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Permian E&Ps, OFS Giants Pledge $100M-Plus as Seed Money to Improve Communities

Permian Basin operators are stepping up efforts to expand educational, health care and housing opportunities across a sparsely populated region where activity today is akin to the California Gold Rush of the late 1840s.

The Permian Strategic Partnership, formed earlier this year, today has the backing and financial wherewithal of nearly 20 of the biggest oilfield services (OFS) and oil and gas producers not only in the region but in the country.

“While our primary financial contribution will be the substantial tax revenues our industry generates, we will also continue to provide funds for selected priority projects, both as individual companies and through the partnership,” it said. “Collectively, we are committed to providing more than $100 million over the next several years as seed money to spur additional private sector investment.”

Chevron Corp., ExxonMobil Corp.’s XTO Energy Inc. and Royal Dutch Shell plc represent Big Oil in the Permian. The exploration and production sector is represented by Anadarko Petroleum Corp., Apache Corp., Cimarex Energy Inc., Concho Resources Inc., Devon Energy Corp., Diamondback Energy Inc., Encana Corp., Endeavor Energy Resources LP, EOG Resources Inc., Occidental Petroleum Inc., Parsley Energy Inc. and Pioneer Natural Resources Co. Halliburton Co. and Schlumberger Ltd., the largest OFS operators in the Permian, round out the membership.

“As leaders of major energy companies operating in the Permian Basin, we often engage in spirited competition with each other for quality workers, leases and equipment, and to make our individual companies the best operators and service providers in the industry,” the partnership said. “But a once-in-a-generation opportunity has brought us together for a common purpose -- to strengthen the communities where we live and work.”

The Permian may be able to provide the energy the world needs and in turn create thousands of local jobs and billions in state and local tax revenue. However, the potential can be realized if operators “simultaneously address significant infrastructure challenges and preserve the quality of life that makes so many want to live and work here.”

Even though the oil and gas business “is inherently cyclical, we are convinced that what is happening in the Permian today points to a resilience that is different from the boom and bust cycles of the past,” members said. Technology advances and improved operating efficiencies have helped operators produce safely and profitably even when prices are relatively low.

“We have analyzed various scenarios and believe that, even in a downturn, Permian production will continue to grow in the coming years,” the operators said.

However, the producing region has brought “certain challenges” that are stressing the communities. Members of the partnership met with local organizations and surveyed employees who live in the area.

“Collectively, they emphasized the need for safer roads, superior schools, quality health care, affordable housing and a trained workforce,” the partnership said.

The anticipated production growth should result in substantial state and local tax revenue that could be directed to help meet some needs. Work is underway to expand educational opportunities and build infrastructure, and individual operators area supporting many community projects.

“But we feel this uncommon situation requires more,” members said.

Plans are to staff an office in the coming months, and early next year a series of community meetings are planned “to invite citizen input and harness the volunteer spirit that is so much a part of this region.”
Adding value and not duplicating the work already being done by local governments, school districts, business organizations, nonprofits and foundations is the partnership’s goal.

“As energy companies, we know how to drill wells and lay pipelines; we are not experts in areas such as improving public schools or training medical staff. However, we can partner with schools and colleges to help prepare future workers for the job opportunities that await them.”

Among other things, the partnership plans to “convene conversations with stakeholders and advocate with state and federal officials to garner support for the critical investments in infrastructure improvements in the region.”

The process is not going to be a short-term solution, it noted.

“Building new roads, recruiting new doctors and teachers and developing new neighborhoods will require years of work, substantial resources and sustained cooperation among many entities. But we share a sense of urgency with our communities to find both interim and long term solutions,” said the partnership.

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