US Shale Firms To Spend $100 Million On West Texas And New Mexico Improvements

Over a dozen top US energy firms have agreed to devote $100 million towards much needed improvements in West Texas and New Mexico, in order to help the regions cope with shortfalls in health care, education and civic infrastructure in the wake of the shale oil and gas boom, the group said on Sunday. 

Chevron, EOG Resources, Exxon Mobil and Royal Dutch Shell are among 17 companies backing the Permian Strategic Partnership, as the consortium is called, Don Evans, a former U.S. government official and energy executive helping launch the group, told Reuters on Saturday. -Reuters

The funds will be used to address labor and housing shortages, according to Reuters, along with traffic congestion caused by companies converging on the Permian Basin - the nation's largest oilfield, where billions of dollars' worth of oil and gas are expected to be extracted over the next several decades, according to experts. 

"t’s a significant amount of money, but these are huge challenges," said Evans, former US Secretary of Commerce from Midland, Texas. "We don’t have enough teachers. We don’t have enough doctors," he added. 

The consortium will work with regional and federal officials, as well as nonprofit groups, companies and educators in Texas and New Mexico. Evans - who became CEO of producer Tom Brown Inc. after starting his career in the Permian, joined the George W. Bush administration as Secretary of Commerce. 

The group is assembling plans to hold meetings in communities across the region, so “everyone have a voice” in the undertaking. There is no timetable or plan for how the initial contribution will be spent. The group is recruiting staff and searching for office space, he said.

In the last decade, the region’s many pockets of oil and low production costs have led to gold rush-like conditions in the Permian. Companies are pouring staff and equipment into the oilfield, which is expected to pump 3.7 million barrels of oil per day by December, four times its rate in 2010, according to the U.S. Energy Information Administration. -Reuters

The unemployment rate in Midland hit 2.1 percent in October, vs. the national rate of 3.7 percent, leaving local employers - including schools and restaurants - under pressure as staff leaves for oilfield jobs. 

As we reported in June, a battle has been playing out in Midland between employee-starved local businesses and multinational energy companies who are poaching local residents left and right for high-paying jobs as the latest Permian Basin shale-oil boom accelerates.

Midland Mayor Jerry Morales has said that the boom is a double-edged sword; while the energy industry has increased sales-tax revenue by 34% year-over-year as of June, the 2.1% unemployment rate has resulted in a severe shortage of low-paying jobs around town - such as the 100 open teaching positions, according to Bloomberg.

Morales, a native Midlander and second-generation restaurateur, has seen it happen so many times before. Oil prices go up, and energy companies dangle such incredible salaries that restaurants, grocery stores, hotels and other businesses can’t compete. People complain about poor service and long lines at McDonald’s and the Walmart and their favorite Tex-Mex joints. Rents soar. -Bloomberg

"This economy is on fire," said Morales - who is also the proprietor of Mulberry Cafe and Gerardo's Casita. Unfortunately, the fire is so hot that the Mayor is scrambling to fill open jobs - from local government positions, to cooks at his restaurants. 

In the country’s busiest oil patch, where the rig count has climbed by nearly one third in the past year, drillers, service providers and trucking companies have been poaching in all corners, recruiting everyone from police officers to grocery clerks. So many bus drivers with the Ector County Independent School District in nearby Odessa quit for the shale fields that kids were sometimes late to class. The George W. Bush Childhood Home, a museum in Midland dedicated to the 43rd U.S. president, is smarting from a volunteer shortage.

And it doesn't take much to get hired by the oil industry - which, as Bloomberg summarizes, "will hire just about anyone with basic training"... and it will quickly double, triple or x-ple their pay in the process. "It is crazy" said Jazmin Jimenez, 24, who flew through a two-week training program at New Mexico Junior College about 100 miles north of Midland. Jimenez was hired by Chevron as a well-pump checker. "Honestly I never thought I’d see myself at an oilfield company. But now that I’m here -- I think this is it."

Meanwhile, the shale boom has also resulted in school overcrowding, a spike in traffic fatalities, drug abuse, and a massive strain on the power grid

“Our roads are not designed to handle the amount of truck traffic we have,” said Jeff Walker, transportation training coordinator at New Mexico Junior College in Hobbs.

Drug charges in Midland more than doubled between 2012 and 2016, to 942 from 491, according to police data. Traffic accidents also jumped 18 percent between 2016 and 2017 in Midland County, and 29 percent in nearby Ector County, according to Texas Department of Transportation data. -Reuters

"They all agree that scaling up infrastructure is going to be a huge challenge," said oil industry adviser Bob Peterson. "There’s a common agreement that there’s a whole bundle of problems."