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Editor's Choice: TIPRO's State of the Energy Report
February 2022 Editor's Choice

TIPRO Report: Industry Impact Is Huge

AUSTIN, TX.–The Texas Independent Producers & Royalty Owners Association has released the seventh edition of its “State of Energy Report,” which shows that the oil and natural gas industry not only continues to play a significant role in the U.S. and Texas economies, but that it also is showing strong indicators of expansion.

TIPRO describes the report as a detailed analysis of national and state trends in oil and natural gas employment, wages and other key economic factors for the state’s energy industry in 2021. The association says its “State of Energy Report” series has been developed to quantify and track the economic impact of domestic oil and natural gas production with an emphasis on Texas.

In 2021, the report shows, the U.S. oil and gas industry continued to offer significant economic support, while providing reliable and affordable energy to meet growing domestic and global demand. According to TIPRO, the industry supported a total of 832,869 direct U.S. jobs last year. The U.S. oil and gas sector paid a national annual wage averaging $115,166 during 2021, 76% higher than average private sector wages. Cumulative oil and gas industry payroll, meanwhile, totaled $96 billion and the industry’s direct gross regional product (GRP) was $573 billion in 2021, or 3% of the U.S. economy. Additionally, total U.S. goods and services purchased in 2021 by the oil and gas industry exceeded $421 billion from more than 900 business sectors, TIPRO observes.

Enduring Impact

Texas’ once again led the nation in oil and gas industry employment last year, accounting for 37% of the entire country’s oil and gas employment, the report details. The industry supported a total of 309,396 direct jobs in Texas in 2021, with total direct and indirect employment of 1.9 million positions. Direct GRP for Texas oil and gas equaled $200 billion in 2021, or 12% of the state economy. Total U.S. goods and services purchased by the Texas oil and natural gas industry surpassed $166 billion last year, 81% of which came from Texas businesses.

Texas oil production exceeded 1.7 billion barrels in 2021, TIPRO notes. The second-largest oil producing state last year was New Mexico (437 million bbl), followed by North Dakota (403 MMbbl), Alaska (158 MMbbl) and Oklahoma (148 MMbbl). Texas natural gas production totaled 10.7 trillion cubic feet in 2021. The next four states ranked by natural gas production are Pennsylvania (7.5 Tcf), Alaska (3.5 Tcf), Louisiana (3.3 Tcf) and Oklahoma (2.6 Tcf).

“Despite a number of unique challenges facing operators over the past year, the Texas oil and natural gas industry continued to show its resiliency and significant economic impact,” reflects TIPRO Chairman Brent Hopkins, chief executive officer of Suemaur Exploration & Production LLC in Corpus Christi, Tx. “Oil and natural gas development, led by Texas operators, will play a critical role in meeting surging global energy demand for decades to come under any realistic scenario.”

TIPRO notes that the U.S. Energy Information Administration forecasts that energy demand will increase 50% by 2050, with global oil and gas demand rising 34% in that time frame. In 2020, oil and gas supplied nearly 70% of U.S. energy consumption, and the EIA projects them to account for about the same proportion of domestic energy needs by 2050.

According to TIPRO member Enverus, 2022 will deliver an even stronger year of growth relative to 2021, even as major public operators continue exercise capital discipline. Similar to 2021, private operators are likely to continue increasing their activity and investment, but the U.S.-focused supermajors seem likely to play an even more important part in the growth story this year. TIPRO notes that Enverus forecasts that these operators will focus on growth out of their shorter-cycle North American assets while they keep corporate-level production flat, which they characterize as their version of capital discipline, as they avoid the riskier parts of their portfolios to optimize cash flows and boost shareholder returns.

According to TIPRO, Enverus remains bullish for 2022, and expects U.S. supply will grow by about 930,000 barrels a day, exit-to-exit, from roughly 11.7 MMbbl/d in December 2021, TIPRO notes. Unlike 2021, the firm expects growth to be more equally distributed between the first and second halves and 360,000 bbl/d should be added by mid-year at an average of about 475 oil rigs. Nearly 95% of forecasted 2022 growth comes from the Permian; the Rockies will stay virtually flat and Eagle Ford output will edge upward at about 100,000 bbl/d. Meanwhile, TIPRO observes, there are real risks to supply outlooks, including well cost inflation and supply chain snags.

“The state of Texas is an energy powerhouse, and our producers are held to strict environmental standards,” relates TIPRO President Ed Longanecker. “It is incumbent upon all of us to help maintain a pro-energy environment by supporting sensible, science-based policies at all levels of government. When countries or regions ignore the immense value of energy security, they open the doors to losing control of their economic well-being and becoming more reliant on foreign sources of energy to meet demand.”

Major Contributor

What does the oil and gas industry mean for Texas? According to TIPRO’s report, the state:

  • Led the nation in oil and gas jobs with 309,396, and approximately 37% of all U.S. oil and gas jobs nationwide were located in Texas last year;
  • Saw its oil and gas jobs paid an annual average wage of $132,232, 107% more than the state’s average private sector job;
  • Had the highest oil and gas payroll in the country in 2021 at $41 billion, with California coming in at a distant second ($10 billion), followed by Louisiana ($6 billion);
  • Had the highest number of oil and gas businesses in the nation last year with 12,300, a quantity that totaled about three times the number of oil and gas businesses of second-ranked Oklahoma;
  • Had the country’s highest rig count in 2021, with an average of 264 active rigs, with active rigs climbing from 197 in January to 322 in December;
  • Accounted for three of the country’s top five metropolitan areas ranked by oil and gas employment;
  • Saw its industry account for $200 billion of 2021 total direct GRP, which totaled 12% of the Texas economy, a number that more than doubles after the typical GRP multiplier is applied; and
  • Saw total 2007-2021 state taxes and state royalty payments paid by its oil and gas industry exceed $178 billion, including $15.8 billion contributed last year.

The report, which includes a full list of its data sources and methodological explanation, can be viewed and downloaded at https://bit.ly/TIPRO2022StateofEnergy.

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