Texas shale towns grapple with growth as oil-bust fears fade
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[August 21, 2019]
By Jennifer Hiller
ODESSA, TEXAS (Reuters) - In west Texas,
the center of the U.S. oil boom, about 3,800 students at Permian High
School are crammed into a campus designed for 2,500, with 20 portable
buildings to help with the overflow.
School officials had expected enrollment to fall after the last oil
price crash, starting in 2014, but it kept rising - one sign of a
growing resilience in the region's oil economy as Exxon Mobil <XOM.N>,
Chevron <CVX.N> and other majors continue pouring billions of dollars
into long-term investments here.
For most of the last century, oil money has flowed into this region like
a rising tide during booms - but residents here had enough sense to know
it would flow right back out again when the next bust hit. That cycle
has always made officials, developers and voters wary of investing too
much during the good times on everything from school construction to
roads to housing.
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That hesitance is fading fast as oil majors make ever-larger and
longer-term commitments to drill in the Permian Basin and residents grow
weary of traffic jams on once-rural roads, long waits for medical
appointments, pricey housing and overcrowded schools. Local governments,
industry and foundations are joining forces to tackle the region's
overwhelmed infrastructure and public services.
"When you have more students, you need more teachers," said Danny Gex,
principal at the Odessa school, which was made famous as the home of the
Permian Panthers football team in the book and screen adaptations of
"Friday Night Lights."
Texas has a statewide teacher shortage, Gex said, and "when you're in a
desert, it makes it a lot more difficult to find them."
Also in severe shortage: housing. The median price of a home in Midland,
$311,000 in April, was higher than any other Texas city except the hip
tech-industry hub of Austin, according to data tracked by Texas A&M
University.
Former convenience store manager Ruben Garcia came to the region and now
earns $2,000 to $2,500 a week hauling sand to fracking sites. But he had
to sleep in his truck until he could find an RV to rent.
"I had to go where the money is, and the money is here," Garcia said.
The city of Midland, the local hospital district and other employers are
considering banding together to build apartments for workers, said Jerry
Morales, mayor of Midland, the de facto capital of the Permian. In
neighboring Odessa, the school district has considered buying a hotel to
house new teachers.
"That’s crazy to even think that," said Gex, the principal.
STAYING POWER
The oil industry, of course, still has its ups and downs, like any
business involving global commodities subject to rapid market shifts.
Some of the smaller producers that pioneered shale drilling in the
Permian, such as Concho Resources <CXO.N>, Laredo Petroleum <LPI.N> and
Whiting Petroleum <WLL.N>, are downshifting as West Texas oil prices
have lost 16% and natural gas has tumbled 36% over the past year.
![](http://archives.lincolndailynews.com/2019/Aug/21/images/ads/current/graue_sda_2016.png)
But the world's biggest oil majors are increasingly taking control of
the Texas shale business, and their drilling plans - sometimes sketched
out in decades rather than years - are envisioned to withstand the usual
price drops.
That means they will need to lure more staff to live permanently with
their families in cities such as Midland and Odessa, rather than
depending on "man camps" for transient roughnecks or relying on
temporary worker-training schemes.
In Midland, a group of local foundations started by wealthy area
families, as well as a consortium of energy firms, recently put up $38.5
million to finance 14 tuition-free charter schools to relieve the stress
on local classrooms.
"The mindset is changing," said Mayor Morales. "There are those who
understand we’re growing and we need these things."
But it's a scramble to catch up: "We’re behind, because we never
invested in ourselves."
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![](../images/082119pics/news_c7.jpg)
A sign soliciting applicants is seen outside of a truck stop in
Midland, Texas, U.S., February 13, 2019. REUTERS/Nick Oxford
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On the New Mexico side of the Permian, local governments, schools
and foundations joined together to build a $63 million sports
complex with a water park in Hobbs. Hotel taxes from visiting energy
workers will pay part of the facility's operating costs, said Hobbs
Mayor Sam Cobb.
Hobbs' next proposal involves a $60 million vocational high school
that would help turn out welders, electricians and other skilled
blue-collar workers. Oil firm executives will consult on the
curriculum by offering insight into the skills they need in new
hires, he said.
"I think there’s more sustainability because all of the supermajors
have come back into the area," Cobb said.
While many local officials and civic leaders say the region has
permanently left its boom-and-bust cycle behind, others remain wary.
Alan Herig arrived in Midland in 1977 to sell oilfield equipment and
later opened an office supply store. He went from flying to Houston
for steak lunches to painting houses after oil prices crashed.
"Midland became a ghost town," said Herig, who now owns three hotels
in the area and believes hard times could come again any day.
Still, Herig understands why city officials and civic groups are
scrambling to upgrade local infrastructure and services.
"Midland is way behind," Herig said. "They need to invest."
ORANGE BUCKETS AND FOLDING TABLES
The latest shale boom, which started about three years ago, has
brought jobs and wealth but also many hassles to day-to-day life.
![](http://archives.lincolndailynews.com/2019/Aug/21/images/ads/current/hartsburggrain_sda_2019.png)
Midland resident and energy executive Kaes Van't Hof had a hard time
scheduling an eye-doctor's appointment for new contacts before his
wedding earlier this year.
"Simple things have to be planned far in advance here," Van't Hof
said.
Max Campos, a tattoo artist who lives in Odessa, recently sold his
motorcycle after concluding it was no longer safe to ride alongside
heavy truck traffic.
Odessa, a city of 120,000 people, drew unwanted attention last year
after a school teacher equipped a classroom with orange buckets and
folding tables because of a lack of chairs and desks. The school
found tables after photos of students using the makeshift furniture
went viral online.
Several groups have formed to bring change to the region, and local
officials are finding that voters are more receptive to approving
new spending on services such as schools and roads.
Priority Midland - a long-range planning initiative formed this year
by officials in government, business and philanthropy - plans
get-out-the-vote efforts to press for increased school financing and
a possible sales tax hike to pay for hospital services or improved
roads, Morales said.
The Permian Strategic Partnership, a group of 20 energy companies
operating in the area, promises to spend $100 million to promote
training, education, health care, housing and roads. The partnership
chipped in $16.5 million for the charter school initiative, which
will open its first campus in August 2020 and plans to offer public
education to 10,000 students over time.
One member of the organization is Travis Stice, chief executive at
Midland's Diamondback Energy, which has been among the Permian's
fast-growing firms.
It's time for the community, he said, to trust that the oil industry
is here to stay.
"We've allowed ourselves to be rangebound by thinking: 'Don't invest
during the boom time because the bust time is coming,'" Stice said.
(Reporting by Jennifer Hiller in west Texas; Editing by Gary
McWilliams and Brian Thevenot)
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