Texas Oil Rigs
600
500
SHALE OIL CYCLE
400
. . . productive
life of shale
oil wells
is much
shorter.
Permian
300
200
Eagle Ford
100
0
2011
2012
2013
2014
2015
Source: Energy Information Administration.
OIL BUST’S IMPACTS
Much of the economic impact of the upstream oil and gas industry comes from
capital expenditures during the early stage of developing new wells. The recent oil price
collapses immediately hit U.S. oil-producing regions with dramatic cutbacks in capital
expenditures by energy companies and their suppliers. In South Texas, Weatherford and
Halliburton were among the first to lay off employees, followed by Baker Hughes and
others in oil field services.
Since January 2015, U.S. oil rig counts have been on steep declines in response to oil
prices dipping below $50. Compared to their peaks in mid-2014, fewer than half of oil
rigs are operating today in the Eagle Ford and Permian plays. Texas oil production also
began to fall in July 2015. Because the productive life of shale oil wells is much shorter
than that of traditional oil wells, total U.S. oil production will likely fall at a very rapid
rate if oil prices do not rebound soon.
6
Annual Review of South Texas Economy