West Texas an ‘Extraction Colony’ as Oil, Gas Exports Surge

MIDLAND, Texas (AP) — Drilling booms have come and gone in this oil town for nearly a century. But the frenzy gripping it now is different. Overwhelming. Drilling rigs tower over suburban backyards. There’s a housing crunch so severe that rents are up 30 percent in the last year alone.

This boom is engulfing the rest of West Texas, extending to areas that drilling hasn’t touched before. As communities welcome new jobs and business, they’re struggling with an onslaught of problems from spikes in traffic accidents to student homelessness.

What’s happening is unprecedented. In December, companies in the Permian Basin — an ancient, oil-rich seabed that spans West Texas and southeastern New Mexico — produced twice as much oil as they had four years earlier, during the last boom. Forecasters expect production to double again by 2023.

Texas Gov. Greg Abbott and others say the drilling spree is ushering in a new era of American energy independence, but American demand isn’t driving it. Foreign demand is.

In late 2015, Congress cut a deal to lift 40-year-old restrictions on the export of crude oil. Three years later, the U.S. has surpassed Russia as the world’s top oil producer. The International Energy Agency predicts that American oil — mostly from the Permian — will account for 80 percent of the growth in global supply through 2025. That’s good for corporate profits but bad for air quality in places with heavy drilling. It also threatens to exacerbate climate change.

This story is part of a collaboration between the Center for Public Integrity, the Texas Tribune, The Associated Press and Newsy.

Hydraulic fracturing — better known as fracking — made this boom technologically possible, but exports are the reason there’s so much new drilling. U.S. refineries built for heavier varieties of oil than the Permian produces can’t handle the enormous new quantities of Texas light crude. Instead, companies are shipping it abroad.

The lifting of export restrictions “is tantamount to one of the most important things that’s ever been done for the industry,” said Tim Dove, chief executive officer of Pioneer Natural Resources, based near Dallas.

But the country is not “energy independent” in the way most Americans would conceive of the idea. Nor can anyone promise that America, as Abbott put it in a recent tweet, “will NEVER AGAIN depend on Foreign Oil Cartels for energy.”

That’s because the U.S. is still importing oil: 1.4 billion barrels in the first half of this year alone, a third of it from the foreign oil cartel known as OPEC.

The country will keep buying oil from other nations indefinitely even as it sells more abroad, the U.S. Energy Information Administration forecasts.

The Texas Tribune and the Center for Public Integrity investigated the scope and impacts of energy exports as part of a collaboration with Newsy and The Associated Press.

In Texas, the boom is sending a lot of money into state and local coffers. Oil and gas tax revenue is up more than 50 percent this year. Said James LeBas, a Texas Oil and Gas Association economist: “When oil and gas is doing well, the state is doing well.”

Still, climbing production hasn’t boosted local tax revenues fast enough to address the problems that come with it, from crowded classrooms to wrecked roads. Schools, police departments and hospitals are struggling to keep employees lured by better-paying oilfield jobs.

Texas regulators, long criticized for being too industry-friendly, also aren’t aggressively tracking or policing problems that accompany the boom. For example, the Texas portion of the Permian — roughly the size of Georgia — has only a few air pollution monitoring stations, leaving residents largely in the dark about what’s in the air they breathe.

And the industry is consuming water in an arid region at an unsustainable rate. Permian Basin operators used eight times as much water to frack and drill last year as they did in 2011.

People with no say in these decisions are stuck with the consequences, said Coyne Gibson, who lives in a part of the Permian that had little oil and gas activity until a few years ago.

“The bitter, cynical way to look at this is, West Texas becomes an extraction colony for the fuel resources for the rest of the world,” said Gibson, a Big Bend Conservation Alliance volunteer who once worked in the oil and gas industry.

Globally, there are major trade-offs, too. Scientists warn this drilling rush almost certainly will worsen climate change by increasing the world’s fossil fuel use at a fraught time. They say drastic reductions in greenhouse gases are needed to avoid intensifying climate-linked disasters.

Two massive wildfires in California this summer were among the largest in state history. Record-high temperatures in Japan killed more than 100 people in July. September’s Hurricane Florence was the most devastating storm ever to hit the Carolinas, while Texas communities are still struggling to recover from Hurricane Harvey, which shattered U.S. rainfall records last year.

“Every additional gigaton of carbon that we produce as a global society carries with it a very real cost,” said Katharine Hayhoe, who directs the Climate Science Center at Texas Tech University.

Meanwhile, companies are building oil and gas infrastructure meant to last decades — including more than 8,000 miles of pipeline in Texas alone, enough to stretch from the Atlantic to the Pacific three times over.

The new infrastructure makes it “very unlikely that we can dramatically curtail fossil fuel use,” said Richard York, an environmental studies and sociology professor at the University of Oregon.

‘I JUST HAD TO STOP BREATHING’

The headaches come almost every day. Some mornings Suzanne Franklin wakes with a nose full of dried blood, her voice filled with gravel. Her husband Jim suffers from respiratory problems, too.

When Franklin moved to Reeves County in 2010, this remote area roughly 100 miles southwest of Midland was a modest oil and gas producer by Texas standards. Now it ranks third in the state for both. Oil production in the county — which has fewer than 16,000 residents and more land than Delaware — skyrocketed from 1.6 million barrels in 2010 to more than 60 million last year, the biggest upturn in the Permian.

A sign near one of the new wells, less than a mile from the Franklins, warns of the presence of hydrogen sulfide, a contaminant in crude oil and natural gas. In high concentrations it can kill almost instantly; at low levels it can cause chronic illness.

A chemical stench hangs in the air here.

“When we went past that site yesterday, I could not believe how bad it was,” Suzanne Franklin said in April. “I just had to stop breathing.”

Complaints like hers are common among people who live near gas sites, academic research has found. Flares burning off gas spew pollutants that assault the respiratory system.

Sites flaring natural gas — a fossil fuel hitchhiker that comes up with the oil here — are everywhere in the region. From 2016 through May of this year, the Texas Railroad Commission — which oversees oil and gas production, not railroads — issued more than 6,300 permits allowing companies to flare in the Permian, compared to 571 in the entire state from 2008 through 2010.

Railroad Commission Chairman Christi Craddick thinks the flaring is a shame — a waste — but not an urgent reason for a regulatory crackdown. She called the rules sufficient and well-enforced, adding: “Certainty in regulation is important for industry.”

In addition to flaring, oil and gas sites release pollutants during “air emission events” — pollution releases they characterize as unforeseeable, prompted by equipment malfunctions or other problems. If the state agrees they were unavoidable — and it almost always does — they don’t count against limits established in state permits that companies must obtain.

“These are off-the-books — they’re not levels that are authorized in their air pollution permits, but they’re happening routinely,” said Ilan Levin, associate director of the Environmental Integrity Project, a research and advocacy group.

Last year, businesses in Texas counties atop the Permian reported pumping out 77,000 tons of pollutants during emission events, largely carbon monoxide and sulfur dioxide. A single gas processing facility in Pecos County reported 103 such events over the 16 months ending in April, or one every five days.

Yet punishment is rare. A 2017 investigation by The Texas Tribune found that the agency that regulates air pollution, the Texas Commission on Environmental Quality, hardly ever fines companies when they bust air permit limits. And only four air pollution monitors are stationed in producing areas of the Texas Permian.

The commission said its monitoring and enforcement comply with state and federal law.

“Any violations that are documented during TCEQ investigations are addressed using standard agency protocols and are handled consistently statewide,” the agency said in a written statement. It declined to make officials available for interviews.

THE DESERT’S WATER

Balmorhea, population 550, has never been an oil-and-gas hub. It’s a tourist destination, thanks to its namesake state park that draws more than 200,000 visitors a year to enjoy the world’s largest spring-fed swimming pool — an acre-plus expanse of blue-green water that pops amid the desert landscape.

But now producers have come for the fossil fuels. Two years ago, Houston-based Apache Corporation announced it had discovered vast oil and gas deposits in the area and leased more than 300,000 acres.

Worries about the ancient springs that feed the pool and supply water to Balmorhea and nearby Toyahvale prompted the TCEQ to install a water quality monitoring station in the state park and spawned at least five studies. Apache contributed money for three of them.

“We spent considerable time and effort conducting baseline air, water and soil studies and cultural, historical and surface impact assessments before development began,” Apache spokeswoman Castlen Kennedy said in a written statement.

The company promised not to drill within the city limits or the state park, but it isn’t waiting for the results of all the studies to exploit its new oil and gas play, known as Alpine High. It plans to drill 5,000 wells in the coming decades.

Contamination isn’t the only water fear. Some worry the industry will use too much in a region already struggling with drought.

Oil and gas companies consumed nearly 58 billion gallons to frack and drill last year in the entire basin, the consulting firm IHS Markit estimated, far outstripping the 6.8 billion used in 2011. By 2023, that’s expected to jump to nearly 130 billion gallons — 19 times the amount of water Midland used last year.

There isn’t a state agency policing groundwater use. That’s left to local conservation districts with differing opinions about how much to limit water withdrawals or even whether, in cases involving oil and gas, they have any authority to regulate.

And substantial parts of West Texas don’t have a district: Legally, people in those areas can pull as much water from their property as they can pump.

The consequences of the increased water use are unclear: Major data gaps hinder such investigations, said Bridget Scanlon, a senior research scientist for the University of Texas at Austin’s Bureau of Economic Geology. For example, the state doesn’t require companies to divulge the type of water they’re using — such as fresh or brackish — for their drilling operations.

A 2017 study by researchers at the University of Texas found that more than enough contaminated water, known as “produced water,” was flowing up from oil and gas wells to meet industry demand — if it had been recycled. Instead, most producers inject it into underground disposal wells, which have been linked to earthquakes.

Some Permian producers are now recycling. Apache says it’s already reusing 80 percent of its produced water in Alpine High and is aiming for 100 percent.

But the state doesn’t require recycling. The Railroad Commission merely tweaked its rules to make the practice easier.

“I call it the carrot —?not the stick —?approach,” said Craddick, the commission’s chairman. “Water protection and, frankly, protecting the environment is a priority for us.”

Toyahvale resident Neta Rhyne thinks that’s a complete misrepresentation.

“Why are they destroying our beautiful desert oasis to send oil to Asia?” she said.

THE OVERWHELMING BOOM

The superintendent of Ector County’s school district teared up this spring as he talked about problems that have come with the oil boom.

Student enrollment has doubled in six years. Classrooms are overcrowded. Staffers keep leaving for oilfield jobs; the district is a few hundred teachers short and new hires can’t find anywhere they can afford to live. Homelessness among students spiked 26 percent last academic year, with more than 2,100 living in shelters, doubling up with other families or otherwise displaced as housing costs outpace wages.

“The thing that really keeps me up at night is, are we giving the kids everything they deserve?” then-Superintendent Tom Crowe said in an April interview, a few months before he retired. “I get emotional about it. I’ve been doing this a long time and every day I worry, is there a kid out there who slips through the cracks?”

The boom is straining communities across the Permian. Midland County has seen rents rise so fast — 65 percent since 2010 — that it’s now the most expensive place to lease a home in the state, with Ector County close behind, according to U.S. Department of Housing and Urban Development figures.

Then there’s the traffic — outright frightening in some places as heavy trucks have multiplied. In Winkler County, population 7,600, accidents are up more than 70 percent this year.

Oil-related traffic is also chewing up pavement on roads and bridges that weren’t designed to carry such heavy loads. Texas Department of Transportation data show the increase in traffic brought by the boom has damaged more than 3,000 miles of state highways in Permian counties. The agency has $3.4 billion worth of projects planned for the area over the next decade — an investment it describes as “historic” — but, as of the end of July, it estimated that it still needs more than $1.1 billion for repair work and safety upgrades.

Oil and gas companies, along with firms that serve them, have responded by paying for some road safety projects and providing housing for their workers.

As they confront the boom’s downsides, local leaders across the Permian must make educated guesses about the best ways to respond, laying their bets on how much Permian oil and gas the world will snap up — and for how long.

Craddick, the Railroad Commission chairman who grew up in Midland, said no one can predict a boom’s duration, but “I don’t think that this is going away in a generation or more.”

The city at the center of the export boom is trying to settle in for the long haul. Leaders have choices to make — uncomfortable ones.

In April, Midland City Council members looked tortured as they discussed a new drainage fee based on how much concrete covers a property — common in Texas but anathema to this conservative stronghold — so they could pay for basic city services.

They reluctantly voted in favor.

Defending the decision, council member Scott Dufford put into words the fear of every town strapped to a rocket it can’t steer, powered by companies selling Permian crude to the world: “If we do nothing, we’re going to be in even more trouble in 10 years.”

Texas Tribune journalists Brandon Formby and Chris Essig, and Center for Public Integrity news developer Pratheek Rebala contributed to this article.