What is Houston's future?

Houston, we have a problem...in future. Not yet. I think this is
the kind of news we will see more often in future.

Big Oil's New Lean Look: 'Glory Days' May Be Over

But recent downsizing moves by Royal Dutch Shell, ConocoPhillips and other oil and gas companies appear to go beyond the typical bottom-of-the-cycle belt tightening.

They suggest a permanent shift toward doing more with less -- in what could be a troubling trend for Houston.

"The oil and gas industry in the Houston area has probably seen its peak in terms of, if you want to call it, its glory years," Allen Brooks, managing director at Parks Paton Hoepfl and Brown, a Houston investment bank that invests in the energy sector.

Last month, Shell said by year end it would cut 5,000 employees, or 10 percent of its global workforce, under a sweeping reorganization. ConocoPhillips -- after cutting 4 percent of its workforce this year -- is putting $10 billion in assets on the block to pay debts. BP, meanwhile, has cut more than 5,000 jobs worldwide under an ongoing turnaround, and major oil field services firms like Schlumberger and Halliburton have eliminated thousands more jobs this year.

While not all the job losses have been in Houston, the moves highlight a growing emphasis on getting lean to compete in a world where the costs and challenges of accessing new oil and gas reserves are rising each year.
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Some oil and gas jobs will inevitably return as the recession lifts and global energy demand rebounds. And Houston will remain a key hub of activity, buoyed in coming years by deepwater projects in the Gulf of Mexico, increasing activity in natural gas shale plays in North America and other work.

But other jobs may never come back to Houston, the casualties of a shrinking workplace, technology improvements and a shifting focus from North America to oil-rich areas of Africa, the Middle East and South America.

"How rapidly we decline," Brooks said, "is open to a lot of debate."

One factor could be the fate of climate change legislation in Congress, which could add costs to oil and gas producers, refiners, chemical makers and other parts of the energy sector, forcing them to cut jobs, Susan Combs, Texas comptroller of public accounts said.

"I think there's a big bull's-eye painted on Houston," she said.