HOUSTON — While soaring production made 2013 a landmark year for Texas oil and gas, there are signs that a slowdown is approaching, according to economist Karr Ingham.
Texas oil production grew more than 20 percent in 2013, as the state pumped out more than 850 million barrels, Ingham said Wednesday during a presentation of the Texas Petroleum Index.
But rig counts in Texas fell slightly in the last three months of 2013, as did the number of jobs in oil field services. Drilling permits for 2013 also declined slightly from the previous year, Ingham noted.
The recent fall in oil field services jobs is a contrast from 2012, when employment for that sector grew 15 percent. The lower numbers could indicate that the industry is pulling back on production a little, expecting lower oil prices in the coming year, Ingham said.
“I think we will see a solid year for exploration and production activity, and that the oil and gas economy will continue to be a great benefit to the state as a whole,” Ingham said during the presentation at the Houston Petroleum Club. “But I don’t think we are going to see rates of growth like this.”
The Texas Petro Index jumped to its highest level since the financial crisis hit, driven by production growth and U.S. oil prices, which rose to an average of about $98 in 2013 from $94 in 2012. The index hit 295 in 2013, up from 277 for 2012.
Its previous peak of 287.6 occurred in 2008. It tumbled to 189 by the following year, but then began its current growth as the state’s energy boom launched.
The index, which Ingham created 10 years ago for the Texas Alliance of Energy Producers, provides a snapshot of industry trends using a range of economic indicators and data.
The growth in Texas crude largely occurred in the Eagle Ford Shale in South Texas and the Permian Basin in West Texas, Ingham said.
“It is the story of the old and the new,” Ingham said. “The old being the Permian Basin, which has turned around production in a behemoth of a region, and the new being the Eagle Ford.”
Oil field services: Pumps move to the Permian under market pressure
The Texas portion of the Permian Basin accounted for nearly 45 percent of Lone Star crude in 2013, up from 31 percent in 2011.
The Eagle Ford made up more than 25 percent of Texas oil produced in 2013.
The value of all oil and gas production in Texas reached nearly $110 billion for the year, the lion’s share of which came from oil.
“It is a spectacular outcome, because there is little help from the natural gas side of the equation,” Ingham said, noting that most of the current natural gas production is actually a byproduct of oil drilling activity.
He said while the current production is booming, the industry expects oil prices to flatten in the coming year, which also could flatten out 2014 production growth.
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