Thursday, August 7, 2008

The Houston Chronicle Discovers Kermit!

Many thanks to Chuck, who sent me a link to this article from the Houston Chronicle: (I added some web pictures to it!)

West Texans jaded instead of giddy during this oil boom
By MIKE SNYDER Copyright 2008 Houston Chronicle
Aug. 4, 2008, 2:20AM

KERMIT — The lights on the rigs pierce the black West Texas night, illuminating mesquite shrubs and jack rabbits scampering across the flat landscape. The glow sends a reassuring message: Good times have returned to the oil patch.
Pump jacks nod vigorously alongside the highway. Fat royalty checks arrive monthly in the mailboxes of ranchers and other landowners. Teachers and retail clerks abandon their jobs for better-paying work in the oil fields as long-idle wells surge to life.

Yet, the people of Kermit and other Permian Basin towns have learned that petroleum-based prosperity is too fragile to squander in wild exuberance. They're paying off debts and investing in public institutions that will endure beyond the boom-and-bust cycles of the oil business.

"I've [wasted] three booms in my lifetime, but this time, no," said Gary Blue, 43, who says his business preparing sites for drilling is turning down about as much work as it accepts these days.

Rodney Hayes, 49, who owns Kermit's only floral shop,

said he and his neighbors haven't forgotten what happened when oil prices plummeted in the 1980s and the town's population dropped from 10,000 to its current 6,000 in a matter of months.

"It was like a suitcase parade" as companies and their workers left town, Hayes said.

Although prices have retreated a bit in recent weeks, their record-breaking levels this year have prompted exploration companies to make big plays in West Texas.

Los Angeles-based Occidental Petroleum Corp., for example, plans to invest more than $1.5 billion in the area. It will drill about 250 wells and build a plant and pipelines to distribute carbon dioxide that will increase the company's Permian Basin oil production by at least 50,000 barrels a day, spokeswoman Stacey Crews said.

These investments, of course, produce higher tax revenue for local governments. In Kermit, the Winkler County seat about 40 miles west of Odessa, community leaders are trying to spend the money wisely by paying off bonds issued to finance public improvements as quickly as possible.

Buildings going up

The effects of recent prosperity are evident in a quick drive around the town, whose businesses, houses, parks and schools are scattered over a couple of square miles surrounding the intersection of two state highways.

Construction crews are finishing work on a new county hospital

and a new elementary school.

The emergency medical service now has its own building where paramedics can sleep and prepare meals. Until the building opened recently, they had to bunk in vacant hospital rooms.

"It's a lot more relaxing atmosphere," said Tiffany Fambro, a 24-year-old emergency medical technician, showing visitors the big-screen TV and workout equipment in the new facility.

At Winkler County Memorial Hospital, administrator Stan Wiley pointed to a new, $1 million CT scan machine. He beamed like a teenager showing off his first car. Up-to-date equipment and a modern replacement for a 60-year-old building have helped attract a third full-time physician and expand services at the rural health clinic, Wiley said.
"It keeps your town alive," he said. "With the price of oil like it is, we should be able to get this paid off while the price is still up."

The sudden infusion of money also causes some problems. "Help wanted" signs at convenience stores and fast-food restaurants show how hard it is for small businesses to hold onto workers tempted by $30-an-hour jobs in the oil fields.

Perhaps the biggest challenge, local leaders say, is finding housing for all the new oil field workers. The nearest home-building firms are an hour away in Odessa and Midland, so at least one energy company is building its own houses for employees in Kermit.

Sitting on a fortune

Stefanie Haley, 70, has learned to take the swings in the oil business in stride during the decades she has lived in West Texas. Her family owns a ranch west of Kermit where companies are producing natural gas, and she works in a related family business that supplies saltwater that helps maintain pressure in wells.

Haley's daughter has planned a party to celebrate the dream home that contractors are building on a section of the ranch that she and her brother own. Haley calls it "the house that gas built."

The gas beneath the ranch, Haley said, is buried deep in the earth — too deep to justify the expense of extracting it until recently. Now, the pastures are dotted with oil rigs, pump jacks and natural gas wells with solar panels to help transmit data read by company executives in Houston.

A burst of activity in the oil fields also provides unusual business opportunities. Haley was reminded of this when a catering truck from Odessa pulled up bearing lunch for a rig crew on the ranch.
Haley knows of a fast-food place in one nearby town that charged $9 for a hamburger, knowing that a hungry roughneck with a pocket full of money and nowhere else to go might be willing to pay that much.
"It's a big burger, but still," said Haley, shaking her head.

Planning ahead

While the people of Kermit enjoy their newfound prosperity, they're keeping an eye on a future that might not be built quite so thoroughly on petroleum. New technology is enabling companies to wring more oil and gas from West Texas fields, but no one is certain when the reserves will play out.

Some local leaders hope a new wind energy project in Winkler County will help sustain the economy after the oil and gas stop flowing.

"Boom times are back for now, but resource-driven regions like the Permian Basin face a recurring dilemma," the Federal Reserve Bank of Dallas said in a report last spring.

"At the bottom of every cycle, when the oil industry is shrinking and times are tough, nothing is pursued with more fervor than industrial diversification," it said. "Yet, on the way up, the oil industry can be so profitable it pushes other businesses to the side."

Winkler County Judge Bonnie Leck said this is the sobering counterpoint to the good times the community is enjoying now. Diversification isn't easy in a region that's far from urban centers and too arid to sustain much agriculture, she said.

"It's a real challenge," Leck said, "and it's something that people are thinking about all the time."


Anonymous said...

With more expensive oil, there are plans to re-open oil fields in the Los Angeles basin where they haven't drilled since the 1920s. Isn't economics great? Every action has its equal and opposite; every dark cloud a silver lining somewhere.

David Kirk said...

Anonymous: I say drill everywhere! Offshore, ANWAR, through a polar bear's head, wherever.....

Granny J said...

Hey, I didn't realize that you lived in the oil patch! I'm with you -- drill everywhere that promises any kid of payoff, tho I would particularly like to see platforms off the California coast. Those folks want to let everyone else do the dirty work so they can maintain their cool lifestyles.

And, gee -- I hadn't expected to see a quote from my blog when I showed up from Bloglines...

Gazelle said...

David, David, David, did you really believe I wouldn't call you on this comment? Leave those poor polar bears alone! They don't drive cars, fly planes, or push their way into your habitat and mess up your environment in order to better their lifestyle!

Granny J -- What? Last time I checked most people in California don't live on the beach and they work hard for their money and the cost of living is very high!

I guess the grass is always greener on the other side. Unless of course you are a polar bear!

David Kirk said...

Granny J: Did I quote from your blog, or are you referring to the new bloglist in the sidebar?

Gazelle, Gazelle, Gazelle: Thanks for reading, and thanks for the comments and the controversy.

People first, polar bears second.

Energy independence is IMHO a matter of national security.

We need to build more oil refineries and discontinue the practice of making regional "boutique" fuels which only serve to reduce refinery capacity. We need to explore everywhere possible for oil, in addition to researching wind, solar, coal, nuclear and other alternatives.

The U.S. is the only country that allows so little offshore drilling. Meanwhile, other countries are drilling 80 miles off the coast of Florida.

Modern drilling techniques would not mess up the polar bear's habitat as much as you might believe.

Gazelle said...

Fine David, just don't go drilling through a polar bear's head!(I'm pretty sure your friend Kermit the Frog would agree with me!!!)

We have to make some tough decisions in order to support/maintain our lifestyles. Hopefully the decisions that are made will not lead to problems like we experienced out here due to ENRON!

The wind power exists out here, you should see the "wind farms". However, the energy produced isn't as readily available to us as you would expect.

I don't believe there are any easy or inexpensive answers to the challenges we face. Instead of looking for a quick fix we need to look for long term solutions.(We should've listened to Jimmy Carter!)

Another problem we should be concerned about---infrastructure!

And here's some interesting information on world population

Now, go hug a polar bear!!!

David Kirk said...

Gazelle: A wind farm is being built 20 miles from here, I'm going to do a feature on it at some point.

Jimmy Carter?? He had no sense!

Gazelle said...

We will just have to agree to disagree regarding Jimmy Carter. Please read the following link and you will see that we should have listened to him.

How many more years can we continue to eat, drink, and be merry like there is no tomorrow? How long before we realize we are quickly becoming the grasshopper?

Anonymous said...

At least Jimmy understood the exponential function. Please recall the natural laws of economics in particular the law of diminishing returns. (Given a fixed amount of some input, when ever more amounts of the variable input are added, eventually, the marginal product declines.) Essentially, it’s too early to drill more in United States territory (as if that’s going to solve our long term problems anyway.) We need to wait on that until oil hits about $180 a barrel and we come into direct competition with China. In the mean time, I’d develop the field off the coast of Brazil (only 1/10 the output of Saudi Arabia but much closer) and get serious about the fact that our grandkids will pay the bill for our present short-sightedness. Guys like T. Boon Pickens are correct, we can’t drill our way out of this problem.

Back in the days of Carter, most of our economic woes were related to the Arab oil embargo and debt from the Viet Nam war. People hated Paul Volcker’s conservative money polices but that combined with the oil glut of the 80s saved our bacon temporarily; the luxury of either I doubt we’ll have the next time around.

David Kirk said...

Gazelle and Anonymous: Another great thing about Jimmy Carter: He can drive a nail just as straight and true as any nail was ever driven. Thanks for reading.

Anonymous said...

A great humanitarian is he! Personally, I miss Daniel Boone, and, I blame *all* of our nations troubles on the quintessential devil in these matters, the worst president of all time one Herbert Hoover. When the documentary movie ‘IOUSA’ comes to your town, go see it. We attended the national screening last night and it’s pretty good; an interesting panel discussion afterward too.

David Kirk said...

Anonymous: You're a great American!

Anonymous said...

Aww shucks, you're just say'in that. ;-)

David Kirk said...

No, you really are!

Anonymous said...

I'm actually a 32nd generation descendent of the Elder John Crandall of Rhode Island said by some to be an original Seventh Day Baptist. This relation is through my paternal grandmother. Probably why we believe in full immersion (for believers) and attend The Vineyard on Saturday night. Perhaps by way of getting back to my roots I should move to Rhode Island and start a political advocacy group or coalition or something. What do ya think?

David Kirk said...

Anonymous: Well, whoop-dee-doo! My grandpa used to whistle for "The Andy Griffith Show"!

Anonymous said...

That's cool. How come you never mentioned that before? We once saw Neal Diamond driving his Jaguar on the freeway and another time Dom DeLuise in a classic MG.

David Kirk said...

Anonymous: How cool is that?

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