Dallas Fed: Oil and Gas Industry in Texas, Louisiana Remains Strong

Tuesday, October 16, 2018

Rye Druzin | Houston Chronicle | October 1, 2018

The oil and gas industries of Texas and Louisiana continued to stay at near-record levels of activity during the third quarter.

A new study by the Federal Reserve Bank of Dallas shows that Texas and Louisiana-based oil and gas companies saw business activity continue to increase during the third quarter, which ended Sept. 30.

The Dallas Fed surveyed 171 energy companies between Sept. 12 and 20, of which 110 were exploration and production firms and the other 61 were oil and gas service companies. 

The business activity index -- the survey's most general measure of conditions for its oil and gas firms -- dipped slightly to 43.3 points from 44.5 points in the second quarter. While there was a slight fall the Dallas Fed said the business activity index remains near the highest levels since the Energy Survey began in the first quarter of 2016.

The survey asked specific questions about pipeline capacity issues out of West Texas' Permian Basin, which has faced pipeline constraints as production has matched pipeline capacity out of the region.

More than half of respondents - 56 percent - said they expect pipeline constraints out of the Permian to be alleviated by the end of 2019.

Seventy percent of respondents said they expect there to be a "slightly negative" impact on Permian production because of crude oil prices differences between oil sold in Midland compared to Cushing, Oklahoma. On Monday oil sold in Midland was been selling sometimes at a $7 discount to oil in Cushing, and at times oil sold in Midland has sold at $15 or higher discounts compared to the Gulf Coast.