Texas Oil and Gas Economy on The Rise
April 24, 2018
As oil and gas producers maximize the benefits of advanced drilling techniques such as hydraulic fracturing (“fracking”) and horizontal drilling and take advantage of favorable pricing, the oil and gas economy in Texas is making impressive gains, driven largely by upstream production. While this presents opportunities to producers and investors alike, successfully navigating the current economic landscape often requires the advice and guidance of an experienced energy industry attorney.
The Texas Petro Index
Basically, the oil and gas industry is divided into three key sectors -- upstream, or exploration and production (E&P), midstream and downstream. The upstream sector involves underground or underwater oil and gas exploration, drilling exploratory wells and subsequently drilling operating wells to bring oil and gas to the surface.
The Texas Petro Index (TPI), a composite index comprised of a comprehensive group of upstream economic indicators, increased to 192.7 in January, up from 188.9 in December and 153.7 in January 2017. Although the TPI has made gains for 14th consecutive months, the index is still off its November 2014 peak of 313.5, prior to the last downturn in Texas’ oil and gas economy.
The TPI also highlights that estimated January 2018 crude oil production totaled approximately 119.5 million barrels (bbl), up by 21.9 percent from January 2017, surpassing all prior production volumes for the month of January. With oil prices hovering at $60/bbl, that’s a crude oil value of $7.2 billion -- more than 48 percent higher than last January. Meanwhile, natural gas production was also up by 2.7 percent while the number of both active drilling rigs and drilling permits issued continues to climb.
This is also a “kitchen table issue” given the fact that the energy production sector is a leading employer in the state, with about 226,000 Texans employed upstream, a gain of more than 15 percent, but still lower than the high of 295,000 in December 2014.
In sum, the upstream oil and gas economy continues to expand, buoyed by relatively favorable pricing and crude oil production at record levels. At the same time, growth comes with challenges such as negotiating energy contracts, managing risks, and adhering to state and federal energy and environmental regulations. By listing the services of an experienced energy and environmental attorney, you can take advantage of the opportunities in the oil and gas industry in Texas.