Expansion: Energy Industry in 2006

Strong crude oil and natural gas prices flowed through the Permian Basin’s oil fields in 2006 as almost $20 billion from the production of crude oil and natural gas — as of October — funded significantly higher drilling activity and oil and gas well completions.

“It’s been a good year, it’s been a good couple of years,” said Karr Ingham, the Amarillo economist who prepares the Texas Permian Basin Petroleum Index and the Texas Petroleum Index, which he prepares for the Texas Alliance of Energy Producers.

Natural gas prices have fallen from December 2005 highs, but crude oil prices for the year have posted double-digit increases to levels about $60 a barrel, Ingham said.

“The rig count continues to climb,” 30 percent to an average 155 rigs a month through October drilling in the West Texas portion of the Permian Basin, he said. “I thought it would level off but it has yet to do so. But beyond drilling, there’s new technology in place to bring to the surface what’s there. What was easy to find, we’ve tapped into. An awful lot of oil and gas remains, but it’s tougher to get to and to bring to the surface. Current prices allow for that technology. If prices hold, and I’m talking even $40 to $50, I think there will be exciting times in the Permian Basin. Producers will have the financial wherewithal to develop new production technologies to let operators bring to the surface what remains. It will be a new high-tech wildcatting experience.”

Midland Reporter-Telegram