Some parts of the Eagle Ford and Permian Basin are profitable with oil below $30 a barrel, according to analysis by Bloomberg Intelligence.
Wells in DeWitt County can be profitable with benchmark crude at a price as low as $22.52, which is $4 below its lowest price this year. Crude oil settled at $26.55 on Jan. 20, its weakest price since May 2003.
The reports show seven Texas counties that can break even with oil at or below $30 per barrel: Martin, Midland, Howard, Reeves, Loving, Ward and DeWitt.
Wells that have already been drilled, but not yet hydraulically fractured, can be profitable at even lower prices. Hydraulic fracturing, or fracking, is the last step before production begins. In Reeves County, fracking an already-drilled well can be profitable with oil prices hovering near $14 a barrel.
But not all producers can weather the storm.
According to the report, drillers in Dimmit County need $58 oil to break even. On Monday, West Texas Intermediate crude oil traded at $29.87.
Since the price of oil began falling in June 2014, oil producers have cut costs any way they can to keep business afloat. Two-thirds of all drilling rigs in the country have been idled. Thousands of oilfield workers have been laid off, and companies continue experimenting with new techniques to boost output and keep wells competitive.
Even with low prices, crude output remains high.
Oil companies produced 9,214,000 barrels of oil in the week ending Jan. 29. That’s the highest level of output since 1971 and just 5 percent below last year’s peak, according to the Energy Information Administration.
Last week, President Barack Obama proposed a new plan to levy a $10 tax on every barrel of oil. The White House announced it would be part of the president’s final budget request to Congress.
The proposed tax would be devastating to the oil industry.
House Speaker Paul Ryan, R-Wis., released a statement, referring to the proposal as ‘dead on arrival.’
“A $10 tax for every barrel of oil produced would raise energy prices – hurting poor Americans the most,” Ryan said. “The president should be proposing policies to grow our economy instead of sacrificing it to appease progressive climate activists.”
South Texas Energy & Economic Roundtable President Omar Garcia said a $10 tax will harm oil companies, workers and even higher education.
“The policies being proposed by the president of the United States will only hinder the oil and gas industry from bringing back jobs for hard-working Texans,” Garcia said. “This state relies heavily on the oil and gas industry to fund higher education and road.”