The Second-Coming of Petroleum in Texas

Petroleum in TexasThe Texas state government just ended 2013 with an $8.8 billion revenue surplus. The state runs on a two-year budget cycle, and during that time natural gas produced $2.6 billion in state taxes and oil production contributed $4.4 billion in tax revenue – a 42% and 80% increase in revenues from the previous two-year cycle!

For those of us who lived through the “oil bust” in the 1980s, when prices fell like an asteroid because of an international surplus, it’s hard to fully fathom this second-coming of petroleum and its importance to our state. Oil went from $33 a barrel in the early 80s – when it was predicted to rise to $100 – to just $10 a barrel in the mid-80s. Today a barrel of oil generally sells between $90-110, or more, and that is what has made drilling in Texas profitable, again.

Coupled with more efficient extraction methods, production of oil and gas in Texas can continue or even increase for years to come. The Permian Basin has long been the center of Texas petroleum production, and is still a leader, but the Eagle Ford shale and Barnett shale formations are quickly catching up with both liquid and natural gas production. About $6.7 billion in royalties were paid out in 2010 (most recent data available) to private landowners in Texas.

The number of jobs and amount of private wealth, for blue and white collar workers, that is being created is staggering. Oil and gas generated a total payroll of $48.7 billion in 2012 – an average of $128,100 per worker – nearly half of the total for the entire U.S. Last year, about 380,000 people in Texas were employed in the oil and gas industry, while the industry directly or indirectly affects about 2 million jobs.

In fact, there are so many open jobs in the petrochemical field in Texas, oil and gas companies are running out of people to take the jobs. In the Houston/Gulf Coast area, Exxon is partnering with local community colleges to recruit and train job candidates. You’ll see more and more initiatives like this in coming years since the industry is adding about 30,000 jobs annually.

More jobs, more tax revenue, more income, more personal wealth – that’s what the oil and gas industry has brought to Texas in the last few years. In fact, Texas is helping move the national conversation from “energy independence” to actually lifting the 40-year-old ban on exporting oil. It has been about 30 years since the bottom fell out of the petroleum market for Texans, but the industry has been fully resurrected – and the future looks even brighter.

The Oil Industry in 2013

Oil and Gas Industry With 2013 in the history books, it’s time to take a look back at the year that was in the oil and gas industry.

Overall, it was a banner year for oil production in America. The U.S. Energy Information Administration has reported that 2013 marked the highest annual increase in oil production in our history, producing over 7.5 million barrels a day more than the previous year. As we’ve previously mentioned, much of this can be attributed to the uptick in oil production right here in Texas mainly from the Eagle Ford formation and the Permian Basin.

The rousing successes of the large shale plays in America have led the way in a worldwide trend. The U.S. Energy Information Administration has estimated that 10 percent of the world’s crude oil resides in shale worldwide. Countries such as England, Mexico, and Saudi Arabia have begun exploring their own shale formations in light of this success.

Venezuela continues to limp when it comes to oil production. Since Hugo Chavez took office in 1999, the country’s oil production has continued to drop annually. Some reports indicate that oil exports have dropped by half since that time. In 2013, the trend continued, as oil production fell by 235,000 barrels a day. With Hugo Chavez’s passing in March, it remains to be seen how Venezuela’s oil production will change in the new year.

In Russia, all signs pointed at it being a good year in terms of oil production. Russia produced more than 530 metric tons of oil in 2013, several tones higher than their 2012 output. Vladimir Putin even went on record saying that production is the best it has since the 1990s. To help spur this growth, Russia had implemented several new laws to help increase oil production.

China surpassed America as the largest crude oil importer. With a billion more people in its borders than America, this doesn’t come as quite a surprise. Some may even wonder why it took so long. Overall, China imported 280 million metric tons of crude oil in 2013, a four percent increase compared to the previous year.

It was an exciting year in the oil and gas industry. Overall, oil production worldwide is trending upward. In 2014, if you are interested in selling your oil or gas royalties, don’t hesitate to contact us.

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