Texas oil production reaches highest levels since '85

Published on Wednesday, 29 January 2014 23:39 - Written by Staff Reports

The volume of oil produced in Texas last year accounted for about 31 percent of all U.S. oil production and is the highest statewide total since 1985, according to the Texas Petro Index released Wednesday.

Texas oil and gas producers achieved one of the upstream industry’s most successful years in 2013.

Crude oil production in Texas in 2013 totaled 856.8 million barrels, about 120 percent greater than the 389.9 million barrels of oil produced in 2007, according to the report.

The Texas Petro Index (TPI) is a service of the Texas Alliance of Energy Producers, the nation’s largest state association of independent oil and gas producers. The composite index, which is based on a comprehensive group of upstream economic indicators, reached 295.0 in December.

It was the fourth consecutive month it reached new heights. The previous record was set in September and October of 2008.

Nearly all the growth in 2013 was crude oil-driven, but the bottom line also received a boost from higher wellhead prices for natural gas.

“The statewide upstream oil and gas economy in July finally recovered fully from the nadir of December 2009 and surpassed the previous peak TPI (287.6) achieved in the late fall 2008,” Karr Ingham, the economist who created the TPI, said in a prepared statement. “Although most indicators of industry activity were higher at year-end 2013 compared to the prior year, the story of the year was crude oil production in Texas.”

Ingham said statewide crude oil production grew by about 21 percent in 2013 compared to 2012, which was up more than 34 percent compared to the prior year.

“And those increases are part of a trend that has been under way for several years,” he said.

The Texas Petro Index ended the year up 6.7 percent compared to December 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, Ingham reported.

The working rig count across the state in 2013 averaged 835, about 7.1 percent less than the year before. The Texas Railroad Commission issued 21,471 drilling permits, compared to 22,479 permits issued in 2012. Producers recovered an estimated 856.8 million barrels of crude oil, a 21.2 percent year-over-year increase and the sixth consecutive year in which statewide production increased, the report states.

The estimated value of Texas-produced crude oil increased by 27 percent, to about $81 billion, with wellhead prices increasing by 4.2 percent, and production up nearly 150 million barrels, the report states.

The estimated value of Texas-produced natural gas increased 29.6 percent to $28.56 billion, as wellhead prices increased 31.8 percent to reach $3.60/Mcf while production declined slightly, by 1 percent.

About 276,092 Texans on average were employed in the oil and gas production, drilling and service sectors during 2013. That’s up about 6.4 percent compared to 2012, when the average was 259,575. Upstream industry employment reached a record 282,700 in August before declining during the remainder of the year.