Dallas Fed Picking Up Good Vibrations

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The Federal Reserve Bank of Dallas pointed to good vibes in its regional economy, with well efficiencies stimulating production and job prospects on the rise.

Global trade tensions are just starting to show up in the U.S. economy. Consumer prices softened month-on-month to July, though wholesale prices increased month-on-month by 0.9% for the sharpest monthly increase since June 2022.

Wholesale prices are sure to trickle down to the consumer level, though indications so far are positive for the Texas economy.

The Federal Reserve Bank of Dallas reported Tuesday that employment improved and home sales increased in the Permian region. The average rate on a U.S. home loan is about 6.67%, the lowest since April.

On energy, the Dallas Fed reported that Permian oil production averaged 6.6 million barrels per day (BBL/d) during the second quarter, while the number of new wells drilled in the Permian dropped 2.8% relative to first-quarter levels.

Federal estimates show Permian oil production should average about 6.53 million BBL/d this year. Drillers in the region are doing more with less by using multi-bore wells and miles-long laterals to get into every nook in the basin.

Shale-focused Enterprise Products Partners (Houston, Texas) was among those boasting of a strong operational performance during the second quarter. Volumes from Gulf Coast basins, including Haynesville, led to record production for the company.

The company also enjoyed a 40,000-barrel-per-day increase in volumes, as well as higher revenues, from its pipeline systems in the Permian and Rocky Mountain regions.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project and Plant databases can a detailed look at Enterprise by viewing the company profile.

Across the entire country, the federal government said that well efficiencies could push U.S. crude oil production to an all-time high of 13.6 million BBL/d by December, though upstream activity is expected to decline as oil prices move lower.

Crude oil production by the fourth quarter is expected to average 13.1 million BBL/d. Permian crude oil production, meanwhile, is expected to decline 1% to average 6.46 million BBL/d by next year, the government estimated.

The Dallas Fed made no mention of natural gas apart from an overview of prices for Henry Hub, the U.S. benchmark for the price of natural gas. Gas production is expected to increase as basins mature and give up increasingly lighter molecules, as the pressure changes in subsurface wells.

The Permian is the second-largest gas producer in the U.S., behind the Appalachia Basin. Maturation in the Permian means more gas is coming, with the federal government expecting an 8% increase in gas production from 2024 levels to average 27.5 billion cubic feet per day (Bcf/d).

Energy Transfer Partners (Dallas) in early August said it made a final investment decision (FID) on an extension to the Desert Southwest pipeline, adding another 516 miles of pipeline and nine compressor stations across Arizona, New Mexico and Texas. The design capacity is 1.5 Bcf/d.

Subscribers can click here for a Breaking Energy News (BEN) feature on Desert Southwest.

Headwinds may be coming for the U.S. shale sector as the increase in output from other countries creates supply-side pressures that are dragging on prices. The U.S. Energy Information Administration (EIA), the statistical arm of the Energy Department, expects U.S. crude oil prices to fall below $50 per barrel on average next year, well below the point at which many shale drillers can make a profit.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).