Several energy experts believed that Texas oil and gas production would slow down in 2014 after a booming 2013, but the state's total output did the exact opposite and increased.
A new report from the Texas Petroleum Institute (TPI) and the Texas Alliance of Energy Producers (TAEP) found that within the next two years, oil production in Texas is estimated to exceed the all-time high benchmark set in 1972, Fuel Fix reported.
Karr Ingham, a lead economist for the TAEP, explained that oil production in Texas will continue to surge, while last year, he noted that state output levels would decline, the source reported.
Texas recovery numbers still growing
The latest June 2014 index report showed that Texas produced 89.75 million barrels of oil (bbl), which was 24.2 percent higher than the figures from the previous June. Not only did the production levels rise, but also the value of Texas crude oil grew to $9.1 billion, which was 37.1 percent more than June 2013. The state was able to recover 519.1 million bbl in the first six-month period of 2014 – a 23 percent increase from the first half of 2013.
“At yearend 2013, the prevailing expectation was that crude oil prices could soften modestly in 2014, and that might have been the case absent the tensions between Russia and the Ukraine and events in Iraq,” said Ingham, according to the source.
However, the production has not slowed down in Texas and has increased 17 times within the last 18 months, the source reported. Since December 2009, the volume of Texas crude oil has skyrocketed by 180 percent and the TPI has grown by 64 percent.
The price of a barrel of oil has increased to around $100 per bbl in June, but the price increase is only because of the growing amount of exploration in Texas's shale regions such as the Eagle Ford and the Permian Basin, Ingham explained.
Even though political tension in Iraq, Libya and Russia has increased the global price of a barrel of oil, Texas's production has kept U.S.'s levels relatively steady.
Texas is the leader of crude oil production
The U.S. Energy Information Administration (EIA) reported that Texas is currently the largest crude oil-producing state in the nation with nearly 26 petroleum refineries. Texas is producing around 4.8 million barrels per day (bpd), which represents more than 25 percent of the entire nation's oil output.
While Texas is the largest producer of energy in the U.S., it's also the biggest consumer, the EIA reported. Texas is prone to higher energy consumption levels because of the massive industry sector, hot climates and large population.
The industry sector alone accounts for nearly 50 percent of the state's energy demand. In comparison to the entire nation, the industry sector represents 32 percent for the U.S. as a whole.
Texas economy boosting
Ingham said that currently, the oil and gas industry represents 25 percent of the total taxes collected in Texas, Fuel Fix reported. He added that 92 percent of the active rigs are drilling for oil in the state, which is increasing production and the amount of work needed.
The energy executive said the president should be thanking Texas oil and gas for increasing the amount of domestic jobs and for energy completely boosting the economy, the source reported. Ingham added that oil companies are not simply getting richer from the production because they are putting money earned into more exploration to get the nation closer to energy independence.
“When oil companies get richer, they don't pocket their money,” said Ingham, according to Fuel Fix. “They invest in future projects. They drill. They pay people. That's how economic growth is generated.”
In 2014, the Texas Railroad Commission issued 11,860 drilling permits through the first six months, which was nearly 300 permits higher than the amount recorded in 2013, the Oil and Gas Journal reported. Since the start of the current expansion, the oil rig count has grown by 170 percent.
“All these signs point to continued petroleum-industry expansion in 2014 and crude oil pricing levels high enough to sustain that expansion,” said Ingham, according to the source. “In addition, the risk premium that has been propping up prices is quite likely to remain in place, if not escalate, which also supports continued industry economic expansion in the coming months.”
As production in Texas grows, original equipment manufacturers can look to Broadwind Energy for precision gearing needed to keep fracking equipment up to date.