(Reuters) - Texas is on track to complete fewer oil and gas wells this year, the state regulator said in a statement on Tuesday, as companies tighten spending to adjust to lower oil prices and a push from investors to focus on returns.
The state’s oil and gas regulator has processed 8,629 well completions so far this year, marking nearly a 16% decline versus the same period last year, the Railroad Commission of Texas said.
Texas is the largest oil producing state in the country and helped propel U.S. output to a weekly record of nearly 13 million bpd last month, according to the U.S. Energy Information Administration (EIA).
U.S. oil prices have hovered below $60 a barrel for most of the year, prompting many energy firms to cut staff and reduce budgets, even as major oil exporting countries have curbed production. Last week, members of the Organization of the Petroleum Exporting Countries (OPEC) and allies agreed to deepen those cuts by 500,000 bpd to 1.7 million barrels per day through March 2020.
Although fewer wells have been completed in Texas this year, U.S. production has continued to surge and is expected to rise another 930,000 bpd next year to average 13.18 million bpd, the EIA said on Tuesday. That is lower than its previous growth forecast of 1 million bpd.
Although the rate of U.S. crude production growth is anticipated to slow in 2020 due to a decline in drilling rigs, it is still on pace to set new records in 2019 and 2020. The EIA anticipates that decline to be offset by greater rig efficiency and well productivity, it said on Tuesday.
Hydraulic fracturing companies that pump sand, water and other chemicals into the ground to help complete wells have been hard hit by lower activity. Last week, consultancy Primary Vision estimated some 50 hydraulic fracturing spreads left the Permian Basin in 2019.
Leading hydraulic fracturing company Halliburton Co has had several rounds of layoffs this year across its North America business, and Pumpco Energy Services, a unit of Superior Energy Services, last week became the latest firm in the oilfield services sector to cut jobs.
Reporting by Liz Hampton; editing by Nick Macfie