Oil and natural gas development has skyrocketed over the past five years in the Permian Basin of West Texas, with communities in one of the sparcest regions of the state also experiencing huge growth, according to the Texas Independent Producers & Royalty Owners Association (TIPRO).
The industry group in its Texas Permian Basin Report noted that gas extraction, pipeline transportation and support activities offer some of the highest employment rates in the region, but matching that growth to infrastructure, health care and education needs can be difficult.
“In just the past five years, oil output in the region has more than doubled,” TIPRO President Ed Longanecker said. “The growth of the oil and natural gas industry brings enormous opportunity and benefit to the Permian Basin, but that growth can also put a strain on infrastructure, education, health care and other areas essential to supporting the region and state across all industry sectors.
“Unique challenges also arise during a market downturn, something West Texans know all too well. Monitoring trends in the Permian Basin region is important in understanding the market factors that impact the economy and our fellow Texas citizens, as well as to further quantify the importance and influence of the oil and natural gas industry for our state and country.”
The report examines the leading industry sectors in the region, including oil and natural gas, which impact a 61-county area as identified by the Railroad Commission of Texas.
“A particular focus has been given to several factors, including labor force, population and workforce trends, education attainment and pipeline, and demographics,” TIPRO noted, to help stakeholders track and identify trends to meet needs for the region.
According to TIPRO, the Texas oil and natural gas industry purchased $204 billion of U.S. goods and services last year, 82% from state businesses. Texas Permian operators purchased $20 billion from 974 business sectors last year, 45% from within the region.
“A strong correlation between the economic vitality of the Texas Permian Basin oil and natural gas industry and the other key sectors in the region is evident,” TIPRO noted.
The group and its partners are addressing several priorities in the basin “that have larger implications in the region beyond the oil and natural gas industry, including transportation and infrastructure investment, workforce development, education, public safety, and health care, to name a few.”
Related initiatives are underway, including bills introduced during the 86th Texas Legislative Session to address some of the unique challenges facing West Texas and beyond, officials noted.
State House Bill 2154 would create the Generate Recurring Oil Wealth for Texas Fund, aka the GROW Texas Fund, to direct existing severance tax revenue paid by producers for specific reinvestment in the oil and gas patch strained by record-breaking production in recent years. Funds would then be used to expand and improve highways/public roads, increase law enforcement/first responder salaries, and revitalize education and skilled-workforce opportunities.
Total population in the Texas Permian region last year hit 2.06 million-plus, with around 477,000 millennials (20-34 years old). The regional population has inched up 3.3% over the last five years, with nearly 66,000 new residents, and it is projected to grow another 2.3% (47,000) by 2023, TIPRO said.
Overall, jobs in the West Texas region increased by 7% to nearly 967,000 between 2013 and 2018, with labor force participation flat at 59%. The oil and gas industry has a jobs multiplier of 10.6%, TIPRO noted, while the earnings multiplier for the industry in the region is 3.3%, with a sales multiplier of 1.6%.
Midland County, in the heart of the Texas Permian, was found to have the highest percentage of occupied housing units (93.2%), followed by Ector (90.3), El Paso (90.8 percent), Tom Green (89.8%), Crane (88.6%) and Gaines (89.1%).