Posted on March 3, 2019
Partnership representatives provide council with details of five areas in which improvement is needed
By Stewart Doreen, MRT.com/Midland Reporter-Telegram
PSP said that currently, there are 15,000 positions that remain unfilled across the Permian. They also reported that Permian production will support the creation of about 45,000 jobs across the region through 2030.
The Permian Strategic Partnership wants to make an impact in the growing Permian Basin and has identified five areas in which its $100 million-plus in investments can be put to best use.
PSP officials spoke to the Midland City Council on Tuesday about the initiative and provided some detail about those five areas that — when improved — will help the Permian Basin reach its full potential.
More activity in the oil patch impacts the roads, which weren’t designed for the type of stress being put on them on a daily basis. During their presentation, PSP officials reminded the council that hydraulic fracturing of horizontal wells requires “substantially more road freight traffic than conventional drilling.”
“This effort is compounded by increasing utilization of locally mined sand,” according to a report provided to the Reporter-Telegram.
PSP officials said fracturing operations require 50 trucks of sand a day. And while they hope to get more trucks off the road in other facets of their operations, by 2022, truck loads will have increased by 125 percent from 2016.
This additional burden on the Permian’s roads is in addition to the 40 percent increase in traffic in the Texas Department of Transportation’s Odessa District between 2009 and 2016.
“We estimate that affected roads require more than $750 million in repairs and rehabilitation to close existing gaps, with the majority of that amount split between the Odessa district (of the Texas Department of Transportation) and the New Mexico Department of Transportation’s District 2,” according to the report. “While this is a large investment, increased activity in the Permian Basin in Texas, for example, is likely to send $26 billion in Proposition 1 funds to Austin for roads through 2030, so every $1 invested today supports up to $50 in future collection.”
Workforce (and housing)
In 2018, the Bureau of Labor Statistics reported there was no region in the United States that could match Midland for its percentage increase in new jobs. PSP said that currently, there are 15,000 positions that remain unfilled across the Permian. They also reported that Permian production will support the creation of about 45,000 jobs across the region through 2030.
“Attracting new workers is becoming increasingly difficult given the housing shortage and higher costs of living,” the PSP report states. “Thus far, the industry has met most of its labor needs by relying on commuters, but this costly approach does not address other sectors – including health care, childcare, education, retail or services – that shape quality of life.
“To unleash growth, we must address three main challenges: attracting talented, hard-working people to the region, expanding the availability of housing choices and scaling up local vocational training to upskill the local workforce,” the report states.
Midland voters have approved more than $220 million in bonds since 2003. PSP officials believe that investment isn’t enough. The PSP indicates that if Midland ISD and Ector County ISD had spent the state averages on facilities since 2000, both districts would have invested an additional $600 million.
The oil industry has a record of investing in education, whether it is funding the tax ratification election campaign in Midland in 2016 or donating millions that provided housing stipends for teachers dealing with rising rents and signing bonuses.
The PSP report echoes what industry leaders have been saying for a year: Oil industry professionals with children rate public education as the single greatest factor in evaluating a location change.
“Midland and Odessa, for example, are at a great disadvantage because their public schools perform poorly,” the report states.
PSP also reports that capital funding has not kept pace with growth in the number of students, “casting doubt on the ability of current schools to absorb expected large growth in enrollments.”
“Research shows that student performance rises with teacher experience and quality – and declines with high teacher turnover and inconsistent leadership,” the report states. “Recent initiatives are producing measurable and encouraging improvements, but there is work to be done.”
Midland also falls short when it comes to the number of physicians required per person, compared to the national average, according to the PSP report.
In 2017, there were 89 primary care physicians – 41 fewer than the national benchmark. That same year, there were 145 non-primary care physicians – 117 fewer than the national benchmark.
“Fortunately, the Texas Tech University Medical School is a premier institution, and we see opportunities to strengthen ties and train more doctors in the region,” the report states. “A large share of the local population is insured, which is a clear strength, but improving quality of that coverage will bolster the financial position of the hospitals and the attractiveness of the region to new physicians. We can also close gaps in hospital infrastructure to improve overall health care, quality of life in the region and reduce the need for residents to travel for treatment.”
The Permian Strategic Partnership is made up of 20 leaders of the largest regional producers and global service companies. Last year, it announced its intention to provide more than $100 million over the next several years as seed money to spur additional private sector investment.
“By making wise, timely investments in vital public services, we can create a virtuous circle, attracting the talent we need to fill tens of thousands of good, high-paying jobs, significantly expanding the revenues and profits of companies in a broad range of sectors, and generate billions of additional tax dollars to make new investments,” the report states.