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Railroad Commissioner offers steps to ensure nation's energy supplies, security
Speaker says dialogue should center on how the U.S. can ensure future supplies of energy.
by Mella McEwen
Midland Reporter-Telegram
Pointing to a slide of a service station's sign advertising $4 per gallon gasoline, Railroad Commissioner Victor Carrillo commented, "With this on the news practically every night, the energy sector is on everybody's mind. That's not always been the case."
The Abilene native, in Midland Wednesday to address the Permian Basin Petroleum Association, added that "In these times when the nation's focus is on energy, the need for energy, where it comes from, how it's produced and its impact on the environment. Even the presidential candidates are focused on energy. It's good the nation is having this dialogue."
That dialogue, he said, has centered on how the United States, as a nation, can ensure future supplies of energy and ensure the security of those energy supplies. Carrillo offered three top suggestions.
"We must moderate the decline of conventional domestic oil and natural gas production," he said, noting that Texas production has experienced a significant decline and a steady decline year in and year out.
"We must increase access for the exploration and production of new resources," he said, especially in the Rocky Mountains and intermountain region, offshore and in Alaska.
And, he said, "we must diversify our energy resources and develop unconventional oil and gas plays, clean coal, nuclear and renewables -- wind, solar and biomass."
Even so, Carrillo said, "for the foreseeable future -- I'm talking 30, 40, 50 years into the future, we will continue to rely on the 'Big Three,' oil, natural gas and coal. Unfortunately, our congressional leaders don't understand that. They seem to think we can just flip a switch. We do need to press forward with diversifying our energy spectrum. But in Texas, which leads the nation in wind power capacity, wind only provides 1-2 percent of our needs."
The nation must never turn its back on oil and gas, he said, "but we must also evolve clean coal, wind, biomass, solar energy, geothermal energy and fuel cells."
Producing more energy domestically will also reduce reliance on foreign sources, some of whom "don't have our best interests at heart," Carrillo said. He told his audience that the nation imports more than 65 percent of the crude it uses, with Canada and Mexico the top-2 providers, followed by Saudi Arabia, Venezuela and Nigeria. He estimated that the United States will send $1.18 trillion to the coffers of Organization of Petroleum Exporting Countries nations.
Still, record high commodity prices have stirred up activity throughout Texas oil fields, from the mature producing regions of the Permian Basin to new plays in the Barnett Shale around Fort Worth to deep and ultra deepwater Gulf of Mexico to East Texas, he said. Such activity, he said, shows that "you can teach an old dog new tricks."
The Railroad Commission is on track, he told those in attendance, to issue more than 20,000 permits for new wells, a figure not seen since 1985. He added that period was just before the bust of 1986, when oil prices fell to $10 a barrel, but he hastened to add that fundamentals -- primarily rising global demand in nations like China and India -- should prevent a similar cycle this time.
But the rise in statewide activity has strained the commission's personnel and created a serious backlog that stretches from new drilling permits to completion reports. The commission is losing personnel, particularly technical personnel like engineers and geologists, to both the oil industry and to sister state agencies that pay higher salaries, he said.
To address both the backlog and the personnel issue, Carrillo said he and his fellow commissioners -- Chairman Michael Williams and Elizabeth Ames Jones -- unanimously voted to request an emergency appropriation of between $500,000 and $1 million from the Legislative Budget Board to hire contract employees to help with the backlog.
The commission will also request $12 million in general revenue for the 2010-2011 budget cycle to hire 36 new employees and spend $3 million on salaries for the new employees and raises for existing staff, Carrillo said.
"I'm confident we'll get a good budget," he said.
The Abilene native, in Midland Wednesday to address the Permian Basin Petroleum Association, added that "In these times when the nation's focus is on energy, the need for energy, where it comes from, how it's produced and its impact on the environment. Even the presidential candidates are focused on energy. It's good the nation is having this dialogue."
That dialogue, he said, has centered on how the United States, as a nation, can ensure future supplies of energy and ensure the security of those energy supplies. Carrillo offered three top suggestions.
"We must moderate the decline of conventional domestic oil and natural gas production," he said, noting that Texas production has experienced a significant decline and a steady decline year in and year out.
"We must increase access for the exploration and production of new resources," he said, especially in the Rocky Mountains and intermountain region, offshore and in Alaska.
And, he said, "we must diversify our energy resources and develop unconventional oil and gas plays, clean coal, nuclear and renewables -- wind, solar and biomass."
Even so, Carrillo said, "for the foreseeable future -- I'm talking 30, 40, 50 years into the future, we will continue to rely on the 'Big Three,' oil, natural gas and coal. Unfortunately, our congressional leaders don't understand that. They seem to think we can just flip a switch. We do need to press forward with diversifying our energy spectrum. But in Texas, which leads the nation in wind power capacity, wind only provides 1-2 percent of our needs."
The nation must never turn its back on oil and gas, he said, "but we must also evolve clean coal, wind, biomass, solar energy, geothermal energy and fuel cells."
Producing more energy domestically will also reduce reliance on foreign sources, some of whom "don't have our best interests at heart," Carrillo said. He told his audience that the nation imports more than 65 percent of the crude it uses, with Canada and Mexico the top-2 providers, followed by Saudi Arabia, Venezuela and Nigeria. He estimated that the United States will send $1.18 trillion to the coffers of Organization of Petroleum Exporting Countries nations.
Still, record high commodity prices have stirred up activity throughout Texas oil fields, from the mature producing regions of the Permian Basin to new plays in the Barnett Shale around Fort Worth to deep and ultra deepwater Gulf of Mexico to East Texas, he said. Such activity, he said, shows that "you can teach an old dog new tricks."
The Railroad Commission is on track, he told those in attendance, to issue more than 20,000 permits for new wells, a figure not seen since 1985. He added that period was just before the bust of 1986, when oil prices fell to $10 a barrel, but he hastened to add that fundamentals -- primarily rising global demand in nations like China and India -- should prevent a similar cycle this time.
But the rise in statewide activity has strained the commission's personnel and created a serious backlog that stretches from new drilling permits to completion reports. The commission is losing personnel, particularly technical personnel like engineers and geologists, to both the oil industry and to sister state agencies that pay higher salaries, he said.
To address both the backlog and the personnel issue, Carrillo said he and his fellow commissioners -- Chairman Michael Williams and Elizabeth Ames Jones -- unanimously voted to request an emergency appropriation of between $500,000 and $1 million from the Legislative Budget Board to hire contract employees to help with the backlog.
The commission will also request $12 million in general revenue for the 2010-2011 budget cycle to hire 36 new employees and spend $3 million on salaries for the new employees and raises for existing staff, Carrillo said.
"I'm confident we'll get a good budget," he said.
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