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Energy Update - October 2016

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October 1, 2016

The number of drilling rigs at work in Texas continued to rise in September with a count of 246 compared to 237 near the end of August, according to the Sept. 23 weekly report from oil services firm Baker Hughes. Nationally, there were 511 rigs at work compared to 487 at the end of August.

The price of oil hovered around the $45 mark during September as the markets worried about the historically high level of inventories and whether members of the Organization of Petroleum Exporting Countries will agree to pull back on production.

U.S. crude oil inventories in the week ending Sept. 16 fell by 6.2 million barrels but still amounted to 504.6 million barrels, according to the U.S. Energy Information Administration. The drop was higher than anticipated by analysts.

U.S. oil production continued to sink, but production in Texas rose in July, according to the Texas Railroad Commission. Preliminary production figures for July showed state output was 2.44 million barrels a day, the agency reported. That's an increase over June production but just short of the 2.46 million barrels a day preliminarily reported in July 2015.

Most of the Texas increase came from the Permian Basin, where 201 rigs were drilling on Sept. 23, up by 69 rigs since late April.

The Apache Corp. announced a major new oil find in the Permian Basin in September. The "Alpine High" in Reeves County is estimated to hold 10 billion barrels of recoverable crude oil and will be profitable to start producing at current prices, the company said.

The Texas railroad commission reported that 660 new drilling permits were issued in July, up from 631 issued in July and 864 issued in August 2015.

In Senate District 19, Reeves County was number 7 among Texas counties for oil production and number 6 for condensate production. The top spot for condensate production continued to be held by Dimmit County, which also held the number 4 spot for natural gas production.

Texas continues to be the State leader in terms of installed wind generation capacity, with more than 18,000 megawatts, from nearly 40 different projects, and approximately 5,500 to come online in the near future.  That is nearly 4 times the amount of wind power generation of the State of California and has accounted for upwards of 16% of electrical generation capacity in Texas.

Texas currently ranks 10th for solar capacity with 566MW but over the next 5 years expects to install 4,612 MW of additional solar electric capacity. This represents about 10 times more solar generation than Texas has experienced in the last 5 years.  Some analysts are predicting Texas to add as much as 19,000 MW of solar capacity over the next 15 years. Currently there are approximately 42 solar projects in West Texas that were in the interconnection queue waiting for new transmission.