by Bob Campbell

Odessa American

Starting with the COVID-19 pandemic in 2020, the energy industry has weathered rough seas in the past 4 1/2 years.

The regulatory onslaught of the Biden years was very tough and now President Trump’s tariffs have depressed prices and decreased the number of drilling rigs and frac crews while new European Union import regulations have hiked costs and discouraged liquefied natural gas exports.

On the plus side, there is the development of the off-shore industry at Guyana, the prospective opening of Alaska to oil and gas production and the benefits of Congress’ “One Big Beautiful Bill Act” that Trump signed into law July 4.

So is the industry better or worse off than it was before 2020?

The Permian Basin Petroleum, Texas Independent Producers & Royalty Owners and Texas Oil & Gas associations say it has emerged through the roaring seas in encouraging shape, although significant challenges remain.

PBPA President Ben Shepperd said production in the Basin and worldwide has substantially increased.

“According to the U.S. Energy Information Administration, in 2020 the world produced just over 71 million barrels of crude oil per day, not including other hydrocarbon liquids such as condensate,” Shepperd said. “The EIA projects that in 2025 the world will produce on average more than 77 million barrels a day.

“Over that same time period oil production in the Permian Basin has gone from fewer than 5 million barrels a day in 2020 to what the EIA projects will be around 6.5 million barrels a day by the end of 2025 for a record amount of annual crude oil production for the Basin.”

He said natural gas production in the region has gone from averaging about 17,000 million cubic feet per day in 2020 to what the EIA projects will be a record 27,000 Mcf/day by year-end.

“If producing oil and natural gas is the stick by which the state of the oil and gas industry is measured, then the industry in the Permian Basin is doing better than it ever has,” Shepperd said. “That doesn’t mean there aren’t challenges and obstacles to overcome.

“There have always been and likely will always be detractors for our industry and what it produces. But humanity is better because of the work performed in the Permian Basin.

“On that note more people are alive today than ever before and a fewer percentage of those people live in extreme poverty. This is only possible because of the affordable, accessible, transportable and reliable energy and materials produced by the oil and natural gas industry.”

He said the last 4 1/2 years brought headwinds with a pandemic shock, a roller coaster of federal rule-making, economic pressures and international regulatory shifts that weighed on costs and activity.

But Shepperd said the region has been established as a leader in energy production by competition, producers’ innovations, capital discipline and ongoing investment in infrastructure including midstream, processing capacity, water recycling and re-use, electrical transmission and distribution lines and its workforce.

“New global projects and potential policy reforms are positive tailwinds, but maintaining reliable, predictable policy and permitting is essential if we want to say that today isn’t just a high point for the industry but a step toward an even better tomorrow,” he said.

TIPRO President Ed Longanecker said the industry is more competitive today than it was before the pandemic thanks to the One Big Beautiful Bill Act and the Environmental Protection Agency’s deregulatory action that reduced barriers and costs for operators.

“U.S. oil and gas producers have gained significant market, regulatory and fiscal advantages relative to the pre-pandemic era,” Longanecker said. “Global supply and demand scenarios are impacted by a range of factors like increased output from OPEC and the cost of steel and aluminum due to tariffs.

“Tariffs could, however, benefit domestic oil and gas production if they were placed on imported crude oil and refined products or on countries that continue purchasing Russian energy.”

He said these scenarios could incentivize increased domestic output and encourage further investment in U.S. energy infrastructure while also risking retaliatory action and global price volatility impacting consumers.

Benefits to the energy industry from the One Big Beautiful Big Act include restoring the minimum royalty rate for new federal onshore oil and gas production to 12.5%, mandating quarterly onshore lease sales and boosting oil and gas development on federal lands, eliminating fees and restrictions on drilling permits, repealing the royalty requirement on extracted methane, increasing oil and gas production on federal lands and waters including the Arctic National Wildlife Refuge, extending bonus depreciation to production real property through 2031, restoring the full deductibility of intangible drilling costs, streamlining permitting procedures for energy projects and removing tax credits for new wind and solar projects.

Longanecker said the American industry stands to benefit from trade deals with countries that have agreed to buy more oil and LNG like the European Union and Japan.

“These energy purchase pledges are politically significant, but actual export increases are likely to remain modest in the short term,” he said.

TXOGA President Todd Staples said Texas’ energy industry has emerged stronger than ever despite significant headwinds from market volatility and regulatory uncertainty in recent years.

“Record-breaking production has enabled Texas to deliver unprecedented volumes to consumers at home and export markets abroad, cementing our indispensable role as a leading global energy supplier,” Staples said. “Underlying this robust capacity to meet the world’s energy demand is the commitment to science-based, innovative solutions that have enabled oil and natural gas to constantly deliver more with less.”

He noted that in January 2015 there were 1,543 rigs producing about 9.2 million barrels of oil per day.

“Ten years later 582 rigs were producing 13.5 million barrels per day,” Staples said. “The phenomenal increase in output with a substantially reduced rig count is a testament to the can-do attitude of the men and women in the oil patch.

“We are fortunate that President Trump and his administration along with Gov. Abbott and top Texas officials continue to recognize oil and natural gas as an asset, not a liability.”

Official Story