The health of the Texas energy sector declined for 10-straight months to close out 2019, even as oil and gas production steadily rose throughout the year, according to a new report from the Texas Alliance of Energy Producers.
An index measuring the strength of the Texas oil industry fell by almost 10 percent last year, showing a steady decline, but certainly not on par with the most recent oil bust of 2014-16, or even the shorter downturn in 2008.
Last year was defined by weaker oil and gas prices, job losses, plunging rig count and drilling activity, a smaller number of state drilling permits issued, and a dip in well completions through hydraulic fracturing, said Texas energy economist Karr Ingham, who heads the Texas Petro Index.
But things could be worse, he cautioned, with crude oil prices languishing in the range of $50-$60 per barrel. Plenty of exploration and production continue in Texas, especially in the Permian Basin.
“Unlike the previous two contractions, crude oil prices actually stabilized in 2019, helping to sustain higher levels of E&P activity than would otherwise be the case in a sharply declining price environment, and this helped to sustain industry employment on the operating-producing side of the industry employment ledger,” Ingham said.
The Texas rig count declined by almost 25 percent during the calendar year, but the 2019 average was down only about 10 percent from the 2018 average.
Texas’ crude oil production grew nearly 15 percent last year because of previous investments and improved efficiency, such as fewer rigs drilling more wells in close proximity.
Texas is producing a record 5.3 million barrels of crude oil per day, about 40 percent of the nation’s crude output. North Dakota ranks second with fewer than 1.5 million barrels a day and the Gulf of Mexico produces about 2 million barrels daily.
So Texas and U.S. consumers will continue to benefit from plentiful, affordable energy, Ingham said.
But with record output produced by fewer rigs and people, the connections between the industry and the state economy are drifting apart somewhat, even though they’ll remain closely linked, he said.
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