September 20, 2017
American Energy Dominance Begins in Texas
By Todd Staples
American energy Dominance is a priority. President Donald Trump, Energy Secretary Rick Perry and Interior Secretary Ryan Zinke have all proclaimed the importance of a new era of American energy security – an era that will be made possible by what’s happening in the Lone Star State.
Energy dominance requires massive investment in oil and natural gas exploration and production, pipeline infrastructure and manufacturing and refining capacity. Texas leads the way on all fronts.
A new report from the Texas Oil & Gas Association shows that America’s potential to achieve energy dominance is concentrated in the Permian Basin, where capital investment and production in West Texas and Southern New Mexico have reached unprecedented levels. The money going in and oil and natural gas coming out of the Permian has spurred billions of dollars in additional investment in petrochemical manufacturing, refining capacity and thousands of miles of new pipeline connecting it all. This progress is a direct result of smart public policies and science-based regulations that make this region an attractive place to invest.
In 2016, 41 percent of the total U.S. upstream merger and acquisition (M&A) value occurred in the Permian Basin with investments totaling $25.6 billion – far more than any other U.S. shale play. A leading and important shale play in Oklahoma, for example, saw just $5.1 billion M&A activity in 2016. Total capital expenditures for the Permian are expected to increase by 400 percent over the next five years – from $8 billion in 2016 to over $40 billion in 2021.
The resulting oil and natural gas production levels have been remarkable. The Permian accounts for 45% of total onshore oil production in the lower 48 states and half of all active onshore oil rigs in the U.S. are operating in the Permian Basin. The Permian’s production of 2.4 million barrels per day in 2016 is greater than the average crude oil production of nine of the 14 OPEC countries. For natural gas, Texas accounted for 24% of U.S. daily production in May, much of which comes from the Eagle Ford in South Texas, where a single day of production could meet the natural gas needs of over 230,000 U.S. homes for a month.
Investment and increased production are creating jobs. In 2016, the Texas oil and natural gas industry supported more than 336,000 direct jobs. Texas added 3,600 upstream jobs in July, marking the 10th consecutive month of job growth, according to the Texas Workforce Commission.
Across the state, we’re seeing multi-billion-dollar infrastructure and petrochemical investments thanks to expanded production from the Permian and Eagle Ford in South Texas. TXOGA’s report shows that new pipelines planned to connect the Permian Basin with the Texas Gulf Coast will support more than 60,000 jobs and account for over $6 billion in investment once complete.
More than 130 announced projects will draw $71 billion of potential investment to the Texas Gulf Coast for new and expanded petrochemical manufacturing facilities. In addition to the economic benefits from increased capital expenditures, Texas and the nation benefit from exporting manufactured products, crude oil and natural gas. During the first half of 2017, the Port of Corpus Christi became the number one port for crude oil exports, increasing its crude exports by 593 percent from 2016. And the U.S. is now challenging Australia and Qatar to become the world’s largest exporter of natural gas, with seven more LNG facilities planned or under construction in Texas.
By 2026, the U.S. is expected to be a net energy exporter – meaning we export more oil and natural gas than we import – an outcome that was unthinkable for generations.
Indeed, America hasn’t always been “energy dominant.” Since the early 1950s, the United States has been a net energy importer, which made us dependent on other countries for energy to heat and cool our homes, fuel our cars and run our businesses.
But, today, thanks to pro-investment policies, rich natural resources, advances in technology, and the know-how to capitalize on tremendous opportunity, the United States is a global energy leader. And our ability to achieve and sustain energy dominance rests here in the heart of Texas.