Energy

Is Automation Limiting The Number Of Jobs Created By The Texas Oil Boom?

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Andrew Follett Energy and Science Reporter
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The New York Times reports that renewed drilling for oil and natural gas in Texas isn’t creating as many jobs as in the past.

The culprit? Automation.

Automation in the oil industry is reducing the demand for unskilled labor and new jobs, despite U.S. oil production hitting record highs.

“Computers now direct drill bits that were once directed manually,” reports NYT. “The wireless technology taking hold across the oil patch allows a handful of geoscientists and engineers to monitor the drilling and completion of multiple wells at a time — onshore or miles out to sea — and supervise immediate fixes when something goes wrong, all without leaving their desks.”

Industry experts estimate roughly 163,000 oil jobs have been lost since the 2014 crude price collapse. The price of crude oil went from $108.09 in June 2014 to $29.18 by January 2016. Job losses just in Texas, the most productive oil-producing state, totaled 98,000. Automation has replaced one-third to half those jobs, NYT reports.

On the other hand, automation significantly reduced operating costs for U.S. oil producers. Break-even oil prices at productive wells fell from $60 a barrel three years ago to around $35 today.

Jobs are coming back, just not at the pace they were before, and oil companies are still investing in Texas oil.

Oil companies poured more than $28 billion into the Permian Basin of west Texas and southeastern New Mexico last year, and $6.6 billion was invested to double the amount of land they control in the region. Land rights in the region can retail for more than $63,000 an acre.

The majority of new oil and natural gas drilling in the U.S. is happening in Texas, according to a report by the federal Energy Information Administration (EIA). Oil production in the region has spiked drastically since 2015, while production in other areas has fallen due to low oil prices. Texan oil is relatively cheap to access and refine since it’s close to most American refineries.

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