Oil & Gas /

Railroad Commission of Texas said it completed plugging a well Monday in Crane County that had uncontrolled water flow.  Inspectors from the commission were dispatched within hours of a report of the water flow that began Dec. 7.  RRC said water flow stopped Jan. 21, the well is now cased and cemented, and freshwater zones are protected.

The RRC announcement Wednesday added, “The agency has done extensive research, and the well is not on any RRC records – indicating no evidence that this is an oil and gas well.  Water sampling further suggests this may not have been an oil and gas well.  The water sample had high salt content, which would not be surprising given the fact that the site is over the Salado (salt) formation.”

The commission is continuing to investigate the incident with Bureau of Economic Geology at University of Texas.

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Brentwood, Tenn.-based Delek Holdings said last week the U.S. Department of Energy selected Delek’s refinery in Big Spring for a carbon capture pilot project.  DOE will provide up to $95 million of federal funds to support development of the project, which aims to capture 145,000 metric tons of carbon dioxide per year and reduce other pollutants.

Reuters said dozens of U.S. carbon capture projects have been proposed to take advantage of federal tax credits provided by the Inflation Reduction Act.

Delek previously invested in two carbon capture start-ups and also acquired 3Bear, which has a sequestration well permit in the U.S.

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Texas’ record crude oil production last year resulted in a record amount of state and local taxes paid by the industry.  The latest annual report from Texas Oil and Gas Association said oil and gas companies in Texas paid $26.3 million in taxes in 2023 – $1.5 billion more than the previous year.  The report said the industry employs more than 480,000 people at an average salary of $124,000 a year.

Todd Staples, association president, told Texas Tribune the industry “has achieved these record-breaking milestones in spite of our federal government using every opportunity to thwart growth by delaying permits, canceling pipelines, and introducing regulatory uncertainty.”

U.S. crude oil production is forecast to set records again in 2024 and 2025 because of increased industry efficiency, but growth is expected to slow because of a decline in the number of active drilling rigs.  Texas produced as much as 5.6 million barrels per day in 2023, and New Mexico produced as much as 1.8 million b/d.  “2023 was such a blockbuster year that Texas efficiency rewrote its oil and natural gas record book,” Staples added.

Texas supplied 42 percent of the nation’s oil in 2023 – most of it coming from Permian Basin where the biggest names in the industry (Chevron, ExxonMobil and ConocoPhillips) are drilling.

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Permian Basin added a drilling rig last week, but U.S., Texas and New Mexico reported declining counts of active rigs.  Permian Basin added 1 rig to reach 311 (354 year ago). Baker Hughes said as of Feb. 2 there were 303 rigs in Texas (down 1 in past week, down 74 in past year), 98 in New Mexico (down 1 in past week, down 7 in past year) and 619 in U.S. (down 2 in past week, down 140 in past year).  No major producing state reported an increase in rig count last week.

Eddy, N.M. (up 2 to 55), Lea, N.M. (down 3 to 40), Martin (up 2 to 37) and Reeves (up 1 to 30) remain the top four counties in Permian Basin, but Loving is now fifth with 23 (up 1).  Others include Midland with 22 (down 1), Upton with 17 (up 2), Ward with 14 (unchanged), Reagan with 13 (up 1) and Howard with 11 (unchanged).

Oklahoma and Louisiana remain equal in third among states; both reported rig counts of 42 (unchanged in past week).  North Dakota is fifth with 32 (also unchanged).  Among regions, Eagle Ford is runner-up with 52 rigs (down 2 in past week, down 20 in past year) followed by Haynesville with 40 (down 2 in past week, down 29 in past year), Williston with 34 (unchanged in past week) and Marcellus with 29 (also unchanged).

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Oil & Gas Journal said a dozen LNG proposed projects – enough to liquefy more than 13 Bcfd of natural gas – are “potentially at risk following the Biden administration’s decision last week to halt new export authorizations to non-Free Trade Agreement countries.”  Journal analyzed data from Center for LNG and U.S. Department of Energy.

Biden administration ordered a pause of new export authorizations Jan. 26 while the DOE enhances its review process to consider climate and economic effects of more exports.  Five of the stalled projects had already received approval from FERC.

U.S. is expected to expand LNG exports to meet growing demand in China (world’s leading LNG purchaser) and northeast and southeast Asia.  Journal said these projects are paused at least until after this year’s presidential election.

U.S. is the world’s largest LNG exporter after surpassing Qatar and Australia last year.  Total LNG operating capacity is 14 Bcfd, and DOE has already authorized an increase to 48 Bcfd.  Five major LNG export projects are under construction, including Corpus Christi Stage III (Cheniere), Rio Grande (Next Decade) and Port Arthur (Sempra).  DOE spokesman told Oil & Gas Journal the new LNG review process “will take months.”

Sen. Joe Manchin (D-WVa), chairman of Energy and Natural Resources Committee, said, “Let me be crystal clear: America’s LNG policy should be based on facts, not politics.  The indisputable facts are that, to date, America’s LNG production has strengthened our economy, created good-paying jobs, supported the energy needs of our allies around the world, and helped reduce global emissions.”

Several industry groups – including American Petroleum Institute, Independent Petroleum Association of America, American Exploration and Production Council, and Center for LNG – warned in a letter to U.S. energy secretary Jennifer Granholm that any further restriction of LNG exports could exacerbate the energy crisis in Europe, threaten U.S. jobs, and force developing nations to rely on coal for their growing energy needs.

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Dallas-based Pioneer Natural Resources said Richard P. Dealy started his new role as CEO, and Scott D. Sheffield is now special advisor to the CEO as of Jan. 1.  Sheffield retired Dec. 31, 2023.  Both will continue to serve on Pioneer’s Board of Directors.  Dealy previously was president and COO since January 2021 in a 30-year career at Pioneer.  While he was COO, Pioneer became the largest oil producer in Texas, and he successfully integrated the acquisitions of Parsley Energy and Double Point Energy.  Sheffield said, “Richard is a disciplined, focused and enthusiastic leader.  He has been a major reason for our success.”

Tuesday’s announcement comes as Pioneer awaits its $64.5 billion merger with ExxonMobil reported in October 2023.  Dealy told Midland Reporter Telegram he expects Exxon’s acquisition of Pioneer to be completed in 2024.  “My focus is directed toward continuing to work alongside our 2,000 dedicated employees to execute on our program and deliver value to our shareholders… We are taking steps to plan for an integration with ExxonMobil… We continue to operate as two independent companies until the deal closes.”  Pioneer plans to grow annual oil production between three and five percent.

Dealy served as Pioneer’s executive vice president and CFO from 2004 to 2020.  A graduate of Eastern New Mexico University, he is a member of the American Exploration and Production Council.

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Texas Seismological Network recently reported that earthquakes in the Texas section of Permian Basin declined 10 percent in 2023 from 2022’s record high.  Bloomberg said the frequency of earthquakes declined “after regulators cracked down on the practice of burying toxic wastewater from oil drilling.”  There were 194 quakes last year of at least 3.0 magnitude in Permian in Texas (not including quakes in New Mexico).

Railroad Commission of Texas asked drillers in late 2021 to restrict oilfield activities by limiting the amount of wastewater disposed of underground.  And shale drillers are boosting wastewater recycling.

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Dallas-based BP Energy Partners said recently it closed on acquisition of Odessa’s American Industrial Machine.  AIM is a regional provider of repair and maintenance services for natural gas compressors in west Texas and New Mexico.  The company specializes in repair, fabrication and parts supply for compressor infrastructure used in transportation of natural gas.  AIM also manufactures and sells replacement parts.

Michael Watzky, managing partner of BP Energy Partners, said Dec. 20, “AIM’s strong culture of service, deep customer relationships and history of growth support its unwavering value proposition and focus on the compressor irrespective of its source of power.”

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Houston-based APA Corp. said Thursday it will acquire Callon Petroleum in an all-stock transaction valued at about $4.5 billion, including Callon’s $1.9 billion in debt.  Callon’s assets provide additional scale to APA across the Permian Basin, most notably in Delaware Basin, where Callon has about 120,000 acres primarily in Reeves, Ward and Winkler counties.  “This transaction is aligned with APA’s overall portfolio strategy and fits all the criteria of our disciplined approach to evaluating external growth opportunities,” John J. Christmann IV, CEO and president of APA, said.  “Callon has built a strong portfolio in the Permian Basin that is complementary to our existing Permian assets and rounds our opportunity set in the Delaware.”

Callon had four rigs running in 3Q in Delaware Basin and one rig running in Midland Basin, where it has about 26,000 acres.  Total company production now exceeds 500,000 boed.  APA expects its oil production in 3Q as a percentage of boe in Permian to increase to 43 percent from 37 percent.  Closing is expected in second quarter 2024.

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Michele Harmon

A qualified local workforce takes investing in our schools, community, and infrastructure.

Wow, it is 2024, and the future of the Permian Basin looks bright, partly due to the investment of money and time that most of our energy leaders made in working so hard to help pass the school bonds in Midland, Odessa, and Greenwood. There is no way that I can begin to thank them all.

Nothing is more impactful than having our leaders and students speak to our area’s needs to improve education. We need to tell our story better. It is not only a good marketing tool but also the truth.

Some of you will disagree that better buildings will not improve student outcomes. Still, you have not walked in my shoes for the last 35-plus years working in school districts that changed to middle schools as far back as the 1980s or added a second high school where no one thought the community would ever agree on another high school. Change is a process that frightens us, but change is a reality of life. Successful change takes hard work, so as a community, we need to be patient.

Do new shining buildings improve student results? The study published by the Abell Hanger Foundation had mixed results, but it is not easy to quantify quality improvements.

Will K-12 schools’ partnerships with Midland College, Odessa College, and UTPB improve our graduation rates and student education levels to build a more qualified workforce? Time will tell, but my guess is, yes, they will. Collaboration is on the upswing between these entities.

Remember my article about the results of an education survey shared by the Literacy Coalition of the Permian Basin? Individual abilities, not just an individual reading level, will contribute to improving the quality of the growth of our own workforce. The study cited that the high-demand occupations will need Level 3 Literacy. Level 3 Literacy means the individual:

• Can comprehend dense or lengthy texts that include continuous, noncontinuous, mixed, or multiple pages of text.
• Can construct meaning across larger chunks of text or perform multi-step operations to identify and formulate responses.
• Can disregard irrelevant or inappropriate content to answer accurately to find the correct answer.

The high-demand occupations are not engineers; they do not necessarily require a bachelor’s degree. However, they need a solid high school education and often some college and/or certifications. Have you looked at a training module to be a mechanic recently?

The jobs requiring Level 3 skills include heavy and tractor-trailer truck drivers, bookkeeping, accounting, and auditing clerks, automotive service technicians and mechanics, nursing assistants, teaching assistants (except postsecondary), medical assistants, hairdressers, hairstylists, cosmetologists, computer user support specialists, firefighters, geological and hydrologic technicians, licensed practical and licensed vocational nurses, heating, air conditioning, and refrigeration mechanics and installers, paralegals and legal assistants, preschool teachers (except special education), dental assistants, calibration technologists and technicians and engineering technologists and technicians (except drafters), and all other emergency medical technicians and paramedics.

Updating and building a solid foundation in our schools, community, and infrastructure in the Permian has been a struggle for decades, but things are changing. Road construction and infrastructure improvements are indeed happening everywhere in the Permian. New businesses are opening, and from my viewpoint after moving here in 2004, the Permian is very different now than then.

I wonder if saying, fly your wife in at night will be a thing of the past. Families want their children to have nice places to go to school and activities to participate in to keep their children engaged and safe. I predict that the school improvements and the continued investment in our area will help grow our community and workforce, and more families will make the Permian their home for years to come.

Only time will tell, but I am hanging around for a few more years to be a part of the change.

Finally, trust our leaders, question our leaders, participate in our community, do your own research on the issues, and get off poisonous social media. You will never know what the inside of a very old school looks like if you do not visit. You will never know how city or county government works if you never attend or watch a meeting; do not forget to vote.

“Your employees are the heart of your organization.” Dr. Michele Harmon is a Human Resource professional, supporting clients in Texas and New Mexico that range in size from five to more than 3,000 employees. Email: [email protected]

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