The Texas upstream oil and gas economy grew in July for an eighth consecutive month after contracting during the previous 24 straight months.
The Texas Alliance of Energy Producers' Texas Petro Index (TPI), a composite index based on a comprehensive group of upstream economic indicators, increased during the month to 176.9, up 1.7% from June's revised TPI and up 14.9% from July 2016.
The July expansion reflected sizable year-over-year improvements in the rig count, drilling permits, and the value of Texas-produced crude oil and natural gas, along with renewed industry employment growth.
Karr Ingham, economist and TPI creator, noted that Texas and the US remain "the chief offenders" in thwarting a desired increase in crude oil prices by members of the Organization of Petroleum Exporting Countries and certain non-OPEC members, which have collectively agreed to curtail production to reduce world supply.
"Oil supplies remain plentiful because domestic producers are becoming increasingly efficient at producing crude oil at lower costs, so a $45/bbl oil market provides more incentive than in the past," he said.
Ingham sees few reasons for US oil production to decline in the current oil-price range, meaning "US 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. Where all of this may take us in terms of prices and global markets, no one knows."
The TPI peaked at a record 318.1 in November 2014, which marked the zenith of an economic expansion that began in December 2009 when the TPI stood at 190.2.
Estimated crude production in Texas during July totaled 103.5 million bbl, up 5.7% from July 2016. With oil prices in July averaging $43.10/bbl, the value of Texas-produced crude amounted to $4.46 billion, up 9.6% year-over-year.
Texas gas output in July amounted to nearly 700 bcf, a year-over-year decline of 3.5%. With gas prices during the month averaging $2.84/Mcf, the value of Texas-produced gas increased 2.3% year-over-year to nearly $1.9 billion.
The Baker Hughes count of active drilling rigs in Texas during July averaged 464 units, up 125.2% from July 2016. The number of original drilling permits issued in July was 1,011, up 60.2% year-over-year.
An estimated average of 212,667 Texans remained on upstream industry payrolls, up 9.9% from the revised average of 193,510 in July 2016 but down 28% from the estimated high of 295,168 in December 2014.
TAEP notes that monthly TPI values were revised modestly over the entire history of the analysis due to a shift in the way industry employment estimates are factored into the calculation of the TPI.