Posted on February 7, 2019
The state of oil and gas in Midland is healthy, according to Tim Leach, who served as keynote speaker at the Midland Chamber of Commerce’s annual State of Oil & Gas luncheon.
Leach, chairman and chief executive officer of Concho Resources, cited statistics indicating Permian Basin crude production is expected to climb from the current 4 million barrels a day to 6 million barrels a day in just six years. That, he told the sold-out crowd at the Horseshoe, would comprise 7 percent of total world oil production and 40 percent of U.S. production. In addition, the Permian Basin could see 45,000 new high-paying technical jobs on top of the 50,000 jobs that have been created since about 2000.
“Companies operating here today will be investing $50 billion a year in drilling and completing wells,” leading to over $1 trillion in spending in that same timeframe, he said. That has created numerous opportunities throughout the Permian Basin, but also significant challenges, he said.
When he and other leaders of local oil companies review their business plans and consider their greatest concerns, he said it’s not sand or pipeline capacity or technology. “Collectively, they say it’s schools, roads, doctors and housing.”
He said the state of the area’s schools are of concern because they can either serve to attract the next generation of workers or put the area at a competitive disadvantage. And as a result of the increased traffic since the shale plays took off – traffic is up 20 percent and truck miles 75 percent – there have been 300 fatalities a year in the Permian Basin. “That’s just not acceptable,” he said.
While Midland is lucky to have a modern hospital, the city suffers from a shortage of doctors that threatens to rise from its current 150 to as many as 300, and people moving here have a hard time finding a doctor, he noted. The best health care is necessary if the Permian Basin is to build its world-class resources and world-class economy, he said.
“When I moved to Midland in 1982, Midland was half the size it is today and there were 2,000 houses on the market, and that was considered a healthy inventory,” he said. “Today there are 200-300 on the market for a city twice as big. When you think about building houses, it’s not just building camps for people to live in. We need to build communities, we need to build housing developments that, 20 or 30 years from now are more valuable than when they were built.”
That is why Concho and 19 other companies have come together to form Permian Strategic Partnership and commit significant funds to address these issues and serve as a catalyst for the future.
“We live here all the time. We’ve seen the ups and the downs. It’s not different this time, but everything’s changing. The change is for the better, but we have a once in a lifetime opportunity to seize the moment to create generational change, change that will affect my grandchildren,” Leach said. “That’s the real message I’m delivering here. We have the opportunity to create a shared vision of what the city will look like 20 years from now. And we have the economic engine that can make it possible. I’ll tell you, solving these problems is probably going to require several billion dollars invested over a long period of time. The taxing entities won’t do it alone. Oil companies won’t do it alone. Foundations can’t do it alone. We’re all going to have to work together. Some of these problems can be solved with help from Austin, Santa Fe, Washington. Some solutions may be part oil company, part MISD, part hospital district. But we need to work together toward a vision of what the community is going to look like.”
He observed that when he gathers with his peers who operate producing companies, “we have a tendency of telling each other it’s different this time. This boom’s different. It’s going to be different. It’s so much different.”
But his message is that “it’s not different this time, but everything’s changed.”
He cited the Permian Basin’s regained role as the world’s swing producer and how that is affecting geopolitics around the world, just as Permian Basin oil aided the Allies in World War II. After the war, as Permian Basin oil production was steadily growing, families from the Northeast, like the Bushes, sent their “young enterprising folks to Midland to take advantage of the Permian’s growth. People like the Bushes moved to Midland and affected our culture and quality of life. Sound familiar? It’s not different this time, it’s everything is different.”
He recounted how the original Petroleum Club at Big Spring and Illinois was torn down to make way for the 50-story MGF Tower. “Sound familiar? It’s not different this time.”