Energy Index on the Rise

The Oklahoma Energy Index has increased a full point during the spring and stands at 222.2, based on May data.
That’s up from 221.2 in April and up 6.7 percent from one year ago, according to the Oklahoma Independent Producers Association.
The Index, after leveling off earlier this year, is back on the rise, said Cody Bannister, OIPA spokesman.
The present rate of growth is much more moderate than it was during the four-year expansion that came to an end last fall, said Amarillo, Texas-based economist Karr Ingham, who compiles the Index.
“But, it does signify continued strength in some important statewide energy exploration and production indicators,” Ingham said.
“Oil and natural gas prices remain the primary determining factor with regard to exploration and production activity,” said John Pilkington, OIPA chairman and independent producer from Tulsa.
“Prices increase as demand increases. Demand nationwide for crude oil and natural gas continue to increase, driving prices upward. Higher energy prices benefit the state in the form of increased tax receipts and a growing work force,” Pilkington said.
The statewide rig count climbed to a monthly average of 186 in May, the highest monthly rig count in 2007 after dipping below 180 for most of the early part of the year. The rig count topped out at 195 in August 2006 before falling to as low as 175 in January. Registered intents to drill continue to lag behind last year’s total, but 2007 remains the second most active year for drilling permits in the history of the OEI, behind 2006.
Ingham said the price outlook has also improved for crude oil and natural gas, with crude oil prices paid to Oklahoma producers averaging more than $60 after being below that level in January, February and March. Natural gas prices were well above $7, some 21 percent improved over the May ’06 average price. In fact, the May natural gas price is the highest average monthly price paid to producers since January 2006.
The energy index, a comprehensive measure of the state’s oil and gas production economy, was established to track industry growth rates and cycles in one of the country’s most active and vibrant energy producing states, Bannister said.
The Index is a joint project of the OIPA and the office of state Secretary of Energy David Fleischaker. ?

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