AUSTIN, Texas, June 9 (UPI) -- State data from Texas show fewer new drilling permits for and fewer new discoveries of oil or natural gas were made in May than last year.
The Railroad Commission of Texas reported 488 new drilling permits were issued in May, against the 778 issued last year. Both permits for oil and natural gas were lower than for the same month last year.
A low price for crude oil dragged on the cash necessary for exploration and production, a trend reflected in metrics like activity in the upstream oil and gas sector. Oil field services company Baker Hughes last week reported an increase in rig activity in the United States for the first time in months as the price of crude oil returned to the $50 per barrel mark, though declines were still prevalent in May of this year.
In terms of new discoveries, the state data show two were made for oil and none for gas in May. A total of eight new oil field discoveries and four were recorded so far this year. Last May, three new oil discoveries and four new natural gas discoveries were recorded, with a combined 30 new finds for the five-month period ending in May 2015.
Data provided by Karr Ingham, an economist with the Texas Alliance of Energy Producers, show total oil production in Texas for April, the last full month for which the group has information, at 104.9 million barrels, a decline of about 1.8 percent from last year. State data for March show total natural gas production down roughly 14 percent year-on-year.
Crude oil prices are more than 80 percent from their low point below $30 per barrel early this year as the market returns to a reasonable balance between supply and demand. Oversupply conditions helped bring oil prices far below $100 per barrel that was common in 2014.
For Texas, the No. 1 oil producer in the country, that has yet to spill over into major economic recovery. Keith Phillips, a senior economist with the Federal Reserve Bank of Dallas, said last week there's little chance, however, of a formal recession for Texas. A metric created by the bank, the Texas Business Cycle Index, finds that, overall, the state economy is actually expanding.