Texas Upstream Oil Economy on the Mend
Midway through 2021, the Texas upstream oil and gas economy is on the mend.
That’s according to the Texas Alliance of Energy Producers (TAEP), whose Texas Petro Index (TPI) has now increased for three straight months, and for four of the last five months, which the organization says signals a new cycle of expansion in statewide exploration and production activity.
The TPI improved to 147.2 in June, up from 143.1 in May, but remains down by 7.2 percent compared to the June 2020 index of 158.6, TAEP noted. The organization outlined that, from peak to trough, the contraction lasted 23 months from February 2019 through January 2021, over which time the Texas Petro Index declined by 38.6 percent.
The first leg of the downturn began late in the first quarter of 2019 as lower crude oil prices compared to 2018 pushed activity levels downward for the balance of the year and into the first quarter 2020, TAEP highlighted. Covid related declines began in March 2020 with much steeper monthly declines in the Texas Petro Index, according to Alliance Petroleum Economist Karr Ingham, who created the TPI and maintains it monthly.
“The 2019 contraction was no minor event, with significant declines in activity and about 20,400 jobs lost in the Texas upstream sector,” Ingham said in an organization statement. “But that paled in comparison to the Covid decline in 2020 during which the statewide rig count dropped to unprecedented lows and another 61,000 Texas oil and gas E&P jobs were lost between February and September,” he added.
Direct upstream employment in Texas climbed back above 160,000 in June, TAEP highlighted, adding that this suggests the addition of about 14,200 of the nearly 81,500 jobs lost over the course of the entire contraction.
The TPI is a monthly measure of growth rates and cycles in the Texas upstream oil and gas economy. It is is calculated based on a comprehensive group of exploration and production indicators, which include crude oil and natural gas wellhead prices, rig count, drilling permits, well completions, volume and value of Texas crude oil and natural gas production, and industry E&P employment. Ingham created the TPI in January 1995.
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