KFDA - NewsChannel 10 / Amarillo, TX: newschannel10.comDrilling Slows, Hits Panhandle Area Hard

Drilling Slows, Hits Panhandle Area Hard

Jobs affected, rigs closed. Our region's oil and natural gas business is taking a hit with the economic downturn.

More than 30 rigs have shut down since crude oil prices dropped this fall. That mean's more than 300 workers either lost their jobs or took pay cuts.

Take into account that most workers on the rigs make around 25 dollars an hour.

Now, you begin to understand the impact the downturn has had on our economy.

President of Amarillo National Bank, Richard Ware II says, "These are primary jobs. They are just like Pantex or Bell Helicopter and when they go, there are going to be some service industries that are hurt."

You may think less rigs pumping mean higher prices when you pump.

Wayne Hughes, Executive Vice President for Panhandle Producers and Royalty Owners Assoc. says, "There is no direct correlation. Crude oil goes through seven distinctive steps from the well head to our gas tank. And each one of those steps decides hours, values is added and the cost is added."

Hughes says less drilling does create an artificial shortage.. And it could trickle down.

"Somewhere down the pipeline, 90 days 120 days from now that may be reflected in the price of gasoline." Hughes says.

Producers expect things will start to turn around. But not for a few weeks.

Hughes says, "We have every expectation that in February OPEC will begin to close the valve they control enough to bring the price of crude oil. When they do that we will indirectly benefit."

While the timeline is unknown, experts are confident.

Ware says, "They know it will come back. Natural gas especially, which is important to the panhandles economy, will come back since it's such a great fuel."

Drilling is down 11 percent according to ANB. 80 percent of those are natural gas rigs.

Going back to your fuel price. Keep in mind, crude oil pumped in the panhandle is a small amount of the total used to produce gas.

In fact, oil from the middle east still makes up about 65 percent of crude oil production.