There is something to be excited about in Texas if you ask leaders with the Texas Alliance of Energy Producers. The alliance released this week its midyear Texas Petro Index update on onshore oil and gas activity in the state, and figures showed that estimated crude oil production is up by about 15% for the first half of 2013, compared to same period last year, to 372.2 MMbbls. The value of Texas-produced crude surged about 10% to nearly US $33.7 billion. Led by the highly prolific Permian and Eagle Ford shale plays, Texas would be the 14th largest oil-producing country, if the state was a country, according to Karr Ingham, the economist who created the index. “You have the Permian producing 925,000 b/d and the Eagle Ford escalating to 540,000 b/d. That is just extraordinary.” What also is extraordinary is what the so-called shale revolution is doing in terms of employment. Take, for example, the month of June. In June 1985, oil and gas employment stood at about 134,000, according to the index indicators. That number skyrocketed to approximately 261,400 in June 2012, and climbed further to about 274,300 in June 2013. Ingham noted, however, that these figures are incomplete, and don’t include multipliers that account for indirect jobs created as a result of the oil and gas business. The amount of oil produced in June 1985 was about 45 MMbbl. Fast-forward to June 2012, and the production volume jumped to about 56 MMbbl and climbed to about 65 MMbbl for June 2013. Looking at gas production volumes, the index revealed a jump from about 468 Bcf in June 1995 to about 647 Bcf in June 2012. Low wellhead prices and a shift from gas-focused to oil-focused wells pushed the amount of gas produced down, so far, this year by 7.6%. Data presented showed about 3.7 Tcf/d of gas was produced for the first half of the year, compared to about 4 Tcf/d for the same timeframe in 2012. However, a closer look at the stats revealed casinghead gas, or gas produced as a byproduct of oil wells, jumped by nearly 20%, Ingham said. These impressive figures come thanks to the use of horizontal drilling and hydraulic fracturing, which Ingham said has become the new “f” word. Despite the tremendous unforeseen transformation the industry has seen in recent years, Ingham said it remains “horribly misunderstood and horribly unappreciated” by the lion’s share of the country’s populous. The industry has created tens of thousands of jobs on the heels of a recession in 2009, Ingham said. “If you have to experience a recession, you want to be the last in and the first out. We [Texas] were the last in and we were the first out.” The oil and gas industry was part of the reason. The boom has created thriving economies in Texas counties where virtually little activity previously existed. It also has brought growing pains such as constraints in housing and in schools, where teachers are needed to educate the children of oil and gas workers. But the oil and gas industry continues to play a major role in the Texas economy, which was the second fastest growing in the US for 2012, Ingham said. Texas had an annual growth rate of 4.8% based upon gross state product. “Only North Dakota achieved a higher rate of growth – 13.4% – which was virtually driven entirely by oil and gas activity in the state.” But he noted that the Texas economy is about 30 times that of North Dakota’s. Ingham predicted growth will continue for Texas’ energy sector. The Texas Petro Index is a composite index based on several upstream economic indicators, which include production volumes, prices, rig counts, completions, drilling permits, and employment. The index reached 284.2 in June 2013, up 3.4% from June 2012. Ingham believes the index will surpass its all-time high, 287.6 reached in September-October 2008, this year, given stable crude oil prices among other factors. “I think between now and the end of the year and moving into next year there has been little to suggest that we’re not going to see a continuation of modest growth,” Ingham said. Contact the author, Velda Addison, at email@example.com.
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