Report says Texas is producing more oil with fewer people, rigs
Texas is producing more oil now than at any point in 2014 when oil was last priced above $100 a barrel, and the industry is doing it with far fewer workers and rigs, according to an index that tracks activity in the state’s oil and gas sector.
Oil companies extracted 110.5 million barrels of oil in Texas in February, exceeding the 109.5 million barrels produced in December 2014, the best month of the peak year of the last oil boom, according to the Texas Petro Index, a service of the Texas Alliance of Energy Producers, a trade group. Drillers achieved the milestone employing half the rigs and 25 percent fewer people than in 2014.
“The implications are striking: record crude oil and natural gas production at significantly lower prices, rig counts and number of industry workers,” said Karr Ingham, the economist who created and calculates the index. “It means that fewer employees are needed to produce
more crude oil in Texas and the U.S. than has ever been produced.”
The surge in production has been driven by increased efficiency, which allows companies to make money at lower prices, and the steady climb in oil prices. Crude surged to a three-year high Wednesday as tensions increased in the Middle East. Saudi Arabia said it intercepted a missile attack launched by Iranian-backed rebels in neighboring Yemen, while President Donald Trump threatened to strike Syria soon over its reported use of chemical weapons in the seven-year civil war.
Oil settled at $66.82 in New York, up $1.31, or 2 percent. That followed a jump of more $2 a barrel, or about 3 percent, on Tuesday.
The state’s oil industry has grown for 15 consecutive months after the worst oil bust in a generation, according to the Texas Petro Index, which tracks a variety of data. The plunge in prices from a peak of $107 a barrel to $26 in early 2016 and their slow recovery drove oil companies to find ways to produce crude more efficiently. Even with prices in the $65-a-barrel range, shareholders are pressuring companies to hold the line on costs and deliver returns, leading drillers to find all the efficiencies they can.
Today’s automated rigs are able to drill more wells from single locations and produce more oil per well by drilling longer horizontal laterals and using hydraulic fracturing, or fracking, to unlock the petroleum from shale rocks. Facing pressure from shareholders, companies also are reluctant to overspend.
Ingham’s index estimates oil and gas production employs about 215,500 people in Texas, more than last year’s 189,400 but well below the nearly 300,000 workers at the end of 2014. The U.S. oil rig count is down 50 percent from its peak of 1,609 in October 2014, before oil prices began plummeting.
His index calculates that in 2008, near the beginning of the shale boom, each Texan in the oil and gas industry accounted for about 2,000 barrels of crude. That average climbed to almost 6,000 barrels per employee by the end of 2016 and is now more than 6,150 barrels each.