Natural gas is back. At least it is in Texas, according to the latest barometer of oil and gas activity in the state, which shows that higher wellhead prices have boosted the value of Lone Star state gas production this year through October by 36.5%.

Well completions underpinned surging crude oil production and recovering natural gas activity to lift the Texas Petro Index (TPI) to 293.7 in October, sustaining the Texas upstream oil and gas economy’s record run for a fourth straight month, according to Karr Ingham, the economist who compiles the monthly TPI data. The September index clocked in at 292.2 (see Shale Daily, Nov. 7).

“Crude oil-related activity has driven expansion of the upstream oil and gas economy in Texas for nearly three years,” Ingham said. “But higher wellhead prices for natural gas have boosted the value of Texas-produced gas this year through October by 36.5%, so the contribution of the gas sector is beginning to show up in the TPI.”

According to September data from the Railroad Commission of Texas (RRC), counties in the Eagle Ford Shale region of South Texas were four of the state’s top five oil-producing counties during the month, while North Texas counties were four of the top five gas producers (see Shale Daily, Nov. 27).

Data used to compile the TPI show that well site 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 RRC. However, oil well completions this year through October increased by 88.5% to reach 16,276, and gas-well completions were up 48.1% 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.”

Crude oil production in Texas totaled an estimated 76.6 million bbl, about 13.2 million bbl (20.8%) more than in October 2012. Crude oil wellhead prices averaged $97.19/bbl, about 13.0% 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%, to about $7.45 billion.

Estimated Texas natural gas output was more than 669.0 Bcf, a year-over-year monthly decline of 2.0%. Natural gas prices averaged $3.52/Mcf, about 22.2% 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% more than in October 2012.

The Baker Hughes count of active drilling rigs in Texas averaged 820, about 5.4% 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.

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% 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.

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. Industry employment in Texas reached a record of 282,700 last August, increasing from a low of 179,200 in October 2009. During the previous growth cycle, industry employment peaked at 223,200 in November 2008.