The state’s oil and gas industry continued to strengthen in August, according to an index of key activity.
“The Texas Petro Index continued its march into record territory in August,” said economist Karr Ingham, who developed the index.
Strong crude oil prices and improving natural gas prices helped boost the index to 289.8, a record level that beat the old record, set in July, of 288.2. The latter number was revised upward from 287.7 because of ongoing revisions for the state’s oil production.
Ingham prepares the monthly index for the Texas Alliance of Energy Producers, an industry association. He began the index in January 1995 with a base number of 100.
The index measures growth in key parts of the state’s energy industry, including crude oil and natural gas prices, rig counts, drilling permits, oil and gas production rates and employment.
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In August, Texas crude oil production reached an estimated 71.1 million barrels, a 16.7 percent increase over the total for the same month one year ago.
Crude oil wellhead prices averaged $103.09 a barrel, almost 14 percent higher than the average for August 2012.
The production gains and higher wellhead prices boosted the value of Texas-produced crude oil by almost 33 percent, to $7.3 billion, Ingham said.
Natural gas prices averaged $3.48 per thousand cubic feet, about 14 percent more than the average price in the year-earlier period. Higher natural gas prices helped offset year-over-year production decline of 5.8 percent.
The value of Texas-produced gas rose to $2.25 billion, 7.5 percent more than in August 2012.
Production and high prices also boosted industry hiring, as oil and gas payrolls reached a record high of 282,700 jobs in August, according to statistical methods based on Texas Workforce Commission data.
“We’ve been in record numbers in terms of industry employment for some time now,” Ingham said.
The rosy picture occurred despite fewer drilling permits. State regulators issued 1,606 drilling permits during the month, the fewest for any August since 2009,? when oil and gas activity was in sharp decline.
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Fewer drilling permits could put downward pressure on drilling activity in the coming months, Ingham said, but he believes oil prices will remain high and support increases in the index.
“If prices remain above $100 a barrel or even in the $90-$95 a barrel range, the rig count will continue its steady improvement and drilling permits will stabilize or increase, and the industry will continue to add jobs.
“At this point all of that seems very likely,” Ingham said. “What would be a surprise now is if the index actually declined.”