Tuesday, August 14, 2012

Oil Prosperity Delivers Economic Stimulus to TX

The oil boom in the North Dakota Bakken area has been getting a lot of attention lately due to the phenomenal increases in production there over the last few years, but there's also an oil boom going in Texas as well, thanks to the same advanced drilling technologies that are turbo-charging oil output in North Dakota.

The chart above shows daily oil production in Texas, which exceeded 1.8 million barrels per day in both April and May, reaching the highest level of production in more than 20 years going all the way to 1991.  Even though North Dakota oil production has increased six-fold over the last six years moving the state ahead of both California and Alaska in the last year to become the No. 2 oil-producing state, oil production there of 666,000 b.p.d. in June is only about one-third of the oil output in No. 1 Texas at 1.834 million b.p.d. in May.

Here's a recent account from the Houston Chronicle of the oil boom going on in West Texas in the Permian Basin, which is booming along with the Eagle Ford Shale area of South Texas, and has helped boost the state's oil production by 66% over the last two years (see chart above). 

MIDLAND, TX -- "As anyone who has tried to rent a house, navigate traffic or lease drilling equipment around here knows, the good times are rolling again. A strong demand for oil coupled with refined hydraulic fracturing and horizontal drilling techniques are tapping long untouchable, deep reserves.

What began a decade ago as a modest revival now is a full-fledged boom. The play extends across hundreds of miles of West Texas and into New Mexico, from Mentone east to El Dorado, and it is reviving long dormant backwaters. The best indicator, the Baker Hughes rig count, recently hit 442, after bottoming out in 1999 at 51. There are now more than 155,000 producing wells out here, generating revenue and requiring service for years to come.

"It's unbelievable. This has 50 years worth of life. They'll be redrilling the entire Permian Basin," exclaimed Jim Smitherman, chief executive officer of Security Bank in Midland.

Airport hangars in Midland now are jammed with private planes, there's a three- to four-month wait to join the Petroleum Club and many of the service companies lining Interstate 20 keep "Hiring" signs out front.  A freshly graduated petroleum engineer can make $80,000 a year, sometimes with a $10,000 to $20,000 signing bonus tacked on. Roughnecks and truck drivers willing to work killer hours can gross over $100,000 a year.

Arlen Edgar, 78, a longtime oil and gas investor said "There's a lot of money to be made. If you look at daily production in the Permian Basin, which is approximately a million barrels a day, that, along with the gas, represents $2.5 billion to $3 billion a month in production revenue."

Sales tax income for Midland went from $13.4 million in fiscal year 2001 to $29.4 million in fiscal year 2011. So much money is flowing in that the city's reserve fund is now equal to about half its general fund, double what it used to be. The wealth has triggered an ambitious capital improvements program. Midland will soon build a new firehouse while remodeling two others, and will also build a new municipal court building. Extensive new roadwork also is planned."

MP: Hydraulic fracturing and horizontal drilling is bringing new oil prosperity to Texas as well as North Dakota, and delivering an energy-based economic stimulus to both states, creating thousands of well-paying, shovel-ready jobs, bringing millions of dollars of new investment, and delivering millions of dollars in royalty payments to local landowners.

HT: Peter Parlapiano


At 8/14/2012 10:28 PM, Blogger NormanB said...

The religion of green energy with its uneconomic basis has Obama chained to the losing side whereas otherwise he could be in front of this bonanza with a bright light shining on his re-election. Instead he's just a spiteful man. Actually, it serves him right.

At 8/14/2012 10:57 PM, Blogger hancke said...

Prosperity thrives in spite of Obama policy. However, one could go out on a limb and say that the domestic drilling boom is a result of shuttered offshore drilling and killing the Keystone pipeline.

At 8/14/2012 11:05 PM, Blogger Benjamin Cole said...

If shale oil can be done in the USA, the global prospects must be amazing....

At 8/15/2012 6:22 AM, Blogger The Drill SGT said...


It's worth noting that this drilling is on private lands, in spite of the best efforts of the Obama EPA, the Dept of Interior, and the endangered species legal industry.

At 8/15/2012 6:38 AM, Blogger JJ Butler said...

The operators have all reported June results, unfortunately it'll be a few months before the Texas RRC adds em up...revised. At least North Dakota is on top of it...

At 8/15/2012 12:25 PM, Blogger Buddy R Pacifico said...

Texas is booming, so did the state get federal stimulus anyway?

Oh yeah, and that amount is $29,287,667,478 over the last three years.

At 8/15/2012 12:30 PM, Blogger Che is dead said...

"Thanks in part to technologies like horizontal drilling and hydraulic fracking, we are entering a new age of abundant oil. As the energy expert Leonardo Maugeri contends in a recent report published by the Belfer Center at the John F. Kennedy School of Government at Harvard, “contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption.” Mr. Maugeri, a research fellow at the Belfer Center and a former oil industry executive, bases that assertion on a field-by-field analysis of most of the major oil exploration and development projects in the world. He concludes that “by 2020, the world’s oil production capacity could be more than 110 million barrels per day, an increase of almost 20 percent.” Four countries will lead the coming oil boom: Iraq, the United States, Canada and Brazil." -- The New York Times: "The Coming Oil Boom

Harvard University: "Oil: The Next Revolution"

So much for "Peak Oil".

At 8/15/2012 2:20 PM, Blogger bart said...

More of the full picture:

Drilling Rig Count

19.5 Hours Ago

Tuesday August 14, 2012 (6:10pm ET)
Alberta Drilling Rigs - Total: Down -1.21% from 578 to 571

BC Drilling Rigs - Total: Down -3.70% from 54 to 52

Western Canada Drilling Rigs - Total: Down -1.26% from 791 to 781


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