Just about a year ago, a handful of oil and gas CEOs were urged to take action by their own.

Tim Dove, CEO of Pioneer Natural Resources (stock ticker: PXD) and Travis Stice, CEO of Diamondback Energy (stock ticker: FANG) asked a group of fellow Permian Basin oil producers to help identify and find ways to solve the human needs problems in the West Texas-New Mexico region. The warning was that if shortages in a qualified workforce, problems with roads, healthcare and housing weren’t addressed now, the Permian’s profit-delivering fever-pitch of development would be stifled to a whisper in the next few years.

The two articles below, the first from the Midland Reporter-Telegram, published in Jan. 2018, and yesterday’s update from Reuters (beneath the MRT story), together tell the tale.

Pioneer CEO: Partnership Needed to Identify Population’s Needs

Permian Strategic Partnership is expected to provide a plan for issues including education, roads, construction and health care

From the Midland Reporter-Telegram – Jan. 23, 2018

Pioneer Natural Resources President & CEO Tim Dove talked with Travis Stice, Director & CEO Diamondback Energy, Jody Elliott, President Oxy Oil & Gas and Steven Pruett President & CEO Elevation Resources at a Midland Chamber event in January

The oil and gas industry in the Permian Basin is growing, and the population’s needs are growing along with it. If tomorrow’s problems aren’t solved today, the momentum might cease.

Pioneer Natural Resources is spearheading an effort called the Permian Strategic Partnership to develop a plan that addresses a variety of issues in the nation’s most-active basin such as educating the workforce of the future, improving health care and constructing roads more suited to the heavy demands of the oil and gas industry.

The partnership involves eight of the top operators and a pair of top service companies in the Permian Basin, Pioneer President and CEO Tim Dove said Tuesday at the Midland Chamber of Commerce’s inaugural State of Oil & Gas event. He wouldn’t identify all of the companies involved, though Pioneer and Occidental Petroleum have been confirmed as participants.

The event’s speaker panel featured Dove; Jody Elliott, president of Occidental Oil & Gas; and Travis Stice, CEO and director of Diamondback Energy, with Steven Pruett, president and CEO of Elevation Resources, serving as moderator.

Dove said the idea of the partnership came from his company’s own future plans.

Shooting for 1,000,000 barrels

“In our company, we have a galvanizing goal that we want to reach one million barrels of production by 2026. That’s roughly four times where we started,” he said. Achieving this will require improvements in many areas. “That means we need to be thinking about technology, innovation and how we affect the workforce.”

Pioneer is particularly focused on education.

Dove wants children to be taught a science, technology, engineering and mathematics (STEM) curriculum beginning at a young age to prepare them for future work in his industry.

“We’re going to have to embrace the notion that we’re educating a whole new workforce in this new technological sphere,” he said. “That needs to start early; that needs to start at Midland Independent School District. I think (MISD Superintendent) Orlando Riddick, from what I’m reading, is doing a fantastic job trying to change the mentality.

Companies want to boost STEM education in Midland

“It should be all the way with a focus on STEM in the schools because those are the types of employees that we’re going to need in this industry: STEM-focused people.”

These technical fields aren’t foreign to the area workforce, given the many engineers, geologists and others in the sciences already employed in the Permian. When asked why the sciences aren’t stronger in Midland schools already, Dove said perceptions of the past might be to blame.

“I think what’s happened is it has been subject to the vagaries of that occur in a boom-and-bust mentality,” he told the Reporter-Telegram.

“When things are booming, when things are going really, really well, it seems like the next thing people are worried about is when the next bust is going to come.”

Dove posits that booms and busts as the area has known them are essential over because of the many industry improvements made over the past decade.

“We can look forward and invest into the infrastructure of the Permian Basin with the confidence that we’re going to continually be prosecute a drilling campaign of significance as an industry. That’s what has changed,” he said.

Need to think decades ahead; Permian Strategic Partnership will do that

The Permian Strategic Partnership is in its very earliest stage, Dove said. He and other CEOs will get together over the next two or three months to develop a view of what the Permian Basin is going to require. Then, input will be solicited from local, state and even federal officials.

All of the effort is to prepare for the future.

“We have needs for the improvement of education, for the medical requirements that each family has, for the road systems to prosecute these large drilling campaigns going forward,” Dove said. “There are decades of drilling left to be done, so we need to think decades ahead when it comes to infrastructure needs.”

U.S. Shale Firms Offer $100 Million to Aid Texas, New Mexico

From Reuters – Nov. 18, 2018

HOUSTON (Reuters) – More than a dozen top U.S. energy companies have pledged $100 million toward easing stresses on health care, education and civic infrastructure from the shale oil and gas boom in West Texas and New Mexico, the group said on Sunday.

Chevron, EOG Resources, Exxon Mobil and Royal Dutch Shell are among 17 companies backing the Permian Strategic Partnership, as the consortium is called, Don Evans, a former U.S. government official and energy executive helping launch the group, told Reuters on Saturday.

The group seeks to address labor and housing shortages, overtaxed health care and traffic congestion caused in part by companies descending on the Permian Basin, the nation’s largest oilfield, where they hope to pump billions of dollars’ worth of oil and gas in coming decades, experts said.

U.S. Shale Firms Offer $100 Million to Aid Texas, New Mexico - Oil & Gas 360

Don Evans – photo: University of Texas Board of Regents

“It’s a significant amount of money, but these are huge challenges,” said Evans, a former U.S. Secretary of Commerce who lives in Midland, Texas, the epicenter of the shale oil revolution. “We don’t have enough teachers. We don’t have enough doctors.”

The group aims to work with regional and federal officials, companies, nonprofit groups and educators in New Mexico and Texas, said Evans, who started in the Permian and became CEO of producer Tom Brown Inc. before joining the administration of former President George W. Bush.

The group is assembling plans to hold meetings in communities across the region, so “everyone has a voice” in the undertaking. There is no timetable or plan for how the initial contribution will be spent. The group is recruiting staff and searching for office space, he said.

In the last decade, the region’s many pockets of oil and low production costs have led to gold rush-like conditions in the Permian. Companies are pouring staff and equipment into the oilfield, which is expected to pump 3.7 million barrels of oil per day by December, four times its rate in 2010, according to the U.S. Energy Information Administration.

That boom has local employers, including restaurants and school systems, under pressure from staff leaving for oilfield jobs. Midland’s unemployment rate was 2.1 percent in October, compared to the nation’s 3.7 percent rate.

The last decade’s shale boom also has led to school overcrowding, soaring traffic fatalities, drug abuse and strains on the power grid because of the activity.

“Our roads are not designed to handle the amount of truck traffic we have,” said Jeff Walker, transportation training coordinator at New Mexico Junior College in Hobbs.

Drug charges in Midland more than doubled between 2012 and 2016, to 942 from 491, according to police data. Traffic accidents also jumped 18 percent between 2016 and 2017 in Midland County, and 29 percent in nearby Ector County, according to Texas Department of Transportation data.

“They all agree that scaling up infrastructure is going to be a huge challenge,” said Bob Peterson, a partner at consultancy Arthur D. Little who advises producers. “There’s a common agreement that there’s a whole bundle of problems.”


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