Texas achieved record natural gas and oil production in 2023 despite lower prices for both commodities, falling rig counts, and fewer drilling permits issued versus 2022, said the Texas Alliance of Energy Producers.
The group, which represents the state’s independent exploration and production (E&P) firms, said its Texas Petro Index (TPI) fell in December for the 11th straight month to 154.4, down 13.4% year/year.
The TPI is a monthly measure of growth rates and cycles in the state’s upstream oil and gas economy, based on indicators including wellhead commodity prices, drilling permits, well completions, production and employment.
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“Rising crude oil and natural gas production and still-growing industry employment were unable to offset lower prices, fewer rigs at work, and lower values of statewide production, pushing the TPI downward in 2023 after the January peak,” said the Alliance’s Karr Ingham, petroleum economist. “But Texas oil and gas producers, with extraordinary efficiency and productivity gains on full display, still managed to grow production significantly, setting new records for statewide output along the way.”
Operators have improved efficiency by drilling longer laterals and adopting new completion techniques such as simultaneous fracturing.
NGI’s Henry Hub bidweek price averaged $2.738/MMBtu in 2023, versus $6.648 in 2022. For February 2024, the Henry Hub bidweek price averaged $2.500, versus $3.110 in February 2023.
Statewide natural gas production in Texas exceeded 12 Tcf for the first time to reach an estimated 12.5 Tcf in 2023, up 7.4% from 2022, researchers found.
The state’s rig count, meanwhile, reached a post-pandemic high of 379 in January 2023, then fell by 76 rigs to 303 in November, before adding four rigs in December, the Alliance said. “At year-end 2023 the rig count was down by nearly 18% compared to the December 2022 monthly average,” the group added.
The number of drilling permits issued in the state fell by 16.5% in 2023 versus 2022.
As for direct E&P employment, the Texas job count surpassed 200,000 in December for the first time since March 2020, researchers highlighted. The job tally for December was estimated to be up about 4.1% year/year.
“It’s an unusual set of circumstances,” said Ingham, who created the TPI analysis in 1995. “Steadily climbing volumes of crude oil and natural gas production with steadily falling rig counts and drilling permits, and an industry employment base that is a third smaller than it was less than 10 years ago.”
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