En­ergy In­dex shows growth

The Oklahoman - - RETAIL - Busi­ness Writer jmoney@oklahoman.com BY JACK MONEY

Oklahoma’s oil and gas in­dus­try con­tin­ued a month­s­long string of growth in De­cem­ber, the lat­est Oklahoma En­ergy In­dex re­leased by the Oklahoma In­de­pen­dent Petroleum As­so­ci­a­tion shows.

An­a­lysts said the in­dex shows both ru­ral and ur­ban parts of the state con­tinue to ben­e­fit from that growth, as ac­tiv­i­ties pick up in oil and nat­u­ral gas fields and in­creased em­ploy­ment and gross do­mes­tic prod­uct boosts over­all eco­nomic strength.

The in­dex showed:

• The rig count re­mained sta­ble in a month-to-month com­par­i­son of Novem­ber and De­cem­ber, at 121. Com­pared to De­cem­ber 2016’s count of 82, it was up by 39.

• The in­dex re­ports there were nearly 49,000 peo­ple work­ing at en­ergy pro­duc­tion com­pa­nies in Oklahoma dur­ing De­cem­ber, com­pared to 42,600 the same month a year ear­lier. It also showed there were 22,800 peo­ple work­ing at en­ergy pro­duc­tion sup­port com­pa­nies, com­pared to 20,100 a year ear­lier.

Lynn Gray, di­rec­tor of eco­nomic re­search and anal­y­sis for the Oklahoma Em­ploy­ment Se­cu­rity Com­mis­sion, said state records es­ti­mate oil and gas em­ploy­ment climbed by about 15 per­cent, when com­par­ing De­cem­ber 2017 to the same time the pre­vi­ous year.

2017, Gray said, “was a pretty good year for oil and gas, cer­tainly much better than what we had in 2015 and 2016.

“And we also saw it in other in­dus­tries as well that are di­rectly tied to it, such as man­u­fac­tur­ing. Then you have the fact those salaries in oil and gas are higher, and those earn­ers sup­port a va­ri­ety of in­dus­tries just through con­sumer spend­ing.”

• West Texas In­ter­me­di­ate spot pric­ing for oil con­tin­ued to im­prove. Its De­cem­ber av­er­age was $57.88 a bar­rel, up more than $1 in a month-tomonth com­par­i­son and up nearly $6, year over year.

Nat­u­ral gas pric­ing, how­ever, con­tin­ued to slide. Its De­cem­ber av­er­age was $2.81 per thou­sand cu­bic feet, down 20 cents month-to-month and down 78 cents, year over year.

Tony Say, pres­i­dent of Oklahoma City-based Clear­wa­ter En­ter­prises, said the neg­a­tive trend on nat­u­ral gas prices has con­tin­ued into early 2018 and isn’t ex­pected to greatly change, look­ing for­ward.

“Weather hasn’t ma­te­ri­al­ized like we an­tic­i­pated for Fe­bru­ary,” Say said. “But what is caus­ing the prices to re­ally drop is the abun­dance of gas in Oklahoma.

“We are pretty much bust­ing at the gills with gas (es­pe­cially in western Oklahoma), and that’s re­flected neg­a­tively on gas prices.”

• The Oklahoma En­ergy Port­fo­lio, a value mea­sure­ment of pub­licly traded, Oklahoma-based oil and nat­u­ral gas busi­nesses, climbed in De­cem­ber com­pared to the pre­vi­ous month, but re­mained sub­stan­tially down com­pared to the same month a year ear­lier.

Still, an­a­lysts were an­tic­i­pat­ing a con­tin­ued recovery.

“The re­cent run-up in oil prices is a wel­come sur­prise,” said Rus­sell Evans, ex­ec­u­tive di­rec­tor of the Steven C. Agee Eco­nomic Re­search and Pol­icy In­sti­tute at Oklahoma City Univer­sity.

“While we ex­pect mar­kets to give up some of those price gains in the first half of 2018, we do ex­pect oil prices to stay above crit­i­cal lev­els nec­es­sary to main­tain ac­tiv­ity in Oklahoma’s oil fields.”

Chris Mostek, a se­nior vice pres­i­dent of en­ergy lend­ing for Bank SNB, ex­pressed sim­i­lar think­ing.

“The cur­rent price lev­els and abil­ity to hedge at higher prices are hav­ing a pos­i­tive im­pact on the in­dus­try’s cash flow,” Mostek said. “It cre­ates a con­tin­ued op­por­tu­nity to ad­dress debt lev­els and de­velop as­sets in Oklahoma.

Over­all, the Oklahoma En­ergy In­dex stood at 180.7 in De­cem­ber, up by 0.6 per­cent com­pared to Novem­ber and up 11.3 per­cent com­pared to De­cem­ber 2016.

The in­dex is a joint pro­ject of the Oklahoma In­de­pen­dent Petroleum As­so­ci­a­tion, Bank SNB and the Agee In­sti­tute.


A pulling unit po­si­tioned over a well near the Univer­sity of Oklahoma Health Sciences Cen­ter in Oklahoma City on Wed­nes­day il­lus­trates on­go­ing ac­tiv­ity in the oil and gas sec­tor of the state’s econ­omy.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.