When Could The New Texas Oil Rush Beat the Boom of the 70s?

Photo by Mose Buchele/StateImpact Texas

A pumpjack in Midland, home to yet another oil boom recently.

A lot was made this week of numbers showing record-breaking numbers for daily oil production in Texas. Those figures, from the US Energy Information Administration (EIA).

In September, the most recent month for the data, drillers in Texas pulled about 2.7 million barrels of oil a day from the earth, most of it from the state’s two hottest shale plays, in the Eagle Ford region in South Texas and the Permian Basin in the west.

“The Permian’s already producing over a million barrels a day of oil, and the Eagle Ford’s up to about 650,000 barrels per day. And so it appears to be only a matter of time before we have two oil fields in Texas producing — by themselves — a million barrels per day,” Tom Tunstall, Director of the Center for Community and Business Research at University of Texas at San Antonio tells StateImpact Texas.

But the current 2.7 million barrel per day figure figure is “record-breaking” only in terms of government records. The fact is that Texas pumped far more oil in the early seventies, but the EIA simply did not keep track of daily oil production back then. According to historical annual data, provided to StateImpact Texas by the EIA, the Texas oil boom peaked in 1972, when drillers pumped around 3.4 million barrels a day on average from Texas oil fields.

Still, if trends continue, experts say the new boom could rival the previous one in a matter of years.

So when might the current boom, spurred on by fracking and horizontal drilling technology, reach the level of the seventies boom?

“There are two aspects to that,” Lynn Westfall, Director of Energy Markets and Financial Analysis for the EIA, tells StateImpact Texas.

“First is, how much new production can you bring on by accessing the shale fields by the new technology?” says Westfall. “The second part of the question is, how much are the old fields going to be declining? Because its the net of those two that gives you the total production.”

Westfall says that production from oil fields in the Permian Basin appears to be stabilizing after dropping about two or three percent annually for some years. That, added to a surge of new drilling, could mean that Texas production could reach the levels it had in the seventies by 2020.

Of course there’s a third factor to consider: cost.

“It always comes with the caveat, ‘If we don’t see some dramatic decrease in oil prices‘,” says UTSA’s Tunstall. “The industry is — if you go back to its inception — is replete with booms and busts, shortages and gluts of oil, and a lot of it due to the market price.”

Tunstall says that the “break even” point for shale oil is likely somewhere in the 50 to 70 dollars per barrel range.

“But by some accounts, the Permian Basin alone is reported to have perhaps 50 billion barrels of recoverable oil at current prices,” he adds. “So yeah, I would not be at all surprised to see Texas break the records that were set in the seventies.”