Reports of Shell layoffs point to 10-year trend

HOUSTON – The Houston Chronicle reports the oil and gas industry has dominated Houston’s job market for decades, employing more people than nearly any other segment of the city’s economy. Now, its reign over Houston is waning as the industry consolidates and slashes its spending. Houston is expected to take a significant hit as Shell moves to cut 20% of its global oil and gas development and exploration division, Reuters reported. Experts say the proposed cuts point to a larger trend: energy giants spending less and less on the geoscience and exploratory drilling needed to find and develop new oil reserves. Leading international oil companies such as Shell, Exxon Mobil and their peers are spending about 67% less than they were in 2013 on exploring new oil territories, said Hassan Eltorie, an executive director at S&P Global Commodity Insights. And, in Houston, the impact of those cuts have been significant.

The industry’s share of the city’s overall workforce is falling as the companies consolidate, produce more oil with fewer employees and spend less on long-term prospects. Oil and gas companies — including those that work in the oil field, transport oil and gas through pipelines and process it into gasoline and chemicals — employ about 290,000 people in Houston. That’s down from roughly 350,000 jobs at the industry’s employment peak in 2014, said Patrick Jankowski, the Greater Houston Partnership’s longtime chief economist and senior vice president for research. In 2014, the industry employed more people than any other segment of the city’s economy, Jankowski said. Now, it’s the fifth largest employer, overtaken by health care, retail, hospitality and government. Still, the industry is producing more domestic oil than ever before. “Even though employment in Houston is down by a fourth, domestic production is at an all-time high,” Jankowski said. “The industry’s just gotten more efficient at producing crude.” Shell declined to comment Thursday beyond the statement it provided earlier in the week, in which it said the company is working to reduce its operating costs by as much as $3 billion by the end of 2025. The initiative launched by the company’s new CEO, Wael Sawan, earlier this year aims to make Shell “a leaner overall organization,” the company said.