Economist Karr Ingham says the improvement in the index is largely driven by crude oil, surpassing the number of gas completions. That reverses a decade-long trend where gas activity was principally driving exploration and production.
“In the Permian basin of Texas and other areas of the state where we have crude oil drilling — and even natural gas drilling has increased, prices have rebounded some, although not to the extent that crude oil prices have — and so, yes indeed, the Texas oil and gas upstream industry — the exploration and production part of that business — is most certainly contributing to an economic turnaround in Texas and a very pronounced economic turnaround in the Permian basin.”
Ingham says oil and gas exploration and production is helping lift the Texas economy.
“We’ve got $70 to $80 crude oil and natural gas prices that are hovering something under $5 an mcf. Assuming continued economic recovery, that would very strongly suggest further support for energy prices, which bodes well for the Texas oil and gas economy. So my forecast for the Texas Petro Index would certainly for the balance of 2010 is continued growth, which means continued activity in terms of rig count, drilling permits and — very importantly — the number of folks that are on the job in Texas.”
Ingham says the Gulf oil spill and the deepwater drilling moratorium will affect offshore work and oilfield services contracts.
Ed Mayberry, KUHF News.