Texas Petro Index: State’s crude oil production up 18% in 2012
By Joanne Liou, associate editor
A glimpse of Texas’ rig count and what those rigs are drilling for is showing a significant increase in oil production. “The tables have turned, and Texas has returned to its crude oil roots,” Karr Ingham, creator of the Texas Petroleum Index (TPI) and owner of Ingham Economic Reporting, said during a 2012 review of the TPI. The statewide working rig count averaged 899 last year, approximately 7% more than in 2011, and “today, about 78% of the working rigs in Texas are drilling for crude oil,” he said.
For the third consecutive year, Texas reached a double-digit percentage rate increase in crude oil production, boosting output by about 100 million bbls, or about 18 %, to 604 million bbls in 2012, according to the TPI report. Last year’s production volume is the highest since 1992, when producers recovered approximately 613 million bbls. “We are witnessing a tremendous, largely unforeseen crude oil production renaissance in the state of Texas,” Mr Ingham said.
Natural gas production is indicating a different trend in Texas. While the national natural gas production picture doesn’t look nearly as bad, “natural gas production in Texas is fairly, dramatically on the decline right now,” Mr Ingham said. Natural gas prices averaged $2.73/Mcf in 2012, down by approximately 31.5% from $3.99/Mcf in 2011, while crude oil prices averaged $90.58/bbl in 2012, down just slightly from $91.49/bbl in 2011, according to the TPI report.
Texas’ oil and gas workforce peaked in August 2012 with about 251,200 employees and has since declined, representative of a modestly declining rig count and declining permits that have been issued, Mr Ingham explained. The Texas Railroad Commission issued 22,479 drilling permits in 2012, one single permit fewer than in 2011. Overall, the number of Texans employed in the production, drilling and service sectors has increased by about 10% from 2011 to average about 248,642 in 2012.
The TPI ended last year at 270.0, up from 259.1 at the end of 2011. The index peaked in May at 273.4, along with the state’s rig count high of 932, and modestly declined for the remainder of 2012. TPI, a service of the Texas Alliance of Energy Producers, is a composite number based on economic indicators, including oil and gas prices, rig counts, drilling permits and production volume. The index began in January 1995 at 100.0 as the base.