Road to recovery
Gilmer’s projections for regional employment growth depend on the price of oil, with three scenarios ranging from $40 per barrel to $80 per barrel. Data below shows projections of payroll employment changes between the fourth quarter of each year and the previous fourth quarter.
drilling, no spills [or] accidents.” Biden issued an executive order Jan. 27 that halted new oil and gas leases on public lands and waters and called for the review of existing permits for fossil fuel development as part of his plan to tackle climate change. The next day, U.S. House District 2, Republican Rep. Dan Crenshaw introduced a bill that would override the president’s order if passed into law and ensure oil produc- ers retain access to energy reservoirs in the Outer Continental Shelf. “Undermining Texas energy jobs and American energy independence appears to be a top priority of the Biden-Harris White House, and the administration is showing little regard to the livelihoods of blue-collar work- ers who are already struggling during this pandemic,” he said in a statement. David Bat, the president of Kimber- lite, an international oil eld research and consulting group, said oil con- sumption should be back to where it was before the pandemic by 2022, and Gilmer said the price of oil should return to $65 per barrel by that time. In the meantime, Bat said strategies for companies to survive the pandemic have been to reorganize to bring reve- nues and expenditures in line and to invest more in remote operations and digital technology. “Generally speaking in the oil and gas industry, being able to accomplish more with less has been the mantra,” he said. “The oil and gas industry has always come through the most painful of times. And as painful as the adjust- ments are, what doesn’t kill youmakes you stronger, and that’s certainly been true for the oil and gas industry over the decades.” Vanessa Holt and Ben Thompson contributed to this report.
would say more concerning to the oil and gas [industry] is probably politics. If we’re already struggling and the pan- demic has already lowered revenues … the [last] thing you want is some poli- tician making rules that your business has to change.” State Rep. Jon Rosenthal, DHous- ton, said a signicant portion of his constituents in Cy-Fair and Jersey Vil- lage work in energy, and he previously designed equipment manufacturing systems for oil and gas companies. He said oil demand has picked up slightly since the start of the pan- demic, but as local businesses con- tinue remote operations, oil rig counts are still lower than what Houston has seen in the past. According to data from Baker Hughes, the average num- ber of running rotary rigs in the Hous- ton region dropped from 56 in January 2014 to 12 in January 2020 and was at two this January. Rosenthal said revitalizing the industry will mean branching into renewable energy sources. He is work- ing on legislation that would expand Texas’ energy industrial base through incentive programs similar to ones proven in neighboring states. “Adding [renewable and green energy] towhat we dowill help us revi- talize our energy industry in Texas and especially in Houston, where some of these higher-level trained profession- als are having diculty nding work in their chosen profession,” he said. Lookingahead While industry leaders are bracing for increased regulations from the federal government, Bell said most oil companies want to innovate to operate in a way that is cleaner and safer. “They’re not just a bunch of care- less folks out in the eld just drilling holes in the ground and not caring,” he said. “They’re doing their best to make this better for the environment—clean
Low ($40 oil)
Medium ($65 oil)
High ($80 oil)
SOURCE: BILL GILMER, UNIVERSITY OF HOUSTON’S BAUER INSTITUTE FOR REGIONAL FORECASTINGCOMMUNITY IMPACT NEWSPAPER
Oil eld researchers said in light of recent changes in the oil market, the industry must make certain changes to remain competitive and protable. Strategies for survival
Reorganize and restructure for savings.
Use remote technology to reduce in-person costs.
Use digital technology for long- term sustainability.
SOURCE: KIMBERLITE INTERNATIONAL OILFIELD RESEARCHCOMMUNITY IMPACT NEWSPAPER
Houston Partnership, said he projects the region will continue to lose 2,000- 5,000 energy jobs in 2021. He said layos typically occur in the rst quar- ter of the year, but prospects could improve with the economy. “We’re not going to rebound like we have in the past,” Jankowski said of the oil and gas industry, citing industry- wide permanent restructuring. Local implications Arnold Gacita, who works in the less-volatile automotive chemical side of the oil industry, said his Cypress- based company, Petra Oil Co., was hit hard at the start of the pandemic. “[In] March and April, the
automotive industry took a hit as the pandemic got here and as the lock- downs began. … People were staying home; nobody was driving,” he said. The company pivoted to producing hand sanitizer—resulting in higher revenue last May through July than was brought in the previous year, Gac- ita said. Petra Oil Co. distributes to 36 coun- tries, so while business in the U.S. started picking up in May, the interna- tional side of the business continues to struggle as other countries have shut down even essential operations. “I think we’re going to overcome this pandemic if we do the right things in the next fewmonths,” Gacita said. “I
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CYFAIR EDITION • FEBRUARY 2021
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