Energy Index shows growth
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.