The growth in the energy sector is expected to continue to grow like gangbusters – led by Texas, according to Karr Ingham, a petroleum economist for the Texas Alliance of Energy Producers and creator of the Texas Petro Index, speaking at the Petroleum Club on the latest release of the index.
“We would be the 14th largest oil producing country on the planet, if Texas were a country,” Ingham said. “You have the Permian producing 925,000 barrels a day and the Eagle Ford escalating to 540,000 barrels a day – that is just extraordinary.”
The Texas Petro Index was established in 1995 and reflects growth in several elements that drive the energy industry, including crude oil and gas prices, the rig count, drilling permits, well completions, oil and gas production rates and employment in the industry.
The Permian Basin and the Eagle Ford have helped make Texas the producer of almost half of all crude oil and a quarter of natural gas produced in the United States, Ingham said.
“The Permian is still the big dog on the block, in Texas – and nationally,” Ingham said. “It means Texas will maintain its position as the big dog on the block nationally.”
The index has gone through a three-year period of growth, Ingham said, as shale drilling spurred production.
In October 2008, the 18-year-old index reached an all-time high of 287.5, driven by ‘extraordinary prices and a run up in activity in all these elements’, Ingham said.
The domestic economy contracted as the financial crisis deepened at the end of 2008, and the index bottomed out at 188.5 in December 2009.
Since that time, it has since steadily climbed to 284.2 as of June 2013, and looks poised for further increases, now only 1.2 percent shy of its all time high. Stability in crude pries at high levels, a strong rig count and a slower than expected decline in gas production are all contributing to the expected index increase.
“This expansion has been driven by entirely different factors from the 2008 run-up,” Ingham set, noting that both oil and gas prices have fallen dramatically from 2008. “The scenario has flip flopped.”
Areas of Texas where the growth is the most acute, such as Odessa in the Permian Basin, are having a difficult time keeping pace with the growth in production, and demand for employment in areas such as education, has also peaked.
The energy sector also contributes about 25 percent of all taxes collected by the state of Texas.
“That is an extraordinary burden that is carried on the shoulders of the Texas oil and gas industry,” Ingham said.
The oil boom has also created a growth frenzy in North Dakota, home to the Bakken Shale. The North Dakota led the nation in economic growth with a robust 13.4 percent in 2012. The Texas economy grew 4.8 percent in the same time period.