When President Joe Biden openly advocates for phasing out oil and gas as primary energy generators in the United States within a decade, what appears as a news scroll blip for most Americans is a clap of thunder across the rolling West Texas sage of the Permian Basin.
“The messages, virtue signaling, and rhetoric that have come from the federal level lately tell us oil and gas is evil or not on the side of the average American or on the side of caring for our environment,” Midland Mayor Lori Blong told congressional lawmakers during a Feb. 16 field hearing in her city, which she called “the energy capital of Texas and, arguably, the energy capital of the United States.”
Forty percent of U.S. oil and natural gas production and 7 percent of global output comes from the Permian Basin, which also spans southeastern New Mexico.
Blong, in addition to serving as Midland’s first female mayor, is a founding partner in Octane Energy, an oil and gas exploration and production company that manages more than 300 wells across 35,000 square miles of West Texas and southeast New Mexico.
Biden’s call for an end to her industry “has made it difficult to access capital” and fostered a “decrease in investment” in new exploration and new wells, Blong said.
Uncertainty Plagues PermianWith the administration tying pipelines up in regulatory knots and “the SEC-driven [Environmental, Social, and Governance] movement” pushing investors away, Blong said the future is hazy in West Texas, and that uncertainty is “creating growing market distortions” that “need to be reversed.”
Independent Petroleum Association of America (IPAA) Board Chair Steven Pruett, also president and CEO at Elevation Resources in Midland, said local oil and gas producers can no longer rely on banks to get needed loans.
“My peers and I know we have to survive on our own cash flow,” he said, noting that less than half as much money is invested in developing new wells now as there was two years ago.
Because of this, Pruett said there will be a shortage “of oil and gas in the next two years and it will be very damaging” to the global economy.
Blong said the administration seems to forget that 96 percent of the products Americans use every day, such as pharmaceuticals, clothing, electronics, and cosmetics, are derived from petroleum, likely from the Permian Basin.
Rep. Dan Crenshaw (R-Texas) agreed.
“If we took away petroleum products ... look around the room, you’d pretty much watch everything disappear,“ he said. ”It is places like [Midland] that help us to maintain the reality we now live in.”
GOP ‘Unleashes’ Bill PackageThe field hearing was the third staged in Texas recently by Republican-led committees. On Feb. 13, the House Natural Resources Committee’s Energy & Mineral Resources Subcommittee held a hearing in Odessa, Texas, on how federal energy production supports local communities.
The ECGS subcommittee also orchestrated the Feb. 16 Midland hearing titled “American Energy Expansion: Improving Local Economies and Communities’ Way of Life,” which emphasized the fiscal and socioeconomic benefits of the Permian Basin’s oil and gas industry and how it’s threatened by the Biden administration’s “rush to green energy” policies.
The seven bills mandate 30-day federal approval of “cross-border energy infrastructure,” or pipelines; call for removal of “public interest” as a categorical review when the U.S. Department of Energy weighs natural gas export proposals; repeals the federal Natural Gas Tax; prohibits a president from banning fracking by executive order; and requires the National Petroleum Council to research U.S. refinery capacity and needs.
Two resolutions among the measures express that there should be “no restrictions” on oil and gas exports and express disapproval of Biden’s revocation of the Keystone XL pipeline permit.
Texas Leads in ‘Green Energy’
As in previous hearings, the witnesses—even those advocating for alternate energies—lobbied for regulatory reform and an overhaul of federal permitting systems.
Biology and geosciences professor Michael Zavada, who chairs the University of Texas Geosciences Department, said the headlong dive into green technologies is foolish.
“It is prudent for the United States to diversify our energy portfolio as the safest, most reliable way to maintain long-term energy independence,” he said, calling support for American oil and gas projects for at least 50 years “a good strategic move in a hostile world.”
Zavada advocated for a diverse array of energy sources, claiming that the Permian Basin will remain in “any new [energy] paradigm that emerges in at least the next 50 years” because it’s also “an ideal environment for solar, wind,” and other renewable energies.
He said equitable investments “to all components” in the energy toolbox could ameliorate boom and bust cycles in “oil patch” cities but that investments shouldn’t favor renewables “at the expense of” oil and gas.
“We all agree oil and gas aren’t going away anytime soon, but the U.S. can embrace ‘all of the above’ without pitting one against the other,” Rep. Scott Peters (D-Calif.) said, noting that Texas leads the nation in alternate energy development as well as in oil and gas.
“Texas also is the national leader in clean energy development. It is first in wind power, second in solar and storage. Forty percent of the state’s power comes from wind, solar, and nuclear sources. Picking winners and losers is failed strategy.”
All options are viable and should be pursued with equal gusto, Rep. Tony Cárdenas (D-Calif.) said.
“Texas is doing it bigger and better with many different energy sources,” Cárdenas said. “That shows we can do all of that, and we have been doing all of that. We can move forward in a way that we can have it all.”
Oil and Gas Get Grant Shaft
Blong, Pruett, Carrasco, and Zavada each recounted examples of how new regulations and rules encoded into the Bipartisan Infrastructure Law and Inflation Reduction Act favor alternate so-marketed green technologies when issuing grants for innovation and good practices that Permian Basin oil and gas producers have practiced for decades.
The new bills and federal agency emphasis “have given benefits to solar and wind that are not afforded to oil and gas,” Blong said, noting that oil and gas producers are “not opposed” to alternate energies being participants in federal grant programs and that they want to participate as long as the government is even in evaluating submissions from oil and gas producers.
“If the federal government truly wants to work with energy companies to positively impact the environment, one tangible suggestion is to significantly invest in technologies for beneficial reuse of produced water from oil and natural gas extraction.”
She said Midland-based innovators have developed technology for the reuse of water used in oil and gas sites, but the federal government apparently isn’t interested in anything except investments in “renewables.”
“Federal efforts in this case could help to accelerate our beneficial reuse efforts, rather than the federal efforts we have seen to restrict our industry but which do not ultimately benefit our communities,” Blong said.
There’s a reason that oil and gas innovation isn’t getting the grants and investment money some alternate energies are, Peters said.
The grants are for new energy sources, such as carbon capture, direct-air capture, geothermal, and nuclear, he said—for advancing new technologies, not sustaining an industry that just recorded record profits.
“The goal is to drive up domestic energy production using all these sources and to allow the world to do the same,” he said.