Texas expanded its energy dominance in the O&G sectors in 2023, with indications that this growth will persist.
The state's contribution reached nearly 43% of total U.S. oil production and 28% of natural gas marketed production, despite relatively limited drilling activity. These shares increased as a result of productivity gains, as highlighted by the EIA. In December 2023, year-over-year increases in rig productivity were observed across major Texas basins, such as the Anadarko at 30.6%, Eagle Ford at 23.3%, Haynesville at 15.6% and Permian at 17.4%.
Technological advancements have been the driving force behind significant productivity. In upstream resource development, there have been transformative ongoing improvements, such as the deployment of sophisticated supervisory control and data acquisition systems, enabling remote drilling and operations. Additional advancements include advanced pipeline flow monitoring, the incorporation of industrial IoT sensors and applications of AI to underground operations. In downstream product processing, refining and transportation, productivity has been boosted by the utilization of Robotic Process Automation in cost management, workload automation for scheduling, real-time pricing and enhanced monitoring of pipelines and wells. Automation has also been pivotal in improving reporting and regulatory compliance.
Contrary to the conventional wisdom that automation and AI simply displace jobs, these technological advancements have instead led to efficiency and cost-effective improvements as well as job growth, even during a period of historically low O&G prices. In fiscal year 2023 (FY23), the Texas O&G industry's direct employment averaged over 480,000 jobs, up from around 443,000 in the prior year. The sector directly generated nearly $60 billion in annual pay in FY23, translating to an industry average annual salary of over $124,000, significantly higher than the Texas private sector average of around $71,000. Furthermore, each O&G industry job is estimated to generate approximately two additional indirect jobs, supporting over 1.4 million jobs across the Texas economy.
For the state's economy, the O&G industry contributed over $361 billion directly to the GDP and over $751 billion in total direct and indirect value added. Even with a diversified state economy that has grown to nearly $2.5 trillion, as reported by the U.S. Bureau of Economic Analysis, the O&G industry continues to drive more than a quarter of the state's economic activities.
These points underscore that the Texas workforce has continually upskilled and added value, reinforcing the U.S.' position as a global energy leader. The industry's growth and investments reflect confidence in Texas' workforce, its supportive infrastructure and favorable business climate.
However, this progress must not be taken for granted. The last two years have demonstrated how rapidly global geopolitical events and state regulatory developments can alter the business climate and investment decisions. It's crucial to continue fostering policies that uphold Texas' position as a beacon of energy leadership, building upon the state's successful strategies while skillfully managing the increasing tensions with federal energy policies and the evolving global marketplace.
Looking ahead, there is a promise of continued prosperity for the state and nation — one that is bolstering our domestic economic and energy security, making significant strides in environmental progress both domestically and internationally and strengthening the U.S. as the world's energy leader.
For more information, visit txoga.org.
