Texas Crude Oil Production Surges in 2013, Could Double by 2020

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Crude-oil production in Texas surged last year to more than 2 million barrels per day (BBL/d), and a flood of drilling permits and well completions could double oil production by 2020, according to the Texas Railroad Commission (TRC) (Austin, Texas), the state agency that regulates oil & gas production.

About 721 million barrels of oil were produced in Texas last year, roughly 2 million barrels per day (BBL/d), a sharp increase over earlier years' production, the TRC reported. Crude-oil production last year was about double the level of production in 2010, according to data posted to the TRC site.

Click on the image at right to see crude-oil production levels in Texas from 2000 through 2013.

"The dramatic production gains we are seeing in Texas are inspiring and an important element of U.S. energy independence," said Jesus Davis, Industrial Info's vice president of research for the oil & gas production, pipelines and terminals industries. "Russia's use of its energy exports as a diplomatic and economic club over the Ukraine and Europe underscores the importance of the strategic wisdom of self-reliance when it comes to oil & gas."

Dramatic production gains from the Eagle Ford Shale in south Texas helped propel the state's crude-oil production upward. This March, TRC Chairman Barry Smitherman discussed the state's dramatic production gains, specifically in the Eagle Ford, where production has grown to about 688,000 BBL/d last year, from about 15,000 BBL/d in 2010.

Click on the image at right to see crude oil production gains in the Eagle Ford Shale from 2008 through 2013.

Smitherman told the CERA conference: "We are witnessing an incredible North American energy renaissance, and I'm proud to say that Texas is leading the way. We must continue to defend Texas energy and Texas jobs against federal government overreach." The chairman described himself as "a passionate advocate for American energy independence" who is working to create a fair, efficient and predictable regulatory climate" for oil & gas companies in Texas.

Production gains could continue in the coming years, with continued high crude-oil prices, strong global demand, and a supportive regulatory environment in Texas. Last year, drillers completed more than 19,000 new oil wells in Texas, nearly double the level completed in 2012 and a 257% increase over completions in that state in 2011.

Click on the image at right to see the number of oil wells completed in Texas each year from 2000 through 2013.

The TRC issued more than 21,000 oil-drilling permits last year, down slightly from the number issued in 2012 and 2011, but significantly ahead of earlier years. Issuance of new permits is a critical factor affecting future drilling and production.

At its recent historic peak, the agency issued about 24,000 new oil-drilling permits in 2008, when crude oil peaked at about $140 per barrel.

Click on the image at right to see the recent history of oil-drilling permits issued by the Texas Railroad Commission from 2000 through 2013.

Davis also pointed out that Texas' well completions have soared in recent years, another harbinger of future growth in crude-oil production.

At recent energy conferences, news reports quoted Smitherman as saying crude-oil production in Texas could hit 4 million BBL/d by 2020. If Texas was a nation, production of 4 million BBL/d would make it the world's eighth-largest oil-producing country.

"What has happened in our state over the last five to six years is nothing short of a technological miracle," Smitherman told a Texas energy conference in late 2013. Producing 4 million BBL/d would put Texas "in league with some of the biggest oil producers on the planet," he said, adding that production in the Eagle Ford "shows no sign of abating." And production from the Permian Basin, previously thought to be mature, has hit about 900,000 BBL/d.

The combination of horizontal drilling and hydraulic fracturing has led to a surge of crude-oil production in the U.S., reinvigorating fields once thought to be mature and allowing profitable production from new shale formations like the Eagle Ford and the Bakken, located mainly in North Dakota.

Last October, domestic crude-oil production exceeded imports for the first time in more than 18 years, according to the U.S. Energy Information Administration (EIA) (Washington, D.C.), the statistical and analytic branch of the U.S. Department of Energy (DoE) (Washington, D.C.). For more on that, see November 18, 2013, article - U.S. Crude Oil Production Exceeds Imports in October 2013.

The shale revolution has led the International Energy Agency (IEA) (Paris, France) to predict that the U.S will be the world's largest oil-producing nation by 2015. For more on that, see February 4, 2014, article - IEA: U.S. to Become World's Largest Crude-Oil Producer in 2015.

Crude oil production in Texas "kind of reminds me of the Energizer bunny--it keeps going and going and going," TRC Chairman Smitherman told a Houston energy conference late last year. "I love the narrative that we lost (oil production from) Iran and Libya and we gained Texas."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.