Weak Natural Gas Prices Crimp Drilling Activity

The Texas Alliance of Energy Producers says that weakness in natural gas prices and instability in crude oil markets are taking a toll on drilling activity.

The slowdown in drilling, combined with price volatility, led the Texas Petro Index for September to drop to just under 271. It was the third decline for the TPI in four months. The index is a composite of indicators of activity in the state’s energy sector. Economist Karr Ingham is its creator.

“These are not deep declines, but they are slight declines, modest declines, that suggest a slight weakening in the statewide rig count, the number of drilling permits that are being issued, and possibly industry employment.”

While crude oil prices remain relatively high, Ingham says, they’re receiving little support from the natural gas market. The value of Texas-produced gas fell by nearly $1 billion from September of last year, a drop of 40%.

The Texas Petro Index hit a post-recession high of just under 273 in May, following more than two years of consecutive growth.

 

 

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...