Texas Petro Index: Statewide oil production up 21% in 2013

Texas oil and gas producers achieved one of the upstream industry’s most successful years in 2013, according to the Texas Petro Index (TPI), as statewide crude oil production grew by about 21% in 2013.

The TPI, a composite index based upon a comprehensive group of upstream economic indicators, reached 295.0 in December, which is the fourth consecutive month that the TPI has reached new heights. The previous record was set in September to October 2008. Nearly all the growth in 2013 was crude oil-driven, but the bottom line 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,” said Karr Ingham, economist who created the TPI. “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.”

“By our estimates, statewide crude oil production grew by about 21% in 2013 compared to 2012, which in turn was up more than 34% compared to the prior year. And those increases are part of a trend that has been under way for several years,” Mr Ingham said.

The TPI ended 2013 up 6.7% 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.

“Crude oil production in Texas in 2013 totaled 856.8 million bbl, about 120% greater than the 389.9 million bbl of oil produced in Texas in 2007. In fact, the volume of oil produced in Texas in 2013 accounted for about 31% of all US oil production and is the highest statewide total since 1985,” Mr Ingham said.

Texas E&P highlights of 2013:

• The statewide working rig count averaged 835, about 7.1% less than in 2012.
• Texas Railroad Commission issued 21,471 drilling permits, compared to 22,479 permits issued in 2012.
• Producers recovered an estimated 856.8 million bbl of crude oil, a 21.2% year-over-year increase and the sixth consecutive year in which statewide production increased.
• The estimated value of Texas-produced crude oil increased by 27% to about $81.0 billion, with wellhead prices increasing slightly (4.2%) and production up nearly 150 million bbl.
• The estimated value of Texas-produced natural gas increased 29.6% to $28.56 billion, as wellhead prices increased 31.8% to reach $3.60/mcf while production declined slightly (1.0%).
• About 276,092 Texans on average were employed in the oil and gas production, drilling and service sectors during 2013, up about 6.4% compared to 2012 (average of 259,575). Upstream industry employment reached a record 282,700 in August before declining during the remainder of the year.

Among leading TPI indicators during December:

• The Baker Hughes count of active drilling rigs in Texas averaged 843, compared to 838 in December 2012. 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. The statewide rig count reached a 2013 peak of 848 in August.
• The number of Texans on oil and gas industry payrolls averaged 280,300, according to statistical methods based upon Texas Workforce Commission estimates, about 4.8% more than in December 2012. Industry employment in Texas reached a record 282,700 in August 2013, increasing from a low of 179,200 in October 2009. During the previous growth cycle, industry employment peaked at 223,200 in November 2008.