Texas oil and natural gas activity sustained a modest expansion in September, marking the 10th consecutive month of improvement, as the state's producers continue to recover, according to the Texas Petro Index (TPI), a barometer of upstream health.
The TPI reached 181.4 in September, a 21.4% increase compared with September 2016 and 22.4% higher than in November 2016, when the TPI reached a low point at 148.2, said economist Karr Ingham, who developed and maintains the index for the Texas Alliance of Energy Producers.
"Crude oil prices in Texas have been the essence of stability for more than a year," Ingham said. Average monthly oil prices in Texas have increased slowly but steadily since dipping to a low of $27.08/bbl in February 2016. "Demand is beginning to show signs of recovery and foreign oil suppliers led by OPEC appear to be committed to maintaining announced production cuts."
The number of workers producing oil and natural gas in Texas is steadily increasing, which is another sign that upstream oil and gas companies in the state have continued to regain economic vitality since the last downturn, Ingham said. The payrolls of companies producing oil and gas in Texas averaged 222,925 during September, about 30,900 more than the nadir of industry employment, about 192,000 in December 2014, according to the TPI.
According to revised TPI estimates, the trough of upstream oil and gas employment in Texas before the expansion ending December 2014 was 168,711 in October 2009. During the previous growth cycle, industry employment peaked at 211,127 in October 2008
"Spurred by the little uptick in prices, Texas producers this year through September have recovered nearly 10.8 million barrels more oil than in the first nine months of 2016," Ingham said. "It is uncertain how long the current pricing environment will continue and where we'll go from here. But the momentum of the TPI indicates Texas producers will recovery a record volume of crude oil during 2018."
In September, Texas estimated crude oil production totaled more than 103.4 million bbl, 11.6% more than in September 2016. With oil prices in September averaging $46.06/bbl, the value of Texas-produced crude oil amounted to more than $4.76 billion, about 24% more than in September 2016.
At the same time, natural gas output was 639.4 Bcf, a year-over-year decline of about 2.7%. With natural gas prices in September averaging $2.79/Mcf, the value of Texas-produced gas decreased about 5.6% to about $1.78 billion.
The Baker Hughes Inc. count of active drilling rigs averaged 453, 85.7% more than in September 2016, when an average of 244 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 in September was 903, about 21% more than the 746 permits issued in September 2016.