Labor output in the US oil patch has already significantly exceeded the pre-Covid level of January 2020, Macquarie strategists noted in a recent report sent to Rigzone.
“Despite some softening in recent months, oilfield labor output has risen sharply year-on-year and is significantly above pre-Covid levels as of January 2020 on a seasonally adjusted basis,” they said the strategists in the report.
“Meanwhile, despite concerns voiced about labor as a constraint on US supply, newly delivered oil and gas supplies in 2022 appear slightly below 2018/2019 highs,” the strategists added.
According to a chart included in the report, which dated back to 2012 and showed weekly industry/non-supervisory production work hours in oil and gas extraction and support, the total weekly industry production/hours of unsupervised work reached its lowest point during 2020, reaching around 9,000. The last value included in the chart in 2023 is 12,803.
Strategists also noted in the report that in the current cyclical upturn, hours worked in the oil patch have outpaced hiring.
“While we see a historical trend toward an increase in hours worked per employee during periods of cyclically high activity, this has been persistent, indicating a tight labor market,” the strategists said in the report.
“More recently, this constraint appears to be easing, with employment continuing to increase and weekly hours trending downward. Despite this apparent labor tightness in the oil patch, wage inflation does not appear to be as problematic as it is widely perceived,” they added.
“While wages for production/non-supervisory employees in oil and gas extraction (read broadly in mining and production operations) have increased sharply (+13.5 percent from January 2020) , increases in activities supporting oil and gas operations (we Read as general maps to OFS operations) have been more limited (+8.3 percent from January 2020),” the strategists continued .
“With the latter accounting for 76 percent of hours worked in the industry, we believe this is the most relevant indicator for oilfield labor inflation,” they stated.
Overall, total industry revenue per incremental barrel of oil equivalent delivered has fallen significantly since 2012 as total labor costs have remained fairly flat and new supply delivered has increased appreciably, they said the strategists in the report.
According to the latest Texas Independent Producers & Royalty Owners Association (TIPRO) State of Energy Report, which was released in January, the US oil and gas industry employed 948,943 professionals in 2022 The report highlighted that this figure represented a net increase of 39,721. direct jobs with respect to 2021, “subject to revisions”.
There were 358,776 direct jobs in the U.S. upstream sector in 2022, a net increase of 32,627 jobs compared to 2021, the report said, adding that the largest sector for employment in the US oil and gas industry was Support activities for oil and gas operations. with 199,552 workers in 2022, followed by Construction of Oil and Gas Pipelines and Related Structures (129,949), Natural Gas Distribution (111,918) and Crude Oil Extraction (82,628).
The largest job gains in 2022 were in oil and gas operations support activities, with a net increase of 23,039 jobs over 2021, followed by oil and gas well drilling (9,489 ) and the manufacture of machinery and equipment for oil and gas fields (2,450). ), the report highlights.
The report revealed that 21% of jobs were held by 25-34 year olds, 28% were held by 35-44 year olds, 23% were held by 45-54 year olds, the 19% were occupied by those between 55 years of age. -64, and five percent were held by people aged 65 and over. The oil and gas industry was said to pay a national average wage of $120,665 in 2022, which the report noted was 74 percent higher than the average private sector wage in the United States.
Workers in crude oil extraction earned the highest average annual salary of all oil and gas industry sectors at $210,417, followed by oil refineries ($157,024), natural gas extraction ($152,996) and petrochemical manufacturing ($151,751), according to the report.
In its latest short-term energy forecast, released last month, the U.S. Energy Information Administration (EIA) projected that U.S. crude oil production will average 12.81 million bpd barrels per day in the third quarter of 2023. The average is expected to be 12.93 million barrels. per day in the fourth quarter and 12.76 million barrels per day in total by 2023, the report revealed.
U.S. dry natural gas production is expected to average 103.36 billion cubic feet per day in the third quarter and 103.63 billion cubic feet per day in the fourth quarter, according to August STEO, which projects the overall figure of US dry natural gas production by 2023. to 102.98 billion cubic feet per day.
In 2022, US crude oil production averaged 11.91 million barrels per day and US dry natural gas production averaged 98.13 million cubic feet per day, noted the STEO.
In a statement sent to Rigzone in April, Rystad Energy senior analyst Sumit Yadav noted that the US labor market had been at its tightest levels in more than five decades and noted that, “d ‘in line with the wider economy, the country’s oil and gas The job market has also seen an increase in recent months’.
“The tightening of the labor market had been even more pronounced for the oil and gas sector, where unemployment stood at three percent in February, even below the broader economic rate of 3.5 per cent before increasing in March,” Yadav said in the statement.
“The prevailing tightness in the U.S. oil and gas labor market has resulted in increasing pain for industry players in major shale basins as they have had to pay a premium to attract and retain workers Yadav added.
“A prominent example is Midland County, in the core of the Permian Basin, where wages rose nearly 14 percent in the third quarter of 2022 on an annual basis, a level of wage growth that was the highest in every county in the US,” the Rystad representative said. been
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