Since many communities across Texas are influenced heavily by German immigrants, we thought it would be interesting to see what the impact of the new boom has on West Texas.
The oil boom in the Permian Basin is setting record-breaking production of oil and gas. It is putting money in the pockets of many West Texas landowners. Production is so high, in fact, that experts are working hard to find a way to transport so much oil to the Gulf for export. Major oil companies are predicting that this boom is here to last.
The sight and sounds of the oil rigs are a small price to pay for the huge flow of oil that is being fracked out of the rock underneath. Families are watching their bank accounts grow before their eyes as engineers mine for never before tapped resources.
To put things into perspective, some families have signed contracts with fracking companies that guarantee them 25% of the revenue from every barrel that is pulled up. Given the level of production and price of oil, this could mean millions per year for families.
The Brunson family of West Texas has signed just such a deal with an oil company. They have 50 wells that are being drilled on their ranch. They are estimated to receive up to $3.8 million in royalties just for this year for the Brunsons. This doesn’t even include the fees the oil companies pay them to drill on the land or the royalties they will receive once the oil is converted into gas.
This oil boom is changing life in just about every way in West Texas. Oil drilling in the Permian Basis accounted for 44% of all drilling in the US for April of this year. The number of oil rigs in this area of the country has tripled in the last 2 years. Exxon Mobil, one of the largest oil companies in the world, is one of the major players in the Permian Basin oil rush. They intend to triple their output between now and the year 2025.
Over the next decade, the Permian is expected to make up over 2/3 of all the oil produced in the US. This is because new technology has made it possible to extract oil out of the shale that makes up so much of the Permian ground. Drillers are able to extract oil from this rock much cheaper than they ever expected. It is actually cheaper to do it here than in places like Russia and the Middle East. Because of the cheaper methods of extraction, experts are estimating that oil from West Texas may be less than $30 per barrel.
This kind of oil boom is surely going to create a ton of new jobs – and not just for oilmen. The oil companies are using computer technology to best strategize their drilling. There will be a need for computer specialists and scientists in addition to traditional West Texas oil field services jobs. This will definitely help the economy in West Texas, especially in areas that are struggling such as Midland.
This increase in output has put a strain on existing resources for transporting oil. Other parts of Texas are experiencing a similar problem. In the short term, oil companies are going to have to rely on trains and trucks to transport what cannot be shipped using existing pipelines. However, there are plans to build 3 major pipeline projects by the end of 2019.
While some fear that this boom may create a world of haves and have-nots, it’s important that everyone keep an eye on maintaining a balanced economy. It is a win-win for everybody if landowners can benefit and the influx to the economy drives prices down rather than up. The infrastructure will also have to be modified to account for new roads and ways to export the increased volume of oil. If this can all be mapped out strategically, it will be a blessing for Texas in more ways than one.