Permian Petroleum Industry Remains On The Rise

By all measures, the Permian Basin’s oil and gas industry is on the rise.

The Texas Permian Basin Petroleum Index, on the rise since October 2016, was up 23.6 percent in August from

August 2016 levels, fueled by higher commodity prices and oil field activity, according to Karr Ingham, the Amarillo economist who prepares the index.

“Once again, only natural gas well completions are down compared to year-ago levels, with all other measures of regional upstream oil and gas activity vastly improved compared to the numbers in 2016,” he said.

August crude prices averaged $44.70, up 7.7 percent from $41.49 last August. The year-to-date average is $45.79, up 22.4 percent from the $37.40 averaged in the first eight months of 2016.

“Crude oil prices continue to post year-over-year increases through August, but that is in part because prices had declined in July and August 2016 after rising to over $45 a barrel in June on the heels of bottoming out in February,” Ingham said.

He said there has been little movement in crude oil prices in more than a year. After recovering to more than $45 a barrel in June 2016, posted prices have averaged only about $45 a barrel since then, he said.

“What we’ve seen, really, since last June, is prices go up, they go down, they go up, the go down. It all seems based on a few dollars either side of $45 a barrel,” Ingham said.

Until that trend changes, oil patch activity should remain steady, he said.

“It can’t be lost on us that the rig count has been flat the last few months,” he said. “To push activity levels up will require higher oil prices.”

The rig count averaged 318 rigs in August, up 98.8 percent from 160 August a year ago. The rig count so far this year has averaged 285 rigs, up 101.9 percent from 141 rigs in the same period last year.

The Railroad Commission issued 690 drilling permits in August, up 74.2 percent from the 396 permits issued last August. The commission has issued 4,986 permit so far in 2017, up 79.4 percent from 2,779 a year ago.

Oil patch employment jumped 7.8 in August from last August with the addition of about 2,100 new jobs and has averaged a 5.7 percent increase so far this year over 2016.

Operators completed 321 oil wells in August, up 10, or 3.2 percent, from 311 last August. Operators have completed 2,431 wells so far this year, down 25.8 percent from 3,275 last year.

That level of activity boosted production volumes 6.6 percent from last August and 8.4 percent so far this year. Stronger commodity prices sent production values up 14.8 percent to $2.36 billion from $2.06 billion last August. Production values so far this year total $18.9 billion, up 32.4 percent from $14.29 billion last year.

Natural gas prices averaged $2.66 per Mcf, up 0.8 percent from $2.64 last August. Prices are averaging $2.75 so far this year, up 31.3 percent from $2.09 a year ago. Ingham noted that prices a year ago fell by more than 20 percent on average through August compared to 2015 levels.

Operators completed seven natural gas wells in August, down 61.1 percent from 18 last August. Operators have completed 97 natural gas wells in 2017, down 33.1 percent from 145 last year.

Natural gas volumes were up 10.7 percent from last August and are up 9.8 percent so far this year compared to 2016 levels. The production values in August totaled $480.8 million, up 11.5 percent from last August’s $431.2 million. Values so far this year are $3.77 billion, up 43.5 percent from $2.63 billion last year.

Source: Midland Reporter Telegram