Texas economy continues expanding with help from Eagle Ford
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ContributedJanuary 27, 2012 | 2,438 views | 1 comment
By Alex Mills
Even though natural gas prices crashed at the end of 2011, the Texas oil and gas industry continued to grow, according to the Texas Petro Index (TPI) year-end numbers for last year.
· Employment up;
· Crude oil production up;
· Drilling rig count up;
· Drilling permits up; and
· Tax revenue up.
The TPI ended 2011 at 259.1, marking the 24th consecutive monthly increase. The rate of expansion was 13.8 percent during 2011. Oil-price growth rose 20.4 percent in 2011, and oil prices in Texas averaged $91.05 per barrel ($/bbl), making 2011 the first year since 2008 in which the average annual price exceeded $90/bbl.
On the other hand, natural gas prices declined 7.6 percent in 2011 to average $3.99 per thousand cubic feet ($/Mcf). By the end of the year, natural gas prices fell below $3 and closed on Jan. 25 at $2.55. The estimated value of Texas-produced natural gas declined by 13.5 percent to $28.2 billion, as production declined 6.5 percent to an estimated 7.0 billion cubic feet (bcf).
The number of Texans employed in the oil and gas production, drilling and service sectors increased by an estimated 29,616, expanding industry employment by an estimated 15.2 percent. The number of Texans on oil and gas industry payrolls reached an estimated 237,500, according to the Texas Workforce Commission, ending a five-month string of record-setting reports that lifted estimated employment to 238,300 in November. The previous high--an estimated 223,200 workers following a revision to reflect new industry employment data for 2009 and 2010--occurred in October 2008.
“The powerful effects of supply and demand on the Texas upstream oil and gas economy were dramatic in 2011,” Karr Ingham, economist and author of Texas Petro Index, said. “Strong oil prices provided producers with an incentive to continue developing and producing more crude oil, while a glut of new natural gas supplies on North American markets drove down wellhead prices for gas and discouraged producers from investing in new gas capacity.
“I find it equally remarkable that oil and gas producers have added nearly 50,000 good-paying jobs in Texas in the past two years,” Ingham said.
The statewide working rig count averaged 838, increasing by more than 27 percent from December 2010 to December 2011. Also, Texas Railroad Commission issued 22,480 drilling permits, which is up 24.7 percent.
One of the most remarkable statistics is that Texas has turned around a 30-year decline in crude oil production. Producers recovered an estimated 453.3 million barrels of crude oil, a 7 percent year-over-year increase. Annual oil production in Texas increased for the fourth consecutive year in 2011.
The estimated value of Texas-produced crude oil production increased by nearly 29 percent to $41.5 billion as prices increased by $15.53/bbl and production grew by 29.7 million barrels.
Alex Mills is President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author.