by Mark J. Perry
The Energy Information Administration (EIA) released new state crude oil production data today for the month of August, 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 August 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 August. The 3.182 million bpd in August 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 (see chart above). Texas reached the two million barrel per day 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 three million barrel milestone in May of this year. Compared to oil production a year ago, Texas posted a 21.5% increase in August marking the 40th straight month starting in May 2011 that the state’s oil output has increased by more than 20% on a year-over-year basis.
2. Remarkably, oil production in the Lone Star State has doubled in less than three years, from 1.60 million bpd in October 2011 to 3.20 million bpd in August of this year (see chart above), and that production surge has to be one of the most significant increases in oil output ever recorded in the US over such a short period of time. A 1.6 million bpd increase in oil output in only 34 months in one US state is remarkable, and 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 recently on CD, 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 ten super-giant oil fields in the world that have surpassed the one million barrel per day milestone at their peak level of production.
3. The exponential increase in Texas oil output over roughly the last 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 (see arrows in chart) – 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% 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% of America’s crude output for the last four months, and almost 37% in August.
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 8th largest oil-producing nation in the world for crude oil output in June (most recent month available for international oil production data) at 3.07 million bpd – just behind No. 7 Iraq’s production of 3.22 million bpd.
6. The dramatic increase in Texas’s oil production is bringing jobs and economic prosperity to the state. For example, over the last 12 months through September, payrolls in the state of Texas increased by 413,700 jobs, which was a 3.7% annual increase in the state’s employment level, almost double the 1.9% increase in total US payrolls over that period. With only 8.4% of the US population, Texas created 16% of the new US payroll jobs over the last 12 months through September.
Every business day over the last year, almost 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 an 7.8% 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 last year just for extraction activities, or almost 4 new hires every hour!
MP: The significant increase in Texas’s oil production over the last several years is nothing short of phenomenal, and 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 ten 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% of US oil, is undoubtedly one of the most remarkable energy success stories in US history – and it’s just getting started. At the current pace of annual increases of about +20%, Texas oil production will likely surpass 4 million bpd by late summer of next year. With those projected increases in Texas oil output, the state could soon surpass Iraq, 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.
Mark J. Perry is concurrently a scholar at American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.