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Eagle Ford: Oil, gas economy continues record run
Well completions in Texas underpinned surging Texas crude oil production and recovering natural gas activity to lift the Texas Petro Index (TPI) to 293.7 in October, sustaining the upstream oil and gas economy’s record run a fourth straight month.
“Crude oil-related activity has driven expansion of the upstream oil and gas economy in Texas for nearly three years,” said Karr Ingham, the economist who created the TPI and updates it monthly. “But higher wellhead prices for natural gas have boosted the value of Texas-produced gas this year through October by 36.5 percent, so the contribution of the gas sector is beginning to show up in the TPI.”
TPI indicators show that wellsite activities are beginning to reflect similar trends at both crude oil and natural gas wells. The rig count in Texas and applications for drilling permits both have declined this year compared to 2012, according to the Texas Railroad Commission. However, oil-well completions this year through October increased by 88.5 percent to reach 16,276 and gas-well completions were up 48.1 percent to 4,594.
“These trends indicate that Texas producers have become focused more on monetizing current assets by getting wells on production than drilling new prospects,” Ingham said. “In the current economic climate, gas wellhead prices are increasing and natural gas is regaining importance to the state.
“This is precisely how markets should work--a never-ending search for equilibrium under changing market conditions. Thankfully, gas prices are higher now than a year ago, but even at these price levels, gas still represents a great value to consumers.”
A composite index based upon a comprehensive group of upstream economic indicators, the Texas Petro Index in October 2013 increased to a record 293.7, up 6.2 percent compared to the same month in 2012. Before the current economic expansion, the TPI’s previous all-time high of 287.6 occurred in September and October 2008, after which the TPI declined to 188.5 in December 2009 before embarking upon the current growth cycle.
Among TPI indicators during October:
•Crude oil production in Texas totaled an estimated 76.6 million barrels, about 13.2 million barrels (20.8 percent) more than in October 2012. Crude oil wellhead prices averaged $97.19/bbl, about 13.0 percent more than in October 2012. Production gains and higher wellhead prices combined to boost the value of Texas-produced crude oil by about 36.4 percent, to about $7.45 billion.
•Estimated Texas natural gas output was more than 669.0 billion cubic feet, a year-over-year monthly decline of 2.0 percent. Natural gas prices averaged $3.52 per thousand cubic feet, about 22.2 percent more than in October 2012. Higher wellhead prices more than offset the production decline to boost the value of Texas-produced gas to more than $2.3 billion, 17.0 percent more than in October 2012.
•The Baker Hughes count of active drilling rigs in Texas averaged 820, about 5.4 percent fewer than in October 2012, when 867 rigs on average were operating. 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.
•The number of Texans estimated to be on oil and gas industry payrolls totaled 281,900, according to statistical methods based upon Texas Workforce Commission estimates revised in March. Industry employment in Texas reached a record 282,700 in August 2013, increasing from a low of 179,200 in October 2009. During the previous growth cycle, industry employment peaked at 223,200 in November 2008.
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