The Texas Alliance of Energy Producers’ Texas Petro Index (TPI), a composite index based on a comprehensive group of upstream economic indicators, recorded its fourth consecutive monthly increase in March, indicating the Texas upstream economy “has embarked upon a new cycle of expansion.”
The TPI improved to 160.4 in March, capping off a first quarter that benefited from year-over-year increases in oil and gas prices, drilling activity, issuances of drilling permits, and oil and gas production value.
However, the TPI is only about half the value of the record TPI of 313.5 in November 2014 and still has not caught up in other economic indicators, TAEP noted. Employment is increasing but still lags behind last year after the loss of more than 100,000 upstream jobs. An estimated 9,000 jobs have been added back since reaching the low point in September 2016.
“We still have a long way to go,” commented Karr Ingham, economist and TPI creator. “But 2017 is going to be a year of recovery and expansion in the Texas statewide oil and gas exploration and production economy. Activity levels will continue to expand, jobs will continue to be added, and the industry will support the broader state economy again, rather than acting as a drag on growth as it has for the prior 2 years.”
During the first quarter, the statewide working rig count averaged 368, up 43.5% from first-quarter 2016. The Texas Railroad Commission issued 3,257 drilling permits, up 104.3% year-over-year.
Producers recovered an estimated 291.4 million bbl of crude, down just 3% year-over-year. Natural gas production totaled 1.93 bcf, down 7.5% year-over-year.
Crude wellhead prices averaged $48.47/bbl, up 60.8% from first-quarter 2016, boosting the estimated value of Texas-produced crude oil by 55.5% to $14.1 billion. Gas prices averaged $2.88/Mcf, up 51.7% year-over-year, increasing the estimated value of Texas-produced natural gas by 40.2% to $5.55 billion.
About 199,000 Texans on average were employed in the oil and gas production, drilling, and service sectors during the quarter, down 6.1% year-over-year.