It can be hard at times to keep ones head up through the constant work, the blistering pace of projects and daily copy, but one of the rewarding bits about being a journalist is seeing your byline and hearing from the people about your writing. In a time of extreme uncertainty in Midland, the people here now more than ever before need the information that we can give them in order to have a better idea of what is going on in their oil-dependent economy and community.
Listen here for my view of what has been happening in Midland:
Marfa Public Radio interviews Rye Druzin
What is happening is nothing short of spectacular. The Houston Chronicle estimated that at least 100,000 oil field workers have lost their jobs worldwide, and one economist, Dr. M. Ray Perryman, said last week at a talk in Odessa that Texas is slated to lose around 150,000 oil field jobs, While the state as a whole will continue to add jobs at a rate unseen anywhere else in the country, the slowdown is putting a significant dent on an industry that just a year ago couldn't add enough people.
Desptie this slowdown U.S. production continue to rise, partly because of the geology of shale formations. When propped open using hydraulic fracturing, a process that pushes pressurized sand and other materials into shale to prop the rock open, a fracked well will produce at least half of its output in the first year of production and at a rapid rate. This is why U.S. production keeps growing, as fracked wells are brought online and rush even more oil onto the market. This production growth probably will not drop off for another six months to a year.
The eerie "stacking" of rigs in Odessa.
At the same time, hundreds of oil drilling rigs are being "stacked," with this yard of 30+ rigs growing in size in Odessa.
But some things have fundamentally changed in the oil field. Horizontal drilling allows for a single rig to drill in multiple directions upwards of three miles away from the pad site. Sometimes four or five pump jacks are in close proximity to each other because of this technological advancement. Newer rigs can not only drill four directions at once, but they can now "walk" to their next pad site under their own power, cutting down the amount of time and equipment needed to work on sites that may be only 10 or 20 feet away.
Vertical rigs are among the first to be cut because of their lack of the horizontal advantage, which is how many of the shale plays are being taken advantage of. Vertical rigs tap into more "traditional" oil pockets: reservoirs of oil that are sucked dry. The horizontal rigs drill for miles into the side of shale formations before explosive charges are inserted to crack the shale, which is then fracked. Because the Permian Basin is made up of pancake layers of shale deposits horizontal drilling rigs are being favored over vertical rigs.
Oil executives like Scott Sheffield, CEO of regional independent Pioneer Natural Resources, have said that this downturn will last between one and two years, and that the recovery will be slow. Recent estimate are that production will not begin reversing itself for another year before tapering off, drawing down some of the over supply that has led to the latest glut. Growing oil stockpiles in Cushing, Oklahoma and the Gulf Coast threaten to destabilize the market for WTI crude further, and potentially drop the price to lower levels as demand sags.
If you want to see more about what is happening, check out these articles that I have written at these links:
http://www.mrt.com/business/oil/article_3d2f105e-bde5-11e4-a185-071b199d6286.html
http://www.mrt.com/blogs/news_blogs/article_9cf537aa-bc7a-11e4-a82f-174e9d05f4ee.html
http://www.mrt.com/business/oil/article_f75b5092-bbc3-11e4-bf4c-0be1228a9c57.html
http://www.mrt.com/blogs/news_blogs/article_0785e7d8-bba2-11e4-a1d2-d7984b5a0170.html
http://www.mrt.com/business/oil/article_ffb1c23a-b89e-11e4-999c-37d37c2e1e7d.html
http://www.mrt.com/business/article_eb3d28e2-b63e-11e4-b63d-cb75f2b7bbe2.html
Thank you all for reading, and stay tuned for more posts.
