Crude oil production is continually breaking records in 2019 in Texas in spite of declines in well completions, e&p employment, drilling permits, and rig counts according to Texas Alliance of Energy Producers’ Texas Petro Index.
This is partly due to efficiencies by Texas oil and gas producers, with daily production exceeding five million barrels for the first time. Essentially, operators are making it happen with fewer resources.
“Typically, these E&P indicators decline during an observable, sustained contraction in oil and gas activity, but that doesn’t appear to be what we’re seeing now,” said Karr Ingham, petroleum economist for the Texas Alliance of Energy Producers and creator of the TPI. “I do think these decreases can partly – even largely – be attributed to the sharp and unexpected fourth quarter 2018 crude oil price declines, but clearly there are other forces at work. These have become increasingly evident over the course of the current recovery and expansion from the 2014-2016 industry downturn.”
Industry employment and production estimates suggest that for every one direct upstream o/g employee, about 700 barrels of oil are produced. That is compared to about 170 barrels per employee back in ’09.
After cyclically peaking in Dec. ’18, employment is waning (nearly 3,500 job losses from December to March ’19). In addition, the March estimate is down by more than 70k compared to the all-time peak employment total in Dec. 14.
“Given current price levels, which continue to improve, the Texas upstream oil and gas economy remains in expansion mode,” said Ingham. “But the nature of oil and gas economic growth in Texas is different in 2019 largely because it has become perfectly apparent that Texas oil and gas companies can produce more crude oil with fewer resources deployed.”