COLUMN: Texas Continues To Lead The Shale Oil & Gas Revolution

NOTE: this article originally appeared in Forbes

But other states, even California, are joining the fray…

Almost lost in all the news about the federal government “shutdown” (which has somehow left 83% of the government funded and functioning) over the last week are several new reports regarding the ongoing massive oil and natural gas Shale Revolution in the United States, and the role Texas is playing in making it happen. Since I make it a policy never to miss an opportunity to expound on the benefits of this revolution, or to brag about Texas in general, I thought I’d roll these stories out here:

  • First is a new projection from the US Energy Information Agency showing that the United States will likely become the world’s largest producer of petroleum products and natural gas hydrocarbons in 2013.
  • Next is this report about the Eagle Ford shale, detailing that this play a) could become the largest onshore oil reserve ever discovered in the United States; b) that it is the fastest growing oil play on the face of the earth; c) that it produces very high quality, highly valuable crude oil; d) that drilling costs in the play are rapidly falling; and e) that the play is the hottest economic development area in the world. All happening in my old home area of South Texas.
  • Third is this story in which current Railroad Commission Chairman Barry Smitherman details the fact that oil production (excluding condensate) in Texas has now surpassed 1.8 million barrels per day, and is on a pace to hit 3 million BOPD by 2017 and 4 million BOPD by 2020. The Eagle Ford alone is now at 657,000 BOPD and will likely jump above 900,000 BOPD in 2014. And the revitalized Permian Basin region, home to several different prolific oil shale plays, is already producing about 900,000 BOPD, and rising.
  • Finally, you have this report detailing one of many happy results for Texas in all of this: a flush Rainy Day Fund, which happens to be funded by the oil and natural gas severance tax. This happy situation has already enabled the Texas Legislature to allocate an additional $2 billion to funding for state roads, and will enable the state to allocate another $2.25 billion to fund the state’s official water plan, should voters approve a ballot initiative in November.

When one includes condensate production from natural gas wells, Texas produced over 2.6 million BOPD in July, fully 35% of the nation’s petroleum production. Just a little more than 2 years ago, in April 2011, Texas’s daily oil production was 1.3 million BOPD, accounting for just 20% of total US production. That’s a phenomenal increase in only two years. The state’s current production level would rank it 13th among all countries on earth, and the rate of increase will almost certainly move the state into the top ten within the next 12 months.

It’s appropriate for Chairman Smitherman to be the person commenting on the surge in Texas production, since the agency he chairs regulates the oil and natural gas industry for the state. As I pointed out in a recent piece, the fact that the RRC does its job so well and efficiently is one of the major reasons why the state has become the center for the Shale Revolution in recent years, currently serving as host to almost half of all the nation’s active drilling rigs.

The RRC has played a key role in putting the U.S. on track to achieve a level of energy security not experienced in the last half century. Mr. Smitherman and fellow commissioners David Porter and Christi Craddick have over the last two years led efforts to significantly upgrade the Commission’s systems, modernize its regulations governing shale development, and putting more inspectors in the field, while retaining the Commission’s historic ability to expeditiously approve drilling permits within a few business days. When one contrasts this performance to the fact that obtaining permits to drill and other regulatory approvals on federal lands around the U.S. can take months or even years, it is no accident that so much of the nation’s resurgence in oil and natural gas production has been focused in Texas while hydrocarbon production on federal lands has steadily declined in the current administration.

And the Commission has achieved all of this while having to cut through a steady drumbeat of misinformation and false allegations coming from the anti-Fracking movement, which is as active in Texas as it is anywhere else. Just in the last few weeks, Texas has seen Carnival Barker Josh Fox bring his latest fake documentary, Gasland II, to San Antonio, and a typically dummied-up “report” on air quality issued by the radical activist group Earthworks.

While Texas is leading the way in the Shale Revolution, it’s far from the only state that is having a significant impact. States like North Dakota, Pennsylvania, Ohio, Michigan, Louisiana and Colorado are also making major contributions to the nation’s rising level of energy security.

Another state that is on the road towards joining the party is California, where Governor Jerry Brown recently signed into law Senate Bill 4, a bill that will provide an umbrella of regulatory oversight that will enable the development of that state’s massive Monterey Shale formation, thought by many to rival the Eagle Ford in terms of total ultimately recoverable hydrocarbons. While some radical anti-fracking groups like the NRDC and Sierra Club, continue to call on Gov. Brown to force an ill-advised moratorium on hydraulic fracturing in the state, he has resisted that call.

Seems even a long-time liberal icon like Gov. Brown has to recognize the economic and environmental benefits the Shale Revolution that have long been recognized in Texas and elswhere. That’s good news for Californians, and good news for America.

God Bless Texas.

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