Energy Index Responds to Higher Rig Count

An increase in drilling activity helped push the most recent Oklahoma Energy Index even higher.
Using data compiled in June, the Oklahoma monthly average rig count surpassed 190, helping to push to index up to 223.8 from 221.8 the previous month. The June OEI is also 6 percent higher than the June 2006 index of 211.2.
Oil and natural gas production volume has been impacted by higher energy prices, which offer a greater incentive for producers to use more-costly practices to extract hard-to-reach oil and natural gas, said economist Karr Ingham. He compiles the energy index for the Oklahoma Independent Petroleum Association.
Because of that, oil and natural gas production, which has steadily declined since the mid-1980s, appears to be holding steady.
“More crude oil and natural gas remain in the ground in Oklahoma than has been extracted over all of the state’s production history,” said OIPA Chairman John Pilkington, an independent producer from Tulsa. “That simple fact alone strongly suggests oil and natural gas industry in Oklahoma has a very bright future.”
The June 2007 rig count of 193 is a tie for the second highest monthly average statewide rig count in the history of the Oklahoma Energy Index. The rig count also reached 193 in September of last year, and the highest rig count recorded over the history of the index is 195 in August of 2006.
The expansion in exploration and production activity is also having a positive impact on the volume of crude oil and natural gas production in the state. Estimated crude oil production through the first six months of 2007 is 2.5 percent higher than production during the same period a year ago, and estimated natural gas production is up by just less than 2 percent.
The energy index is a comprehensive measure of the state’s oil and gas production economy established to track industry growth rates and cycles in one of the nation’s most active and vibrant energy producing states. The OEI is a joint project of OIPA and the office of state Secretary of Energy David Fleischaker.

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