Posted on May 5, 2020
By Don Evans, Permian Strategic Partnership
These are difficult days – for our families, businesses and communities – all of which are feeling the impacts from multiple global threats at once. The threat to our personal health from the COVID-19 pandemic is taking its toll around the globe, while we absorb the threat to our economic health caused by market uncertainty and job losses. Our daily routines have been upended as we face these unprecedented challenges.
The pain feels especially sharp in the Permian Basin, as the economic nucleus of our region – the oil and natural gas industry – grapples with shockingly lower global oil demand that is primarily a result of the global economic slowdown caused by the virus. While it’s hard to predict what will happen next week or next year, the 20 companies of the Permian Strategic Partnership are committed to, and believe in, the long-term promise of the Permian Basin.
These companies believe that this situation is fundamentally different from previous downturns. The most obvious difference is the extremely rapid drop in oil demand in part due to the virus. It’s also different because, in the past, other oil producing regions offered more competitive returns, making it difficult for the Permian to compete. The advent of horizontal drilling and advances in technology have completely changed that picture over the past several years. The Permian is now among the most prolific and productive oil fields in the world, with strong economics to match. The world energy market is in shock today. But when demand recovers and prices return to a more stabilized level, even at a relatively low price, we expect the Permian to continue thriving.
More than a year ago, we formed the PSP. We committed to work with community and state leaders to improve the quality of life for the families of the Permian Basin. With a focus on better roads, quality schools, improved health care and a well-educated and trained work force, the PSP has worked to find common ground and solutions. In its first year, PSP committed nearly $40 million to support six major initiatives, including IDEA schools in Midland and Ector school districts, a career technical education high school in Hobbs, New Mexico, and a rural medical residency program across underserved areas of West Texas and Southeast New Mexico. PSP made these commitments in partnership with local leaders and foundations, leveraging the dollars and ideas we all bring to the table.
We supported advocacy efforts resulting in an increase of approximately $1 billion in state and federal funding for roadway improvements in the Permian. We are working with local municipalities to encourage census participation to make sure we get an accurate census count and the resulting increase in federal dollars. We have more work to do, especially in this environment.
The challenges ahead haven’t yet been defined and cannot be underestimated. Companies from all industries are adjusting to market conditions, making difficult decisions and finding ways to weather this storm. Yet as we look ahead, a growing world will continue to need reliable and affordable energy, and the Permian will continue to offer the world that energy.
The determination, resilience and grit of those who call the Permian Basin home give us all hope and give me confidence that our long-term future is bright. PSP’s commitment to partnership continues today and will continue tomorrow and during the years ahead. We know we have the best place, partners and people to respond to today’s challenges and, over time, put them behind us as we all work together toward a better tomorrow.
Don Evans is chairman of Permian Strategic Partnership.