Texas economists and the Dallas Federal Reserve have newfound optimism for the oil and gas industry in Texas as rig count is on the rise, oil prices are rebounding, and employment in the industry shows gains:
According to Baker Hughes, which monitors the number of rigs in the field, the U.S. rig count bottomed in May 2015 at 404 active rigs. That figure stood at 524 for the week ending Oct. 7.
Oil and gas exploration, new oil exports allowed by Congress, and steady drilling activity in Texas has helped sustain the recovery of the energy sector:
Omar Garcia, CEO and president of the South Texas Energy & Economic Roundtable, or STEER, said that “there’s still activity in South Texas.”
But West Texas has led the recovery with close to 2 million barrels of crude oil being produced daily:
The same is not true in West Texas, where many oil companies have doubled down their investments in the Permian Basin that surrounds Midland and Odessa. It is one of the few shale plays where production has grown since mid-2014 and which the EIA says is near 2 million barrels a day of production.
Oil exploration in West Texas has been a reliable source of economic opportunity and prosperity as energy companies continue to make massive discoveries in the Permian Basin. The Permian Basin was described as a “home run in the longer term,” and should “surpass expectations” in the future:
The Permian currently produces an estimated 1.986 million b/d of crude oil, according to Platts Analytics’ Bentek Energy, which also projects the basin’s 2021 oil output at 2.184 million b/d. However, Bentek analysts say that estimate could rise as activity increases.
Richardson said oil prices signal a green light for development in 2017 even at a $52/b WTI average for the year, although a number of Permian-focused producers see $45/b as their pivot price for growth. His review of operator plans for next year also implies a 34% increase in capital spending, Richardson said.
As energy companies plan to invest more capital and explore more drilling opportunities in Texas, local communities across the state should expect more good paying jobs and invigorated economies.