Panhandle oil and gas industry outlook depends on a recession, or not

Published: Jan. 12, 2023 at 4:55 PM CST
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AMARILLO, Texas (KFDA) - The oil and gas industry has been under attack in the last few years — from COVID-19 to the war in Ukraine and everything in between.

Here in the Panhandle, industry experts say we are in a decent place, leveling out.

Prices have fluctuated a bit, right now a barrel of oil is fluctuating between $75 to $80, after hitting a high of around $120 a barrel a few months ago.

There are currently six active rigs drilling in the Panhandle, which has increased from recent years.

In 2020, there were zero rigs, but in 2008, there were 100.

“It’s good to see a little uptick in drilling activity, I mean zero is a bad number, six is a better number but nothing like it used to be,” said Karr Ingham, petroleum economist, Texas Alliance of Energy Producers.

Experts say the industry is running into some obstacles.

“The ability to get enough people to work to source everything that you need to drill a well and then pay 30 or 40 percent more than it cost a year ago to drill a well and complete it and bring that product to market,” said Ingham.

Judy Stark, president of Panhandle Producers and Royalty Owners Association, says she had a conversation from someone at the governor’s office and the governor will most likely be back here next year, looking at employment and how hard it is to get good workers.

Stark works with many employers and they say ever since COVID-19, many do not want to work anymore.

She says the industry is very important to this area, as there are wells here producing for the two refineries in the area, Valero and Phillips 66.

They both produce about 200,000 barrels of fuel a day that is shipped out all over the U.S.

“Both of those refineries buy the majority of all their crude oil that is processed in those refineries from local producer operators in this area,” said Stark.

She also adds the taxes paid by those producer operators go directly back into the economy.

“It goes to school districts, it goes to the hospitals that are community hospitals, like hospitals in Borger, Spearman, Pampa and Perryton,” said Stark.

When asking about the outlook for this year and beyond, experts say a lot of it will depend on if there’s a recession.

Ingham believes there is a 50/50 chance.

“If we have this, it’s generally bearish for the industry, it generally pushes prices downward and which in turn, pushes activity levels downward, drilling, employment in the industry and all of these things,” said Ingham.

The biggest takeaway, the industry does not look the same as it did because there aren’t as many rigs and there are only about half of the workers.

If things get better or worse, experts say all has to do with the economy for 2023.