More than 85 percent of Exxon Mobil’s drilling permits were in the Permian Basin. Diamondback Energy and Occidental Petroleum were the second and third biggest drillers in the West Texas shale play.
The Texas energy sector has managed to add jobs and increase oil and gas production in the past 12 months despite lower oil prices, but fears of a slowdown loom for the rest of this year and into 2020, according to a midyear “State of Energy” report.
The new report from the Texas Independent Producers & Royalty Owners Association highlights the industry’s ability to advance technologically and gain efficiencies, but it also warns that slowing activity levels and economic headwinds could make for a challenging future – at least in the near term.
Global oil demand growth is slowing, crude prices are muted, and a driving force behind all of this – the U.S.-China trade war – has shown more recent signs of escalating rather than settling.
“Unless these issues can be resolved, the United States could experience a slowdown in domestic production growth and an insufficient number of wells to offset the decline rate in the short-term,” said TIPRO President Ed Longanecker.
Production volumes from onshore shale wells can slow rapidly after the first couple of years, so new drilling is required to keep pace and prevent total production outputs from declining.
Still, the report mostly focused on the positives. Despite a partial industry slowdown in 2019, the Texas energy sector has gained nearly 10,000 jobs in the past 12 months, representing a total of more than 365,500 direct jobs for the state, the report said.
Texas is producing a record-high 5 million barrels of oil per day, while the booming Permian Basin, including southeastern New Mexico, is churning out about 4.4 million barrels daily. The federal government estimates the U.S. is producing a new record of 12.5 million barrels a day.
The Permian now accounts for nearly two-thirds of Texas oil production, TIPRO said.
Essentially, the industry has learned to do more with less. Rigs can drill more wells from single locations more quickly, while also drilling increasingly deeper wells horizontally. Of course, fewer rigs also mean fewer people over time.
“Technological advancements continue to make oil and gas operations more efficient, allowing Texas to achieve record-setting production of oil and natural gas despite a dip in drilling activity,” Longanecker, said.
The U.S. oil benchmark settled Thursday at $56.71 per barrel, well down from nearly $70 per barrel a year ago. The last time the U.S. oil price sniffed $70 was in mid-October.
The numbers of rigs actively drilling in Texas dipped below 450 rigs in August, down from more than 525 rigs a year ago. But Texas still represents nearly half of the nation’s total.
And, in July, the state issued a total of 912 new well permits, down from 1,001 issued in June, and from 1,153 approved in July 2018. The number of wells brought into production also dipped in July to 699, compared to 940 over the same time last year, TIPRO said.
Total well completions are down 12 percent in 2019 compared to this point a year ago, the report said.
Read it from Chron – Photo as posted on Chron ( Lilis Energy)