Permitting, employment reflect growth of oil and gas economy
HOUSTON --The oil and gas economy in Texas in February – led by an increase in employment and drilling for oil – increased over last month and February of 2012, according to the latest Texas Petro Index (TPI).
“The Texas Railroad Commission issued 1,744 drilling permits in February, which is about 3 percent fewer than in February 2012,” said Karr Ingham, the economist who created the TPI and maintains it monthly. “But combined with permits granted in January (1,978), the Commission issued 3,722 permits through February. That’s 10% more than in January-February last year and the strongest start to a year in the entire history of the TPI.”
Ingham described as “stunning” a sharp increase in oil and gas industry employment in Texas indicated by an annual revision in state employment data, concluded in March.
“Before the revision, the TWC estimated that total upstream oil and gas employment in Texas was slightly more than 250,000 at yearend 2012;” Ingham said. “Following the revision, the number of Texans estimated to be working in the upstream sector of the upstream oil and gas industry at the end of the year increased to more than 267,000.
“Employment at companies in the ‘support activities’ category, which includes drilling and service companies, accounted for all of the jobs added to oil and gas company payrolls in 2012, highlighting the importance of the exploration function in industry job creation,” Ingham said. “The implication is that the oil and gas industry in Texas--which was easily the most vibrant job-creating industry in the state--was even more so in 2012. The updated jobs data suggest the industry has been an even bigger part of the Texas economy in 2012, and a bigger part of the U.S. national exploration-and-production picture than was indicated by the original estimates.”
A composite index based upon a comprehensive group of upstream economic indicators, the Texas Petro Index in February 2013 increased to 275.0 from 274.5 in January and 270.9 in February 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 TPI peaked in the current cycle at 275.5 in August 2012.
Among TPI indicators during February:
• Crude oil production in Texas totaled an estimated 50.6 million barrels, about 3.9 million barrels (8.3 percent) more than in February 2012. Crude oil wellhead prices averaged $91.90/bbl, about 7.0 percent less than in February 2012. Production gains more than offset lower prices to increase the value of Texas-produced crude oil by 0.7 percent, to more than $4.6 billion.
• Estimated Texas natural gas output was about 528.7 billion cubic feet, a year-over-year monthly decline of 12.5 percent. Natural gas prices averaged $3.27 per thousand cubic feet, about 26.3 percent more than in February 2012. Higher wellhead prices more than offset the production decline to boost the value of Texas-produced gas to more than $1.7 billion, 10.7 percent more than in February 2012.
• The Baker Hughes count of active drilling rigs in Texas averaged 833, 8.9 percent fewer than in February 2012, when 914 rigs on average were operating. 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 number of Texans estimated to be on oil and gas industry payrolls reached a record 270,300, according to statistical methods based upon Texas Workforce Commission estimates revised in March. Industry employment in Texas dropped to a low of 179,200 in October 2009 after reaching a high of 223,200 in October 2008 during the previous growth cycle.