The Texas exploration and production (E&P) economy hit a record high in 2007, with the rig count climbing more than 10% from 2006, according to data compiled in the Texas Petro Index.

The index is a composite of 25 economic indicators for the Texas oil and natural gas industry, which is assembled by petroleum economist Karr Ingham. He noted that the state’s oil and gas production economy jumped by 8.1% in 2007. Total production value for oil and gas in Texas last year was “nearly $65 billion, a tremendous boost to the Texas economy,” he noted.

Oil and natural gas activity “increased once again in response to rising prices,” Ingham said.

According to the Petro Index, higher crude prices drove the Lone Star state’s E&P economy last year, with prices up 50% at year’s end. The index found that West Texas Intermediate (WTI) for November 2007 “surpassed $90,” and average WTI for the year was nearly $70/bbl. The state’s rig count responded, and “is now approaching 900 in Texas,” which is a double-digit increase over 2006.

“Even though most drilling in Texas is for natural gas (63% of well completions were gas well completions), rig count and drilling permits rose even though gas prices were basically the same in 2007 as in 2006,” which indicated to Ingham that the state’s producers were reacting to higher oil prices.

Also seeing a bump last year was E&P employment in the state, which was up almost 10% over 2006. “E&P employment makes up 2-3% of all Texas jobs, but the E&P economy in Texas comprises some 10-12% of the overall Texas economy, and directly accounts for over 20% of all state taxes,” Ingham said.

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