Recovery of the upstream oil and gas business in Texas continued for a fifth consecutive month in April, recording its first year-over-year increase in 27 months, according to the Texas Alliance of Energy Producers’ Texas Petro Index (TPI).
A composite index based on a comprehensive group of upstream economic indicators, the TPI improved to 164.8 during the month from 160.4 in March and 164.3 in April 2016. Before the recent economic downturn, the TPI peaked at a record 313.5 in November 2014, which marked the zenith of an economic expansion that began in December 2009 when the TPI stood at 187.4.
Among TPI indicators logging year-over-year gains in April were oil and gas wellhead prices, the rig count, well-permitting activity, oil production, the value of Texas-produced oil and gas, and total upstream oil and gas employment, which registered its first year-over-year increase since February 2015.
“Texas producers are responding to higher wellhead prices that have resulted from coordinated efforts by [the Organization of Petroleum Exporting Countries], Russia, and others to curtail oil production,” explained Karr Ingham, economist and TPI creator. “But in large part, production growth in Texas and the US is keeping a lid on crude oil prices, which continues to frustrate parties to that agreement,” he said.
Ingham said the volume of crude being exported from the US—about 1.3 million b/d—is only slightly less than the volume of the production curtailment agreement among OPEC and certain non-OPEC countries has been able to remove from global markets. “Producers in Texas and across the US will gladly take the market share given up by nations that attempt to manage oil markets and prices by centralized decisions to manipulate production,” he said.
Crude production in Texas during April totaled more than 99.55 million bbl, up 2.3% from the April 2016 total. With oil prices in April averaging $47.62/bbl during the month, the value of Texas-produced crude amounted to $4.7 billion, up 27.9% year-over-year.
Gas output surpassed 651.8 bcf, a year-over-year decline of 4.5%. With gas prices in April averaging $2.95/Mcf, the value of Texas-produced gas increased 44.1% to $1.92 billion.
The Baker Hughes Inc. count of active drilling rigs in Texas during April averaged 425 units, up 116.8% from the April 2016 count. The number of original drilling permits issued was 909, up 33.1% year-over-year.
An estimated average of 204,550 Texans remained on upstream industry payrolls, 2.7% more than in April 2016 and 33.2% fewer than the estimated high of 306,000 in December 2014. “Upstream oil and gas companies have added more than 12,000 jobs in Texas in the past 6 months, providing growth momentum to the state economy rather than a drag as was the case for the better part of 2015 and 2016,” Ingham said.