The Texas rig count rose slightly in July and may be stabilizing, indicating a “green shoot of hope” that producers are returning to the field, said petroleum economist Karr Ingham, speaking to the media at the Texas Alliance of Energy Producers lunch.

In July, the Texas oil and gas rig count rose to 342, a small but healthy gain over June’s 320, according to the midyear release of PetroIndex, an energy-related composite index used to measure growth rates and track cycles and turning points in the sector.

Although the energy industry represents only 11.2% of the total Texas economy (and could fall to about 7% by the end of 2009), each dollar of revenue generated by the industry creates an economic impact with a significant multiplier.

“When rig counts are down, that means people are losing jobs and the state is losing tax revenues,” said Ingham. “The July rig count indicates some stabilization, despite eight consecutive months of decline.”

The midyear PetroIndex review revealed that, compared to 2008, the average monthly rig count has fallen by more than 600 (about 65% off the peak of 958), monthly drilling permits declined by more than 1,800 (a drop of about 70%), the value of Texas oil and gas production is down by 70% and some 34,000 industry jobs have been lost.

Meanwhile, although the monthly average price for crude oil has doubled over the past several months, it does not have an appreciable effect on domestic producers that target gas.

However, stable or increased drilling activity will benefit Texas communities because much of the proceeds stay in the region due to the exit of international oil companies a decade ago.

Also, the index intimates that well completions are on the rise, but the statistic is misleading, Ingham said, “because recently the Texas Railroad Commission has had time to catch up with its paperwork. We are still watching the dominos fall.”

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