May 11 (UPI) — Already home to about half of all the rig activity in the country, the Texas state government reported drilling permits jumped more than 30 percent.
Texas is the No. 1 oil producer in the country. Total crude oil production for all of last year was around 1.2 billion barrels, up 3.3 percent from full-year 2016. According to Baker Hughes, the state accounts for about 50 percent of all rig activity in the country.
Baker Hughes provides a weekly rig count, which serves as a loose barometer to gauge optimism in the exploration and production side of the oil and gas sector. That same sector suffered a downturn when crude oil prices dropped below $30 per barrel in early 2016.
Crude oil prices are now trading above $70 per barrel. The Railroad Commission of Texas, the state energy regulator, reported that 1,221 original drilling permits were issued in April, compared with 909 for the same month last year.
“Total well completions processed for 2018 year to date are 3,514, up from 2,455 recorded in 2017,” the commission stated.
Wells completed loosely equates to the prospect for commercial operations, with completions indicating an operation is close to actual production. Uncompleted wells could indicate a potential slowdown in Texas production, though economists at the Federal Reserve Bank of Dallas said the rising number of drilled, but uncompleted, wells in the Permian basin could indicate the reservoir could respond with a larger increase in production when market conditions are more favorable.
A March survey from the Dallas Fed of 140 energy firms, of which 78 were in exploration production and the rest were field services companies, found that most respondents viewed the market as supportive of sector activity.
Steel and aluminum tariffs imposed by U.S. President Donald Trump could be an obstacle to growth, however, as metals used in oil and gas pipelines are sourced usually by foreign suppliers. The International Energy Agency said takeaway capacity from the Eagle Ford and Permian shale basins in Texas is limited and could see a deficit during the first half of 2019.