ENERGY INDEX: Drilling activity, employment head in different directions
It’s a tale of two data sets.
Drilling activity in Oklahoma continues to decline, falling from 51 active rigs in May to just 38 today.
Drilling rig counts have long been the barometer of industry economic activity, with employment increasing as the rig count goes up and decreasing as drilling activity slows.
But the most recent Oklahoma Energy Index (OEI) shows that may not be the case today. Despite drilling activity falling to levels not seen since the latter stages of the COVID pandemic, employment in Oklahoma’s oil and natural gas industry is on the rise, adding 300 workers in June according to the OEI.
The index of oil and natural gas activity in Oklahoma declined 0.8% in June and is nearly 10% below year-ago levels. The current Energy Index stands at 115.5.
Dr. Russell Evans, who compiles the OEI, said the split from the tandem rise and fall of drilling activity and employment has two potential explanations. First, it’s possible the employment data is wrong, and labor statistics revisions in early 2024 will show less growth than estimated in monthly surveys.
Alternatively, the industry may still be in the process of staffing up to normal operating levels following the pandemic disruption. This alternative explanation is supported by recent responses in the Kansas City Energy Survey.
“It remains to be seen if desires to staff up and retain a workforce can offset weakening industry conditions in the months ahead,” Evans said.
The OEI is a comprehensive measure of the state’s oil and natural gas economy established to track industry growth rates and cycles in one of the country’s most active energy-producing states. The OEI is a joint project of The Petroleum Alliance of Oklahoma and Thorberg Collectorate.