Stability has come to the Texas oil and gas exploration and production sector, which is a good thing for producers and for consumers, said the economist who compiles the state’s monthly Texas Petro Index (TPI).
“After languishing in the latter half of 2012, the TPI has begun 2013 by posting four consecutive monthly increases [see Daily GPI, May 3],” said economist Karr Ingham. “In April, the TPI logged its strongest gain of the year, rising to 279.5 from 277.7 in March, and up 1.8% from the April 2012 index of 274.5.”
Estimated Texas natural gas output in April was about 642.5 Bcf, a year-over-year monthly decline of 1.5%, according to the TPI. Natural gas prices averaged $3.90/Mcf, about 88.6% more than in April 2012. Higher wellhead prices more than offset the production decline to boost the value of Texas-produced gas to slightly more than $2.5 billion, 85.8% more than in April 2012.
Ingham said the TPI’s slow, steady growth this year contrasts with industry activity trends last year, when the upstream petroleum economy in Texas became overheated in the first-half of 2012 before cooling slightly in the second half. Growth in 2013 was mainly attributed to crude oil prices, drilling rig activity and well-permitting activity.
“Crude prices appear to have stabilized in the $90/bbl range; the rig count has posted modest increases; and the number of drilling permits issued through April exceeded the record-setting pace of 2012,” Ingham said. “These are not dramatic month-to-month increases. However, the outcome is that aggregate oil and gas exploration and production activity has stabilized at a very high level, absent the vagaries of either rapid growth or rapid decline.
“This scenario has been coveted by Texas producers for quite some time, and consumers will be better served by comparable stability in domestic energy markets. Clearly, there is danger in assuming this economic stability will always be the case. But it is the case for now.”
A composite index based upon a group of upstream economic indicators, the TPI in April increased to 279.5, up 1.8% from the same month in 2012. The TPI reached an all-time high of 287.8 in October 2008 and then declined to 188.5 in December 2009 before embarking upon the current growth cycle. The April TPI represents the peak in the current cycle.
In April, Crude oil production in Texas totaled an estimated 57.6 million bbl, about 4.54 million bbl (8.5%) more than in April 2012. Crude oil wellhead prices averaged $88.33/bbl, about 11.2% less than in April 2012. Production gains failed to offset lower prices, decreasing the value of Texas-produced crude oil by 3.6%, to about $5.1 billion.
The number of Texans estimated to be on oil and gas industry payrolls reached a record 274,200 in April, according to statistical methods based upon Texas Workforce Commission estimates revised in March.
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