According to Karr Ingham - the oil economist who created the Texas Petro Index - Texas is set for another oil boom.
The Texas Petro Index which is a composite based on several upstream indicators showed a December 2017 reading of 188.8, up from 151.2 in December 2016. The TPI has been rising for 13 months in a row.
While far below the peak of 314.2 back in November of 2014, it’s much better than 2016 readings.
Obviously, higher prices and more efficient production are chiefly responsible for the gains. Ingham did note, however, that oil price predictions are “all over the map” Still, he maintains that oil production in Texas - and across United States - will break the previous records.
In Texas alone, Ingham predicted total production of 1.423 billion barrels in 2018, or around 3.9 million bpd, beating its previous record of 1.263 billion barrels (3.46 million bpd), set in 1972.
According to a forecast by the Dallas Fed in a survey among oil executives conducted at the end of last year, if prices can stay above $60 a barrel, the result would be a strong rebound in oil and gas drilling in Texas as well as other southern states.
The Energy Information Administration’s (EIA) latest weekly petroleum status report showed daily production at 9.88 million bpd, of which 9.37 million bpd was from the Lower 48.
The authority’s drilling productivity report said that in January the average daily production in Texas’s two largest shale plays, the Eagle Ford and the Permian stood at 1.242 million bpd and 2.794 million bpd, respectively.
These are set to rise to 1.57 million bpd in the Eagle Ford and 2.87 million bpd in the Permian. However, new well production is also increasing in the two Texas plays.
Eagle Ford this averaged 1,200 bpd in January, but is expected to rise to 1,281 bpd in Feb, according to the EIA. Average new well production in the Permian was lower than this, at 628 bpd this month but expected to rise to 632 bpd in February.
Indeed, things are looking bright in Texas. But with volatile oil prices, how long it will last remains debatable.