Labor shortages, supply chain issues, hesitant financial backers and a frosty relationship with the Biden administration have limited how much Texas oil and gas companies are ramping up production.
After Russia invaded Ukraine last month and the U.S. and major energy companies boycotted Russian oil and gas, some politicians quickly called for cranking up American energy production to fill the void.
U.S. Rep. Lauren Boebert, R-Colo., wears a shawl with "Drill Baby Drill" printed on it before President Joe Biden’s State of the Union address on March 1, 2022. Credit: Win McNamee/Pool via REUTERS He said frac sand — a key ingredient in the hydraulic fracturing process — has been particularly hard to find due in part to labor shortages, even though much of the supply comes from Texas. The price of steel has increased so much that supply shortages make it hard to get pipe for drilling wells, he added. Oestmann said his company has no plans to add more drilling rigs, but even if it did, he said it probably wouldn’t be able to find the supplies to do so.
First: A roofing crew begins to shingle a home under construction in a new Midland housing development as a pumpjack operates nearby. Last: Motorists drive past a sign hiring workers in Midland. Credit: Eli Hartman for The Texas Tribune Motorists drive along Interstate 20 past a gas station in Odessa. Credit: Eli Hartman for The Texas TribuneThe Biden administration announced a U.S. boycott of Russian oil on March 8, but only about 7% of U.S. oil imports come from Russia. A handful of other countries like Britain and Canada, plus some major energy companies like ExxonMobil and Shell, have also stopped buying Russian oil.
In the U.S., no place drills for oil as much as the Permian Basin. As of March 11, the region had 316 oil rigs in the ground — the number continually flashes on a large screen in downtown Midland along with the current temperature. The rest of the U.S. had 212 rigs, according to the Federal Reserve Bank of Dallas. The Permian produces more than 5 million of the nation’s daily output of 11.6 million barrels of oil per day.
Before Russia invaded Ukraine, the Permian Basin’s oil production had finally surpassed pre-pandemic levels as the global economy recovered. The U.S. Energy Information Administration forecasts that production in the Permian region will average 5.3 million barrels per day in 2022 and will reach 5.7 million barrels per day in 2023, which would be a record high.
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