The number of active drilling rigs in Texas skyrocketed by 125.2% compared to a year ago to average 206 rigs in July.
During the same time frame, crude oil production grew by 5.7% to more than 103 million barrels per day (MMbbl/d). With the price for a barrel of West Texas Intermediate crude fetching an average of $43.10, the value of Texas’ crude oil was nearly $4.5 billion in July. That’s about 9.6% more than a year ago.
Meanwhile, the number of original drilling permits issued jumped more than 60% in July to 1,011, compared to July 2016.
The statistics, released Aug. 23 by the Texas Alliance of Energy Producers, were part of the driving force that led to another monthly increase for the Texas Petro Index (TPI), a composite index based on upstream economic indicators such as production volumes, commodity prices, rig counts, completions, drilling permits and employment.
The TPI for July was 176.9, the alliance reported this week. The TPI for November 2016 was 149.2.
So what’s behind the improvements?
Karr Ingham, the economist who created the TPI, points to the decision by OPEC and a Russia-led group of non-OPEC members to curb production. The move played a pivotal role in lifting oil prices and reducing the global oil glut. The OPEC and non-OPEC group agreed in late May to extend production cuts by about 1.8 MMbbl/d until March 2018, sacrificing market share.
While OPEC’s decision has led to lower inventories, including in the U.S., rising commodity prices gave some producers confidence to pump more.
“Oil and gas producers in Texas and across the U.S. responded swiftly to wellhead price increases that occurred when OPEC and other oil-producing nations agreed to curb output to fight excessive supplies on world oil markets,” Ingham said in a news release.
“OPEC production curtailments did not achieve the desired price outcome, and once again Texas and the U.S. are the chief offenders—and I say that with great pride,” Ingham said. “Oil supplies remain plentiful because domestic producers are becoming increasingly efficient at producing crude oil at lower costs, so a $45 per barrel oil market provides more incentive than in the past.”
However, that breeds more competition, which he believes will likely lead to falling U.S. oil production.
“But make no mistake about it, U.S. producers—and Texas producers, in particular—have backed OPEC and other producers around the world into a corner from which there seems to be no easy escape," Ingham added. “Where all of this may take us in terms of prices and global markets, no one knows.”
The report also showed the estimated average of Texas upstream oil and gas industry payrolls in July was 212,667, up 9.9% from a year ago. The gain is welcomed, but the number is still below the estimated high of 295,168 in December 2014.
Velda Addison can be reached at email@example.com.
DUG Haynesville: Tamboran Resources' Dick Stoneburner on LNG Markets [WATCH]
2023-03-29 - Tamboran Resources Chairman Dick Stoneburner discusses LNG market dynamics in Australia, Asia and the Gulf Coast at Hart Energy's DUG Haynesville Conference in Shreveport, Louisiana.
EU Countries Approve CO2-cutting Targets and Expanding Forest Carbon Sinks
2023-03-28 - European member states gave final approval for tougher national targets to cut emissions in some sectors and expand CO2-absorbing ecosystems.
Brookfield, EIG Consortium to Acquire Australia’s Origin Energy in Deal Worth $10.3 Billion
2023-03-28 - Brookfield plans to invest at least AUD$20 billion more during the next decade to construct renewable generation and storage facilities in Australia.
Validere Brings Onboard Karen Marsh as Senior Advisor of Carbon Strategies
2023-03-28 - A former senior environmental engineer for the EPA, Karen Marsh brings 15+ years of experience to her new role as Senior Advisor, Carbon Strategies for Validere.
ConocoPhillips to Raise Stake in Australia’s APLNG
2023-03-28 - ConocoPhillips currently holds a 47.5% stake in APLNG, one of the largest suppliers of natural gas to Australia’s East Coast. Origin and China’s Sinopec hold the remaining shares in APLNG.