Who to Thank for the New Texas Oil Boom
The Energy Information Administration (EIA) released new state crude oil production data last week for the month of September, and one of the highlights of that monthly report is that oil output in America's No. 1 oil-producing state—Texas—continues its phenomenal, eye-popping rise. Here are some details of oil output in "Saudi Texas" for the month of September and the economic impact that production is having on the state's economy:
1. For the fourth straight month starting in May, oil drillers in Texas pumped out more than 3 million barrels of crude oil every day (BPD) during the month of September. The 3.25 million BPD in September was the highest daily oil output in the Lone Star State in any month since at least January 1981, when the EIA started reporting each state's monthly oil production.
Texas reached the 2 million BPD oil production milestone in August 2012, and has since added a million more barrels of daily oil production in less than two years to reach the 3 million barrel milestone in May of this year. Compared to oil production a year ago, Texas posted a 22.8 percent increase in September marking the 41st straight month starting in May 2011 that the state's oil output has increased by more than 20 percent on a year-over-year basis.
2. Remarkably, oil production in the Lone Star State has more than doubled in less than three years, from 1.59 million BPD in October 2011 to 3.25 million BPD in September of this year, and that production surge has to be one of the most significant increases in oil output ever recorded in the U.S. over such a short period of time.
A 1.66 million BPD increase in oil output in only 35 months in one state is remarkable, and it would have never been possible without the revolutionary drilling techniques that just recently started accessing vast oceans of Texas shale oil in the Eagle Ford Shale and Permian Basin oil fields. As I have reported before, the Eagle Ford and Permian Basin oil fields in Texas are now each producing crude oil at a rate of more than 1 million BPD, joining an elite international group of only 10 super-giant oil fields in the world that have ever surpassed the 1 million barrel per day production milestone at their peak level of output.
3. The exponential increase in Texas oil output over roughly the past three years has completely reversed the previous, gradual 28-year decline in the state's conventional oil production that took place from 1981 to 2009—thanks almost exclusively to the dramatic increases in the state's output of newly accessible, unconventional shale oil.
4. As recently as mid-2009, Texas was producing less than 20 percent of America's domestic crude oil. The recent gusher of unconventional oil being produced in the Eagle Ford Shale and Permian Basin oil fields of Texas, thanks to breakthrough drilling and extraction technologies, has recently pushed the Lone Star State's share of domestic crude oil all the way up to more than 36 percent of America's crude output for the past five months, and almost 37 percent in September.
5. Oil output has increased so significantly in Texas in recent years that if the state were considered as a separate oil-producing country, Texas would have been the seventh largest oil-producing nation in the world for crude oil output in July (most recent month available for international oil production data) at 3.17 million BPD—just behind No. 6 Iran's production of 3.23 million BPD. In previous months, Texas ranked as the world's No. 8 oil producer, and just moved up one place in the rankings in July, when it surpassed Iraq's crude oil production for the first time ever.
6. The dramatic increase in Texas's oil and gas production is bringing jobs and economic prosperity to the state. For example, over the past 12 months through October, payroll employment in the state of Texas increased by 421,900 jobs—the largest 12-month job gain in state history—and that represented a 3.74 percent annual payroll increase, almost double the 1.93 percent increase in total U.S. payrolls over that period. With only 8.4 percent of the U.S. population, Texas created 16 percent of the new U.S. payroll jobs over the past 12 months through October.
Every business day over the past year, more than 1,600 new jobs were created in the Lone Star State, and many of those jobs were directly or indirectly related to the state's booming energy sector, which experienced a 7.8 percent increase in payrolls for oil and gas extraction jobs (8,200 new jobs) over the most recent 12-month period through September. Oil and gas companies in Texas hired nearly 32 new employees every business day over the past year just for extraction activities, or almost four new hires every hour!
The significant increase in Texas's oil production over the past several years is nothing short of phenomenal, and it is a direct result of America's "petropreneurs" who developed game-changing drilling technologies that have now revolutionized the nation's production of shale oil. Thanks to those revolutionary technologies, Texas is now home to two of only 10 super-giant oil fields in the world to ever produce more than 1 million barrels of oil per day—the Eagle Ford and Permian Basin.
For oil output in Texas to increase from 2 million to more than 3 million BPD in less than two years, and increase so dramatically that the state now produces almost 37 percent of US oil, is undoubtedly one of the most remarkable energy success stories in U.S. history. At the current pace of annual increases of more than 20 percent, daily Texas oil production is on track to surpass the 4 million barrel milestone by August of next year.
With those projected increases in Texas oil output, the state could soon surpass Iran and even Canada to move up in the international oil production rankings to become the world's No. 5 oil producer in 2015.
"Saudi Texas" continues to be the shining star of the Great American Shale Boom.
"Texas Oil Topped 3M Barrels Per Day Again in September" by Mark J. Perry, is reprinted with permission of the American Enterprise Institute.
