Oil Is Booming Again In Texas And The Implications Could Be Vast
Texas is producing more oil than ever this year, and experts think the volume will grow so much over the next few years, we will soon surpass the production of several OPEC countries.
If Texas were a country (it's not, we know, but stay with us), it would be among the top 10 oil producers in the world. And in the next year or so, Texas could be among the top five, surpassing Iran and Iraq.
This data isn't just about bragging rights. The growth means that technology developed partly here in Texas is expanding the supply of a fuel that is crucial to modern human life and keeping the price of that fuel relatively steady. As the use of this technology spreads, it could mean independence and greater freedom for some regions of the world.
By technology, we mean the combination of fracking and horizontal drilling that caused a natural gas boom in the Barnett Shale of North Texas, and then an oil boom in the Eagle Ford Shale in South Texas, and now has reignited the Permian Basin in West Texas. The Permian Basin growth alone is huge; IHS Markit forecasts oil production in the West Texas field will hit 5.4 million barrels per day by 2023, more than any OPEC country besides Saudi Arabia. Total production for all of Texas this year has been about 4 million barrels per day.
IHS expects Texas production will hit the 2023 forecast due to 41,000 new wells and $308 billion in investment. That forecast assumes an oil price of $60 a barrel; the West Texas Intermediate price has traded this summer in a band of around $65 to $75 a barrel.
This production growth is confirmation that fracking and horizontal drilling technology aren't just profitable in boom times, when oil hits $100 a barrel, but also when oil prices are tame. Texas production grew during the last couple of years, too, when oil prices were lower. Friends, this is nothing short of a global revolution.
The global balance of power is shifting thanks to fracking. The U.S. doesn't have to depend on OPEC countries, for oil supply or to keep oil prices steady. And we don't have to be entirely energy independent to achieve this freedom from undue influence from the world's oil regimes. In other parts of the world where fracking is possible — for example, Europe — regions could also cut their fealty to major oil-producing countries, such as Russia.
That's to the good, even if oil comes with an environmental trade-off. We are not among those who protest new oil supply because of it, though we do believe Americans can be mindful of their oil usage. One way to buy greater energy independence is to be more efficient with energy usage (and tap renewable sources when possible).
In developing countries, affordable oil can help lift living standards, possibly putting cleaner technology within reach. And we can better trust that West Texas drillers follow U.S. environmental regulations than producers in other, less environmentally minded countries.
This is where the Railroad Commission of Texas has great responsibility. The commission, which regulates the oil and gas industry, must keep this oil boom alive by ensuring the public can trust oil companies. We are relying on regulators to set firm and fair rules that protect people and nature. There are many ways to turn a boom into a bust, and public concern about safety is one.