Can Politics Help the Permian Basin in 2019? September 20 th Petroleum Club of Midland January 31, 2019 Petroleum Club of Midland
Who is the PBPA The Voice of the Permian Basin Our Mission… To advocate for safe and responsible oil and gas development and to provide education on safety, legislation, regulation, and support services for the industry.
PBPA Offices Midland, Texas Austin, Texas Santa Fe, New Mexico
The Permian Basin As of last week, there were 492 rigs operating the Permian Basin of West Texas and Southeast New Mexico. 46% of all rigs in the United States 73% of all rigs in Texas 97% of all rigs in New Mexico Through 2017, just in Texas 30 billion barrels of crude 75 trillion cubic feet of natural gas Santa Rita #1
Permian Basin Production Oil & Natural Gas 4,000,000 3,500,000 3,000,000 2,500,000 BOE/Day 2,000,000 Crude Oil 1,500,000 1,000,000 Natural Gas Equivalent 500,000 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Data from U.S. EIA
Barriers to Continued Growth
The Permian Basin Periskope Shale Oil Report - January 2019 2018 was another outperforming year for U.S. shale oil production, but 2019 faces much more challenges: The Q4 1 18 oil price decrease has been a a game-cha hange ger r for small- and mid- sized companies: es: completion activity is down more than 20%, while the rigs count was stable until recently. Halliburton highlighted last week a modest improvement in completion activity in Q1 19. Bottle tlene neck ck issues are still l present and, even i if the risks decreased sed, they will l limit the produc ucti tion on upside potenti ntial l until autumn 2019. 2019. Right now, Midland WTI is trading at the smallest discount to benchmark Nymex crude futures since March 2018. WTI Midland +$1.30/bbl. to $2.25 under WTI at Cushing. Port capacity is the next bottleneck by 2021. La Last, but n not least, t, with 2018 as a bi big vi vintage on produc ucti tion on growth, h, so will l the depleti tion on be i in 2 2019: More than two thirds of capex allocated to shale would be used to offset the production decline in our view. Capex increases for Big Oils and decreases for others.
Infrastructure/Safety
Planned Investment in Energy Sector Corridor For FY 2019 – FY 2028 Abilene $538 million El Paso $612 million Lubbock $718 million Odessa $1.1 billion San Angelo $486 million Total planned investments equals $3.4 billion
Safety Statistics in Energy Sector Areas (2010 – 2017) Reportable Motor Vehicle Traffic Fatalities in Energy Sector Regions 450 400 350 300 Fatalities 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 Eagle Ford Shale Permian Basin The Permian Basin contains 2% of Texas’ population but has 10% of the state’s traffic fatalities.
PBPA Takeaway Task Force
PBPA Takeaway Task Force NGL Gas Crude
State Legislative Review 2017 Texas Legislature 6,499 bills were filled before deadline Tracked over 400 bills, focused on 123 RRC Sunset and Funding 2017 New Mexico Legislature 507 bills passed by legislature No bills were passed directly impacting O&G
Texas Focal Points for PBPA Railroad Commission Budget New State Road Projects and Funding COL Increase for RRC, TxDOT & DPS Employees Physician Education Loan Repayment Program Family Medicine Residency Program Eminent Domain School Finance
Texas Legislative Action So Far Railroad Commission Budget House & Senate both Cut RRC request New State Road Projects and Funding HB 42 – White – Severance Tax Allocation COL Increase for TxDOT & DPS Employees HB 917 – Craddick – Truck Safety Physician Education Loan Repayment Program Family Medicine Residency Program Eminent Domain HB 991 & SB 421 (companion bills)
Texas Legislative Action So Far Continued Taxes and Revenues Property Taxes Around 100 property tax bills introduced so far 1/3 deal with exemptions Tax rate transparency and the creation of real-time tax notices Reduction in roll back rates School Finance Stated to be a priority by the Governor, Lt. Governor, and Speaker of the House House budget – adds $7 billion (no earmarks) Senate budget – adds $4.3 billion (with earmarks) HB 569 – Capriglione – School Finance HB 665 – K. King – School Finance Still awaiting bill containing recommendations from the School Finance Commission final report Sales Tax Franchise Tax
New Mexico Legislative Focal Points Stem the bleeding. All statewide office holders, and the majority in both the House and the Senate are of the same party.
New Mexico Legislative Action So Far HB 6 – Tax Changes HB 17 – Water Leases & Use of Leased Water Road Funding HB 188 – Motor Vehicle Excise Tax to State Road Funds HB 189 – State Road Fund HB 201 – County Road Fund Tax Refund Donation HB 206 – Environm ronmental ental Review ew Act HB 213 – Paid Family and Medical Leave Act Renewable Energy HB 283 – Increase Renewable Portfolio Standards HB 289 – Fund Investment in Renewable Energy HB 291 – Renewable Use of Energy Act Changes SB 186 – Oil Conserv ervati tion on Division on Power wers & Dut uties
January 31 st Petroleum Club of Midland
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