Oil and Gas Update - September 2016

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September 1, 2016

News on the energy front was mixed in August as crude oil prices appear to have stabilized above $40 a barrel despite a glut in worldwide inventories and sagging U.S. production.

Texas remains a bright spot as the number of drilling rigs at work in the state continued to climb in August, rising to 237 from 217 at the end of July, according to the Aug. 26 weekly report from the oil services company Baker Hughes. The U.S. saw the drilling rig numbers rise as well, climbing to 487 from 462 at the end of July. Texas' share of the U.S. count was 48 percent.

Although U.S. production continues to wane, crude oil production in Texas remained about the same, according to the Railroad Commission of Texas. The agency reported that preliminary figures for June production was 2.43 million barrels a day, the same as it was a year earlier and slightly above the 2.36 million barrels a day reported in May 2016.

Analysts say it will take continued strong demand to whittle away the huge inventory that has built up as some members of the Organization of Petroleum Exporting Countries continue to send record amounts of oil to market. Some analysts are speculating that OPEC countries in August may announce an agreement to slow production in an effort to further stabilize or increase prices.

The Texas railroad commission reported that 631 new drilling permits were issued in July, down from the 656 issued in June and the 979 issued in July 2015. Operators continue to work off a backlog of drilled but uncompleted wells.

In Senate District 19, Reeves County claimed the number 8 spot among Texas counties for oil production and the number 7 spot for condensate production. The number one spot for condensate production continued to be held by Dimmit County, which claimed the number 3 spot for natural gas production.

Texas has long been the leader among the states in oil and gas production, but development of wind and solar power remains strong. The state produces more wind power than any other state, and wind power makes up 16 percent of the state's installed electrical capacity. Though the state is number 10 in installed solar power, projects planned and under construction are expected to rocket the state to the number 2 spot within 5 years, according to the Solar Energy Industries Association.