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West Texas an 'extraction colony' as oil, gas exports surge

Last Updated Oct 11, 2018 at 11:01 am EST

MIDLAND, Texas – Drilling booms have come and gone in this oil town for nearly a century. But the frenzy gripping it now is different. Overwhelming. Drilling rigs tower over suburban backyards. There’s a housing crunch so severe that rents are up 30 per cent in the last year alone.

This boom is engulfing the rest of West Texas, extending to areas drilling hasn’t touched before. As communities welcome new jobs and business, they’re struggling with an onslaught of problems from air pollution to student homelessness.

In December, companies in the Permian Basin — an ancient, oil-rich seabed that spans West Texas and southeastern New Mexico — produced twice as much oil as they had four years earlier, during the last boom. Forecasters expect production to double again by 2023.

Texas Gov. Greg Abbott and others say the drilling spree is ushering in a new era of American energy independence, but American demand isn’t driving it. Foreign demand is.

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This story is part of a collaboration between the Center for Public Integrity, the Texas Tribune, The Associated Press and Newsy.

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In late 2015, Congress cut a deal to lift 40-year-old restrictions on the export of crude oil. Three years later, the U.S. has surpassed Russia as the world’s top oil producer. The International Energy Agency predicts that American oil — most of it from the Permian — will account for 80 per cent of the growth in global supply through 2025.

Hydraulic fracturing — better known as fracking — made this boom technologically possible, but exports are the reason there’s so much new drilling. U.S. refineries built for heavier varieties of oil than the Permian produces can’t handle the enormous new quantities of Texas light crude. Instead, companies are shipping it abroad.

The lifting of the export restrictions “is tantamount to one of the most important things that’s ever been done for the industry,” said Tim Dove, chief executive officer of Pioneer Natural Resources, based near Dallas.

But the country is not “energy independent” in the way most Americans would conceive of the idea. Nor can anyone promise that America, as Abbott put it in a recent tweet, “will NEVER AGAIN depend on Foreign Oil Cartels for energy.”

That’s because the U.S. is still importing oil: 1.4 billion barrels in the first half of this year alone, a third of it from the foreign oil cartel known as OPEC.

The country will keep buying oil from other nations indefinitely even as it sells more abroad, the U.S. Energy Information Administration forecasts.

The Texas Tribune and the Center for Public Integrity investigated the scope and impacts of energy exports as part of a collaboration with Newsy and The Associated Press.

In Texas, the boom is sending a lot of money into state and local coffers. Oil and gas tax revenue is up more than 50 per cent this year. Said James LeBas, a Texas Oil and Gas Association economist: “When oil and gas is doing well, the state is doing well.”

Still, climbing production hasn’t boosted local tax revenues fast enough to address the problems that come with it, from crowded classrooms to wrecked roads. Schools, police departments and hospitals are struggling to keep employees lured by better-paying oilfield jobs.

Texas regulators, long criticized for being too industry-friendly, also aren’t aggressively tracking or policing problems that accompany the boom. For example, the Texas portion of the Permian — roughly the size of Georgia — has only a few air pollution monitoring stations, leaving residents largely in the dark about what’s in the air they breathe.

And the industry is consuming water in the arid region at an unsustainable rate. Permian Basin operators used eight times as much water to frack and drill last year as they did in 2011; the ultimate consequences are unknown because Texas doesn’t require companies to disclose basic information that would allow scientists to understand the risks.

People with no say in these decisions are stuck with the consequences, said Coyne Gibson, who lives in a part of the Permian that had little oil and gas activity until a few years ago.

“The bitter, cynical way to look at this is, West Texas becomes an extraction colony for the fuel resources for the rest of the world,” said Gibson, a Big Bend Conservation Alliance volunteer who once worked in the oil and gas industry.

Globally, there are major trade-offs, too. Scientists warn this drilling rush almost certainly will worsen climate change by increasing the world’s fossil fuel use at a fraught time. They say drastic reductions in greenhouse gases are needed to avoid intensifying climate-linked disasters already pummeling the planet.

Two massive wildfires in California this summer were among the largest in state history. Record-high temperatures in Japan killed more than 100 people in July. September’s Hurricane Florence was the most devastating storm ever to hit the Carolinas, while Texas communities are still struggling to recover from Hurricane Harvey, which shattered U.S. rainfall records last year.

“Every additional gigaton of carbon that we produce as a global society carries with it a very real cost,” said Katharine Hayhoe, who directs the Climate Science Center at Texas Tech University.