Texas Petro Index: Crude oil activity boosts state’s recovery, expansion

Posted on 25 January 2012

By Joanne Liou, editorial coordinator

Texas’ petroleum landscape continued the shift from natural gas toward oil as the state sustained a two-year recovery of the upstream oil and gas economy in 2011, according to a monthly index compiled by the Texas Alliance of Energy Producers. The Texas Petroleum Index (TPI) ended last year at 259.1, up from 229.9 at the end of 2010

In a year-end review of 2011, Karr Ingham, creator of the Texas Petroleum Index and owner of Ingham Economic Reporting, explains how Texas sustained a two-year recovery of the upstream oil and gas economy. The Texas Petroleum Index (TPI) ended 2011 at 259.1.

“That’s exactly two solid years of expansion, 24-straight month-to-month increases in the TPI,” Karr Ingham, creator of the index and owner of Ingham Economic Reporting, said. However, the index “has not yet managed to work its way back to where we were in the peak period in 2008, and that has essentially everything to do with the fact that we’re getting very little help, if any, on the natural gas side of the E&P equation in Texas. The effect of natural gas E&P in Texas is frankly staggering.”

The decline of Texas natural gas production is not in keeping with trends on the national level. “Texas is very responsive to gas price decline, and activity in the Barnett certainly did not shut down, but it slowed dramatically,” Mr Ingham explained. While US natural gas production increased slightly by about 3% to 4% in 2011 over 2010, Texas experienced a decline of 6% to 7%.

Texas’ petroleum industry continues to experience a shift in activity from natural gas to crude oil production in response to low natural gas prices.

The expanding crude oil activity more than compensates for the natural gas side, however. The statewide rig count, driven by oil or liquids-rich projects, continued its climb in 2011 and has already shown a positive number for 2012. “The January rig count has reflected an increase above 920,” Mr Ingham said, “and that trend should continue an upward march close to where our peak was in 2008.” Drilling activity in Texas peaked at a monthly average of 946 rigs in September 2008.

Oil drilling is also driving another component of the index – the number of drilling permits. Approximately 22,480 permits were issued in Texas in 2011, short of the 2008 peak of 24,000. However, in 2008, both natural gas and oil were contributors to the peak, whereas in 2011, “very few permits were issued for rigs that drilled for natural gas,” Mr Ingham said.

The industry expansion in oil activity has spilled over to boost employment numbers in the state as well. The direct industry jobs and the ripple effects of supporting jobs make up a significant share of Texas’ total employment growth. “On a conservative basis in Texas, for every industry job that is added, you could multiply that by about five,” Mr Ingham stated. The state surpassed its 2008 peak in terms of employment last year, employing more than 230,000 Texans in the oil and gas industry.

Last year marked the state’s highest crude oil production volume since 1998, at 453.3 million bbls, while natural gas output was 577.9 bcf, a year-over-year decline of 10.8 percent, and Mr Ingham expects Texas production to continue to trend toward oil in 2012 and beyond.

TPI, a service of the Texas Alliance, is a composite number based on economic indicators, including oil and gas prices, rig counts, drilling permits and production volume. The index began in January 1995 at 100.0 as the base.

Leave a Reply

*

FEATURED MICROSITES


Recent Drilling News

  • 31 October 2014

    Japan Drilling to operate new jackup under construction at Keppel

    The KFELS Super B Class design has a drilling depth of 35,000 ft. The rig's leg structure is designed to provide enhanced robustness for operations at 400 ft water depth...

  • 29 October 2014

    New intelligent water management solution based on oxidizer technology

    Nalco Champion has launched the RenewIQ line of oilfield water reuse solutions to help operators reduce freshwater consumption and associated handling costs...

  • 29 October 2014

    Baker Hughes launches all-electric intelligent well system

    Baker Hughes has commercially released its MultiNode all-electric intelligent well system. It allows operators to remotely monitor and control a greater number of production zones...

  • 29 October 2014

    Tercel collaborates with TOTAL to design MicroCORE PDC drill bit

    Tercel Oilfield Products has launched the MicroCORE cutting system at the 2014 SPE Annual Technical Conference and Exhibition in Amsterdam. The MicroCORE cutting...

  • 28 October 2014

    First extension well in pre-salt Libra leads to oil discovery

    The Libra consortium announced that the drilling of the first extension well in the Libra area, known as 3-BRSA-1255-RJS (3-RJS-731), has proven the discovery of high-quality oil...

  • Read more news