Texas energy industry continues to take it on the chin

The economic condition within the Texas petroleum industry took another tumble in October, according to the Texas Petro Index that dropped below the 200 mark for the first time since December 2005.

The October Petro Index was 198.6, which is a 30 percent drop from its peak just a year ago of 285. 

The economic contraction within the oil and gas industry has sapped more than $45 billion from the Texas oil and gas industry in the past year. 

Drilling activity rose in Texas last month by a an average of 50 rigs, but still more than 500 below last year when there were 958 rigs running in Texas. 

Employment within the industry rose slightly from 201,000 in August to 203,000 in September, according to the Texas Workforce Commission.

Texas crude oil prices averaged $65.73 per barrel, up from a low ebb of $35.87 per barrel in February.  Low wellhead prices cut the value of Texas crude oil produced this year through September to about $15.8 billion, nearly $17.3 billion less than during the first nine months of 2008.

Although natural gas prices have rallied during October, gas prices in Texas during September averaged just $2.65 per thousand cubic feet (Mcf), the lowest monthly average of the year.  As a result, the wellhead value of Texas-produced natural gas through September totaled only $19.9 billion, down from more than $52 billion during the first nine months of 2008.

As the oil and gas industry in Texas seems to be making slow but steady progress, the American Petroleum Institute (API) released a study that warned that passage of a climate change bill similar to H.R. 2454 would be devastating to the U.S. refining industry.

H.R. 2454, authored by Reps. Henry Waxman, D-Calif., and Ed Markey, D-Mass., makes refiners responsible for emissions by the facilities as well as those associated with use of the products.  The refining industry would be required to make 43 percent of all required cuts yet receive only 2.25 percent of allocated emission allowances.  This requirement would make refiners purchase large quantities of emission allowances and raise their cost of operation substantially.

            The study estimates that demand for refined products will decline and utilization would decline to 63 percent in 2030.

Emissions would be reduced by 20 to 41 percent, according to the study.

More bad news for an industry that has had its share recently.

Alex Mills is President of the Texas Alliance of Energy Producers.  The opinions

expressed are solely of the author.