AQUA BOOK 2016 - Page 8

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