The number of active drilling rigs at work in Texas on December 15th was stable around 457, slightly higher than last month's count, and significantly more than last year, according to oilfield services firm Baker Hughes. Nationally, there were 930 rigs at work, up from 915 at this time last month. Overall, US crude production rising slightly each month since September and is around 9.8 million barrels/day, according to the Energy Information Agency.
The price of West Texas Crude remained steady at $58 per barrel and the price of Brent Crude also rose slightly to around $65 barrel throughout December. Overall, global crude prices have decreased slightly as of this week. This is in part due to an increased supply to Europe through Ineos Group’s Forties Pipeline System's North Sea pipeline, which has been closed since December 11th, will reopen in January. Additionally, in the U.S. crude inventories were at their lowest since October 2015 and exports have increased significantly.
Looking forward to 2018, it is clear that Texas will lead the way in setting oil prices. Analysts expect U.S. crude production to reach record levels next year, and are predicting that Brent crude prices in the U.S. will fall to between $55 and $57 per barrel and West Texas Crude to between $50 and $53 per barrel. OPEC's supply reduction over the past 6 months has helped producers invest in drilling due to higher prices per barrel within and outside of the U.S. meaning that global supply will likely increase in 2018. Still analysts expect strong demand with the growing U.S. economy in the next year, mitigating concerns around an increased supply.
This year, analysts raised concerns about transporting West Texas oil and gas, since pipelines are at capacity and supply is expected to increase. However, companies are taking steps to build new pipelines. Recently, Kinder Morgan announced it expects a pipeline from West Texas to Corpus Christi to be operational in 2019. Additionally, Tellurian, another Houston-based company, is planning a pipeline to Louisiana from West Texas. Overall, there are more than 15 projects currently proposed to move oil and gas from West Texas to the coast.
Looking to a more sustainable future, one West Texas company, Pioneer, released a report that cited its efforts to decrease carbon emissions and set its breakeven point at $24 per barrel in a world of decreased demand. The report also suggests that Pioneer may lease 800,000 acres to wind companies, allowing wind companies to use the surface while Pioneer continues oil and gas development. This could be a way for oil and gas companies to get the most out of the land moving forward.
Texas added 277 megawatts of solar energy over the past three months, more than any other state, except Nevada and North Carolina. This comes on the heels of wind energy becoming the second largest source of energy in the state last month. Still, solar only provides 0.6% of the state's electricity. Texas has the opportunity to expand solar, especially oil and gas companies consider leasing their land.