The Texas upstream industry continues to expand thanks to a more-stable oil market.
The Texas Alliance of Energy Producers’ Texas Petro Index (TPI), a composite index based on a comprehensive group of upstream economic indicators, showed a 10th straight monthly expansion in September. Albeit a modest month-over-month increase, the index rose to 181.4, up 21.4% from September 2016 and 22.4% from November 2016 when the TPI hit bottom at 148.2.
“Crude oil prices in Texas have been the essence of stability for more than a year,” said Karr Ingham, economist and TPI creator. “Demand is beginning to show signs of recovery and foreign oil suppliers led by [the Organization of Petroleum Exporting Countries] appear to be committed to maintaining announced production cuts.”
Ingham also noted a steady increase in upstream employment—another sign that oil and gas companies in Texas have continued to regain economic vitality since the last downturn.
An estimated 222,925 Texans remained on upstream industry payrolls, up 16.1% year-over-year but down 24.5% from the estimated high in December 2014. According to revised TPI estimates, the trough of upstream employment in Texas before the expansion ending December 2014 was 168,711 in October 2009. During the previous growth cycle, industry employment peaked at 211,127 in October 2008.
“Spurred by the little uptick in prices, Texas producers this year through September have recovered nearly 10.8 million bbl more oil than in the first 9 months of 2016,” he said. “It is uncertain how long the current pricing environment will continue and where we’ll go from here. But the momentum of the TPI indicates Texas producers will recovery a record volume of crude oil during 2018.”
Estimated September crude production in Texas totaled more than 103.4 million bbl, up 11.6% from September 2016. With oil prices averaging $46.06/bbl, the value of Texas-produced crude amounted to $4.76 billion, up 24% year-over-year.
Texas natural gas output declined 2.7% compared with September 2016 to slightly more than 639.4 bcf. With gas prices in September averaging $2.79/Mcf, the value of Texas-produced gas fell 5.6% to more than $1.78 billion.
Baker Hughes' count of active drilling rigs in Texas during September averaged 453 units, up 85.7% from September 2016. The number of original drilling permits issued was 903, up 21% year-over-year.
