Texas drilling activity slumps

AUSTIN, Texas, Jan. 12 (UPI) -- A Texas state energy regulator said about half as many original drilling permits were issued for December than for the same month in 2014.

Crude oil prices, down about 70 percent from their mid-2014 peaks, means less capital is available for energy companies to invest in exploration and production. The number of wells drilled, rigs deployed and drilling permits issued is used as a barometer used to gauge industry spending and health during the market downturn.

The Railroad Commission of Texas, the state's energy regulator, said in an emailed report it issued 727 original drilling permits in December, about 51 percent less than the total issued for the same month in 2014.

In terms of discoveries, the energy regulator said two new discoveries were made for oil and one for gas in December. For the year, 35 were for oil and 27 were for gas, which, when combined, mark a 38 percent increase from the previous year.

For October, the last full month for which the state has data, Texas produced 85 million barrels of oil, a 15 percent decline from the same month in 2014. October gas production of 636 million cubic feet was 14 percent lower year-on-year.

Texas depends on oil and gas to generate state revenue and to support employment. While the energy sector is depressed, the state economy is more or less balanced by a strong manufacturing sector. Outside of oil and natural gas, Texas produces more than 11 percent of all the manufactured goods in the country, putting it in the No. 2 spot behind California in terms of factory output.

In terms of rig activity, Texas accounts for about half of all of the activity in the nation.