Texas natural gas value plummets by $1 billion

Texas natural gas production in September lost nearly $1 billion in value compared to a year earlier, as the natural gas price fell and producers turned their attention to higher-priced crude oil, according to a monthly report on state energy production.

The state produced $1.5 billion in natural gas last month, a 40 percent decline from the value of natural gas extracted in September 2011, according to the Texas Petro Index report released by the Texas Alliance of Energy Producers.

The analysis showed a general decline in energy industry activity in Texas, as the rig count fell, drilling slowed, and hiring moderated.

“This plateau is in no way a ‘crash,’” said Karr Ingham, who produces the monthly Texas Petro Index, in a written statement. “At mid-year, even though crude prices were recovering from an unexpected $30-per-barrel dip in the second quarter, we speculated that aggregate activity levels might well cool a bit over the balance of the year.”

There were 17 percent fewer drilling permits issued last month compared to September 2011. And the Texas rig count fell for three consecutive months, from a peak of 932 in June to 876 in September.

The Texas Workforce Commission estimates that the state’s oil and gas industry payroll fell from a record 251,600 in June to 247,200 in September. The industry employed about 234,700 Texans in September 2011.

Still, crude production is on the rise. Texas operators extracted 47.2 million barrels of crude oil in September, an 11 percent increase compared to a year earlier. The value of crude produced in the state grew 24 percent to $4.3 billion.

“It would be unlikely for producers to begin expanding activity again until crude prices indicate that market demand is rising,” Ingham said.

SHOW MORE