Upstream oil and gas development in Texas rallied for the fifth straight month in April, according to the Texas Petro Index, which improved to 164.3 to post its first year-over-year increase in 27 months.
Among TPI indicators logging big year-over-year gains in April were wellhead prices for crude oil and natural gas, the number of drilling rigs at work, well-permitting activity, and the value of Texas-produced oil and gas. Joining those positive signs was total upstream oil and gas employment—which registered the first year-over-year increase since February 2015—and the volume of oil produced in Texas, which was up more than 2 percent compared to April 2016.
“Texas producers are responding to higher wellhead prices that have resulted from coordinated efforts by OPEC, Russia, and others to curtail oil production,” said Karr Ingham, the economist who created the TPI and updates it monthly. “But in large part, production growth in Texas and the U.S. is keeping a lid on crude oil prices, which continues to frustrate parties to that agreement.”
Ingham said the volume of crude oil being exported from the U.S.—about 1.3 million barrels per day—is only slightly less than the volume of crude the curtailment agreement has been able to remove from global markets. “Producers in Texas and across the U.S. will gladly take the market share given up by nations that attempt to manage oil markets and prices by centralized decisions to manipulate production.”
A composite index based upon a comprehensive group of upstream economic indicators, the Texas Petro Index in April was 164.8, up from 160.4 in March and a slight 0.3 percent higher compared to the April 2016 TPI of 164.3. 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.
TPI Highlights in April:
- Estimated crude oil production in Texas totaled more than 99.55 million barrels, 2.3 percent more than in April 2016. With oil prices in April averaging $47.62/bbl, the value of Texas-produced crude oil amounted nearly $4.7 billion, about 27.9 percent more than in April 2016.
- Texas natural gas output surpassed 651.8 billion cubic feet, a year-over-year decline of about 4.5 percent. With natural gas prices in April averaging $2.95/Mcf, the value of Texas-produced gas increased about 44.1 percent to about $1.92 billion.
- The Baker Hughes count of active drilling rigs in Texas averaged 425 units, 116.8 percent more units than in April 2016 when an average of 196 rigs were working. Drilling activity in Texas peaked in September 2008 at a monthly average of 946 rigs before falling to a trough of 329 in June 2009. In the economic expansion that began in December 2009, the statewide average monthly rig count peaked at 932 in May 2012 and June 2012.
- The number of original drilling permits issued was 909, about 33.1 percent more than the 683 permits issued in April 2016.
- An estimated average of 204,550 Texans remained on upstream oil and gas industry payrolls, about 2.7 percent more than in April 2016 and about 33.2 percent 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 six 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.) According to TPI estimates, the trough of upstream oil and gas employment in Texas before the expansion ending December 2014 was 184,640 in October 2009. During the previous growth cycle, industry employment peaked at 225,965 in October 2008.
About the TPI: The Texas Petro Index is a service of the Texas Alliance of Energy Producers, the nation’s largest state association of independent oil and gas producers.