The Federal Reserve Bank of Dallas reported Wednesday that southern U.S. oil and gas activity declined as uncertainty remains heightened in the third quarter of 2019.
According to oil and gas executives responding to a Dallas Fed survey, the business activity index, the survey's broadest measure of conditions facing Eleventh District energy firms, fell to minus 7.4 in the third quarter from minus 0.6 in the second quarter.
Oilfield services firms drove the decline, with their business activity index slumping to minus 21.8 from 6.6, said the survey.
Oil and gas production increased for the 12th consecutive quarter, according to exploration and production executives. The oil production index was at 15.7 in the third quarter, a tick down from the second-quarter reading of 17.4. Meanwhile, the natural gas production index fell to 6.5 from 13.4.
The aggregate company outlook index improved to zero from minus 4.5. The zero reading suggests outlooks remained unchanged during the third quarter after worsening during the second quarter.
However, company outlooks for oilfield services firms remained negative at minus 14.8. While uncertainty continues to intensify, slightly fewer firms noted rising uncertainty this quarter than last, and the index fell 12 points to 38.
On average, respondents expect West Texas Intermediate (WTI) oil prices will be 56.92 U.S. dollars per barrel by year-end 2019, with responses ranging from 48 dollars to 75 dollars per barrel. WTI is a grade of crude oil used as a benchmark in oil pricing.
Dallas Fed conducts the survey quarterly to obtain a timely assessment of energy activity among oil and gas firms located or headquartered in the Eleventh District, which covers Texas, northern Louisiana, and southern New Mexico.
The Houston-based oilfield services company Baker Hughes reported on Friday that the number of active drilling rigs in the United States fell by 18 to 868 in the week ending Sept. 20, or 185 rigs down year on year.
Among them, 589 rigs were operating in the U.S. states of Texas, Louisiana and New Mexico, accounting for nearly 69 percent of total rigs in the country.
With the combination of hydraulic fracturing and horizontal drilling, U.S. oil production has increased significantly, and this is termed as "Shale Revolution."
According to the U.S. Energy Information Administration, hydraulically fractured horizontal wells accounted for 69 percent of all oil and natural gas wells and 83 percent of the total linear footage drilled in the country.
By far, the Permian basin, located in western Texas and southeastern New Mexico, has been the largest source of shale oil production growth in the United States, which has become the engine of supply growth outside the Organization of the Petroleum Exporting Countries in the past years.
Editor:Cherie
