Advanced BioFuels USA – The Pandemic Could End Texas’s Oil Boom—and Start Something Better: Profits from the Permian Basin Are Falling and Renewable Energy Is Surging. Here’s What That Means for the Lonestar State’s Future.

Then came the shale revolution. Technological breakthroughs in hydraulic fracturing and horizontal drilling in the late 2000s made it possible to split open shale formations miles below the surface and suck out pockets of previously inaccessible oil and natural gas in places like North Dakota, Pennsylvania, and Texas.

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In 2014, a major fall in oil prices prompted a downturn. Bankruptcies and mass layoffs ensued, spurring warnings of the shale boom’s demise. Still, Permian production kept growing. Then, after an intense lobbying campaign by the oil industry, Congress lifted the decades-old ban on crude oil exports in 2015, opening a vast new global market for Texas oil. The Permian entered into hyperdrive. A domestic energy renaissance began, upending energy geopolitics and, improbably, making the United States the world’s leading oil producer. Texas became the third-largest producer of crude in the world.

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Upon his election, Donald Trump used the boom to hawk a jingoistic doctrine of “energy dominance” in which the United States would frack its way to freedom from oil despots.

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(In early March 2020) Demand for oil was already down, as China went into lockdown to contain the COVID-19 outbreak. Then Saudi Arabia and Russia launched a high-stakes price war with both countries significantly ramping up oil production, flooding the market with crude and quickly creating a massive global supply glut.

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By the end of May, the number of active oil and gas rigs in the Permian Basin was 162, down from 451 a year earlier.

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As many as 240 energy companies could go bankrupt by the end of 2021 if oil prices stay low, according to one estimate.

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April 20 brought the absurd chaos to new heights when, for the first time ever, the futures contract price of crude dropped below zero—ultimately to below negative $30.

The world’s oil storage capacity had reached its limits.

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The Trump administration ultimately loosened restrictions on the Federal Reserve’s emergency loan program for small businesses, freeing up billions for embattled energy companies, and the Texas Railroad Commission waived a bevy of industry regulations.

Critics warned that Trump was merely propping up his friends in an already-doomed industry. Indeed, the shale revolution was showing dire weaknesses in the several months before the pandemic hit.

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In pursuit of their share of the boom, more and more frackers drilled more and more wells at an increasingly frantic pace, all enabled by a near-limitless credit line from Wall Street bankers and private equity firms. But even when the price of West Texas crude was north of $70 a barrel, many frackers couldn’t turn a profit. In 2019 alone, these companies reported a combined net loss of almost $7 billion.

The pandemic simply accelerated an impending implosion of the shale revolution.

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The pandemic simply accelerated an impending implosion of the shale revolution. “Instead of quarter after quarter, we’re now seeing it in a condensed timeline,” says Clark Williams-Derry, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA). Even if oil prices tick higher as demand returns, skeptics like Williams-Derry expect that the Permian shale boom will not return in full force.

“At minimum, what investors are going to see is that this is not an industry that has ever been able to produce clear returns,” Williams-Derry says. “It seals the fate of oil and gas as a hyper-volatile industry that, in the best of times, has meager financial returns and, in the worst of times, is a complete wipeout.”

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But in his (State representative Rafael Anchía's) first session, he was part of a coalition that passed the landmark Senate Bill 20, which financed the construction of 3,600 miles of transmission lines—known as the Competitive Renewable Energy Zone—bringing power generated in the wind hot spots of West Texas and the Panhandle to the state’s major population centers. This provided critical infrastructure necessary for a surge in new investment and a dramatic expansion of Texas' wind capacity. “That was an important step forward,” Anchía says, and would cement Texas' status as the nation’s leading producer of wind power.

This spring, wind supplied more than three times as much electricity to Texas' grid than coal, ....

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Wind energy is responsible for about 25,000 jobs, far more than any other state, and with more and more projects in the pipeline, wind turbine service technicians are one of the most in-demand jobs in the state’s labor market. The number of those technician jobs could double by 2026. Solar, too, is poised for a massive expansion after struggling for years to establish a footprint in Texas.

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There are still many Democrats in the statehouse, particularly from Houston and South Texas, who are supportive of the (oil/gas) industry. Meanwhile, the GOP has grown ever more aligned with oil and gas in recent years.

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During the governorships of George W. Bush and Rick Perry, there was “enthusiastic investment in clean energy, and wind was seen as a very Texan thing,” says Adrian Shelley, director of Public Citizen Texas, a good-government advocacy group.

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“A lot of workers who could have earned higher wages in the oil field are now a ready workforce to be involved in solar farms, wind turbine maintenance, and things like that,” he (State Representative Brooks Landgraf) says. “So you have a plug-and-play workforce that’s ready to work on projects that, historically, have had difficulty competing … with the oil field.”

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Thomas says he’d be willing to leave behind the oil and gas industry for a more stable job in the renewables sector, but has found that many entry-level positions in the field require a technical degree. READ MORE

Saudi America: The Truth About Fracking and How It's Changing the World (Bethany McLean/Columbia Global Reports)

A presidential election rundown: oil and gas (SaveOnEnergy)

Biden wins over Pennsylvania union leaders worried about his climate plan (Washington Examiner)

BY THE NUMBERS: At the end of September, loans to fossil fuels through the Federal Reserve's Main Street Lending Program more than tripled (Politico's Morning Energy)

Permian scramble (Politico's Morning Energy)

The Death Of U.S. Shale Has Been Greatly Exaggerated (OilPrice.com)