Skip to comments.Oilís new reign in Texas draws comparisons to the Kingdom
Posted on 02/18/2013 5:29:23 AM PST by thackney
The Lone Star State is earning a new moniker: Saudi Texas.
Oil production in Texas is soaring, jumping to an average 2.139 million barrels a day in November the best showing in more than 25 years.
Analysts are chalking up Texas booming production to shale plays, especially South Texas Eagle Ford, where production was minuscule just five years ago, along with a revival of West Texas Permian Basin.
Analysts are tossing around the words phenomenal, amazing and unprecedented when discussing the numbers.
Since production began in the Eagle Ford Shale, the states oil output has doubled and Texas share of domestic oil output has reached record highs, said Mark Perry, a professor of economics and finance at the University of Michigan-Flint and a scholar at the American Enterprise Institute in Washington.
Texas oil production has jumped by 71 percent in the last two years, Perry said, based on data from the Energy Information Administration, the Energy Departments statistics arm.
Its a huge, unbelievable increase, said Perry, who has used the term Saudi Texas in his blog, called carpe diem (Latin for seize the day).
To put Texas oil production in perspective, Perry compared it to North Dakota, the nations No. 2 oil-producing state. In November, Texas produced almost three times as much oil as North Dakota, home to the productive Bakken Shale.
Texas logged a 654,000-barrel-a-day increase in oil production in a 15-month period ending in November.
Thats like adding another Bakken formation to the U.S. oil supply, Perry said.
And the Permian Basin, once thought to be nearly played out, has reclaimed its status as a strong contributor to the states production.
Analysts credit the oil boom in Texas and across the country to advances in horizontal drilling and hydraulic fracturing. Improvements in efficiency are helping, too.
The oil boom is significant to the states economic base and to revenue for state government, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist Universitys Cox School of Business in Dallas.
Texas is benefiting from the high salaries paid to workers in oil- and gas-related industries. Their annual pay averaged $112,000 in 2011, more than twice the average of $47,000 for all Texas workers, according to Bureau of Labor Statistics data.
Oil and gas workers represent just 4 percent of all workers in the state, but when you have a salary thats approaching three times the average, that shows you the impact on the states economy, Bullock said.
Also, oil field jobs have a relatively high multiplier effect, creating four other jobs for every one directly related to petroleum. That doesnt even count service jobs, such as restaurant employment added to serve oil field workers, he said.
Severance taxes Texas tax on oil and gas production and local property taxes also have risen with the oil production, Bullock said.
Oil and gas deposits in the states rainy day fund were almost $1.9 billion for fiscal year 2013 that began Sept. 1 representing almost one-fourth of the funds $8 billion. Theyre estimated to be $1.7 billion in fiscal 2014 and $1.8 billion 2015.
Those numbers dwarf 2011s deposit of $451 million, when Eagle Ford production was just starting to have an effect.
Whether the state can get a firm grip on the Saudi Texas handle is a matter of dispute. Experts differ on the expected longevity of Texas black gold boom.
State Comptroller Susan Combs noted last month that the continued lack of vitality in major world economies will ultimately affect Texas regardless of how salutary the current oil and natural gas related activity is to our state.
SMUs Bullock, though, is optimistic that oil prices will remain relatively high and that will continue to encourage drilling.
Prices will go up and down for oil, but as long as the world economy maintains some modicum of growth in China and India and other developing countries, oil prices arent going to dip too far.
The Dallas-based petroleum consulting firm, Turner, Mason & Co., noted in a report last week that the shale oil revolution is accelerating. More crude oil is being tapped than was projected just a year ago, the firm said.
Senior consultant John Mayes at Turner, Mason said the general expectation is that shale plays such as the Eagle Ford wont be as productive for as long as reservoirs like the Permian Basin have been.
Yet the Eagle Fords production is expected to last a couple of decades more, he said. And remember that the way technology evolves, the life of the field could extend longer than originally anticipated.
Texas Field Production of Crude Oil
If there is so much oil and gas around, why does it cost $3.61/gallon of gasoline?????
Because there is so much demand for it.
We still import more oil than we produce ourselves.
We import more from OPEC than we produce in Texas, North Dakota, Alaska and California taken together.
Oil is a also a globally priced commodity. Relative to its cost, it is cheap to transport it around the world.
I get a 404 on the link but the story sounds about right, we’re booming.
Try clicking on “Home” - the article will come right up!
The Eagle Ford is definitely an economic boom to the area and the state in general. We’re starting to see a lot of drilling rigs moving to the west Texas Permian basin which some analysts say has the potential to be at least 10 times larger than the Eagle Ford. I hope so but not crazy about moving to west Texas...LOL. Another couple of years of this and I’m retiring if the obamanation at bay.
That apostrophe appears to be messing with posting the link correctly.
Top of the page now. It will likely be pushed down as articles come in.
Far more rigs are already in West Texas than the Eagle Ford.
Click below for an interactive map to locate rigs.
May God continue to richly bless Texas!
Printing money devalues the dollar.
This is the money statement of the article:
“Also, oil field jobs have a relatively high multiplier effect, creating four other jobs for every one directly related to petroleum. That doesnt even count service jobs, such as restaurant employment added to serve oil field workers, he said.”
You would think the federal govt. would want to encourage something that has such a huge impact on the economy and employment rate.
Because drilling sideways and fracing costs a whole lot of money. It costs even more when you have inexperienced people doing it. The waste is terrible.
In real dollars gasoline isn’t much higher than it was a long time ago but it is higher.
As much as you pay for stuff the industry pays the same and usually more just because it is the oil industry.
BTW, those average wages that are double the $47K average for Texas... by the hour they work out pretty close to the same. The oilfield is very little time off until the job is done and the boom is over. This one has just lasted a long time. Longer than most.
Shale production in the Baken declines at about 37% per year only drilling like mad men keeps it rising by keeping the new wells coming on line. Unless more rigs are added the rate of increase will eventually fall then stop and then the decline will begin. Until then it is good news.
If you click on the following link:
You can select the state at the bottom and get which ones are active in the State. There is a decent sized cluster of drilling in the South East Corner of New Mexico.
Where are the guys who were pimping ‘peak oil’ on FR a few years ago?
Click below for an interactive map to locate rigs.
Yep. The boss was talking about this just the other day.
We’re putting plans together right now to move crews to west Texas here shortly. We will continue our presence here in the Eagle Ford to service our existing business, but it sounds like we’re gearing up for out there.