HOUSTON—Texas oil and gas production in 2018 is set to eclipse the all-time production records, according to economist Karr Ingham. During a recent Texas Alliance of Energy Producers luncheon, the Texas Petro Index (TPI) creator detailed his crude oil production prediction for 2018.
The TPI, he said, marked its 13th consecutive increase in December 2017 by improving to 188.8, roughly a 25% increase from the December 2016 TPI of 151.2. Crude oil production totaled nearly 110.8 million barrels (MMbbl) in December 2017, marking a 14.4% from December 2016.
The EIA said 2016 was a rich year for Texas as it reports it was the leading oil-producing state in that year with the production of more than one-third of the nation’s crude oil—a record Ingham believes Texas is on the path of vastly surpassing.
“Now we are on the cusp again of blowing by production records from the 1970s, both in Texas and nationally, just in the next few months,” Ingham said.
Texas producers recovered an estimated 1.22 billion barrels (Bbbl) of crude oil causing a 5.3% increase from the 1.16 Bbbl recovered in 2016, according to Ingham.
The estimated value of Texas-produced crude oil exceeded $58 billion in 2017 compared to the $46.1 billion achieved in 2016; the result of a crude oil wellhead price increase of 19.3% in 2017.
He added that roughly 212,020 Texans were employed in the oil and gas production, drilling and service sectors. This was a 6.6% increase from the average 198,810 employed in 2016.
Ingham’s TPI highlights also show that the value of Texas-produced crude oil amounted to more than $5.95 billion in December 2017 due to oil prices averaging $53.75 a barrel—a 26.2% increase from December 2016.
With crude oil prices being “all over the map”, Ingham said that factor could facilitate the risk of crude oil production outpacing demand. Ingham said it is possible—even likely—for all prior crude oil production records for Texas and the U.S. to fall in 2018.
“Crude oil prices [has had] a 80% decline; natural gas prices are worse now than they were a couple of years ago; rig count [has had] a 75% decline and drilling permits [has had] a 70% decline,” he said.
Despite the TPI being down 40% from its pre-downturn peak, he said 2017 was an important year of growth and recovery for the upstream oil and gas industry in Texas.
He added that his indicators, including oil production volume and value, rig count and industry employment, put 2018 on the fast track for record levels.
“At this point, there is every reason to believe 2018 will be another year of general growth and expansion in the Texas upstream oil and gas economy.”
Mary Holcomb can be reached at email@example.com.
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