Oil and Gas - The Texas Contribution
Authors: Langdon Jim C. 
Published: December 2007

For more than 2 decades the domestic oil and gas industry has been under constant attack from headline-hungry politicians of every political persuasion. They have been supported and sustained by political persuasion. They have been supported and sustained by well organized consumer interests and by the eastern news media and more recently by environmental protection groups. The consumer is not served by prices so low that supply is unable to achieve a balance with demand, nor can environmental goals be attained by reducing the nation's access to the energy resources required for those goals. If the purpose of such attacks has been to weaken or destroy the domestic oil and gas industry, they are very close to success. The greatest attrition has been suffered by the small independent oil and gas producer. Once numbered by the thousands in Texas alone, they can now be counted by the, hundreds. Oilwell drilling contractors met a similar fate. Their numbers were decimated, drilling declined, hundreds of rigs were idled, eventually stacked, sold for scrap or exported to other areas of the world. Most tragic of all has been the loss of the army of skilled oilfield workers - drillers, roughnecks, roustabouts and other essential employees. Many of them were exported along with their drilling rigs to the faraway places of the earth where the search for oil and gas continues. The rest finally gave up and moved into other less hazardous, more profitable forms of employment. We can replace the physical equipment - the drilling rigs and oil tools that will be required when the nation resumes its search for oil and gas. The incentives to do so, however, must be supplied. Then not only will the necessary capital required to do the job be attracted, but hopefully a new generation of independent oil and gas producers will respond to meet our country's vital energy requirements. The problem of recruiting and training the thousands of new oilfield workers required to replace the skilled employees chat have been lost to the industry will be far more difficult. There is an ever widening gap between what we are now able to produce domestically and the minimum volumes of oil and gas required to keep the country running. It is probably already too late to completely avert a serious national energy crisis, but its duration and effect can be minimized if appropriate action is taken now. Unfortunately, some of our congressional leaders are now in the process of drafting legislation that will further discourage domestic oil and gas exploration and development. This legislation is designed to usurp state control of the intrastate use of oil and natural gas and place it under the control of a super federal agency. In my place it under the control of a super federal agency. In my judgment such legislation will not provide the incentives required to increase reserves, but, to the contrary, will hasten the liquidation and demise of America's petroleum industry. A few weeks of bad weather have been more effective than 10 years of official statements in calling the attention of the general public to the twin facts that a strong domestic oil and gas industry is essential to both the economic health and the national security of this nation. Most thoughtful Americans have long been aware that the oil and gas resources of this nation are not inexhaustible - that in time they would be depleted. The most prolific producing wells eventually grow old. Production reaches a prolific producing wells eventually grow old. Production reaches a peak, levels off for a time and then gradually declines until its peak, levels off for a time and then gradually declines until its economic limits are reached. This may occur before as little as 10 to 30 percent of the oil in place has been recovered. When the cost of producing the remaining oil exceeds the price that can be obtained for such oil, the economic life of the well has ended, production ceases and such cases, unless economics are altered by production ceases and such cases, unless economics are altered by a crude oil or gas price increase or the application of new technology, the well is then plugged and abandoned. Since price increases have been very few, the industry has largely relied upon new technology applied in the form of secondary and tertiary recovery methods to extend the economic life of oil and gas reservoirs. These methods, too, whether they involve a waterflood or one of the more exotic recovery methods, in time reach their economic limits. Energy poses both economic and political questions: how to provide enough energy to keep the country running and from what provide enough energy to keep the country running and from what sources. How much should we produce domestically and at what price - economically and environmentally?

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