order to advance a flawed ideology, to the detriment of American workers, independent producers and the economy, the report says. An increasing level of activity at the state and local levels by anti-oil and natural gas organizations have also continued to rise in more recent years, it added.

“In addition to the ongoing battle with our own federal government, millions of dollars from agenda-driven organizations continue to funnel into states across the country to advance anti-oil and gas campaigns and related efforts to supersede state-regulated activities by abusing local ordinances,” noted Longanecker.

“Efforts to pass local moratoriums or bans on hydraulic fracturing have been the latest ploy used by environmentalists, which only results in more litigation, loss of jobs and income for mineral owners, higher taxes, and an increased financial burden for city government. We prefer an approach that creates jobs and strengthens national security, not the demise of domestic oil and gas production by any means necessary mantra used by many radical groups,” he said.

Since 1946, TIPRO has remained an advocate to preserve and protect the ability of independents to explore for and produce oil and natural gas. Key priorities for the organization include increased funding for road repair and maintenance, water use and conversation, endangered species reform, maintaining the high-cost gas severance tax reduction in Texas, educating new policymakers on the benefits of oil and gas development, and supporting balanced regulatory reform at the state level. Other industry priorities include lifting the federal ban on oil exports, expediting permitting for LNG facilities, and maintaining federal tax policies that have been used effectively to encourage domestic production for over 100 years, including intangible drillings costs (IDCs) and depletion allowance.

“Smart energy policies will grow our economy, create jobs, establish America as a global energy leader and help keep us secure for generations to come,” added Welder. “TIPRO is committed to working with all stakeholders and supporting continued growth for our economy through the responsible drilling and production of oil and natural gas.”

Editor’s Note: The Texas Independent Producers & Royalty Owners Association (TIPRO) is a trade association representing the interests of over 2,800 independent oil and natural gas producers and royalty owners throughout Texas.

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