Roads: County, Energy Company Lay Groundwork for Productivity
by Julie Anderson
Some relationships have natural tension simply because of cause and effect. However, this doesn’t mean the two parties can’t forge a positive path, especially when they step outside the challenges and look at the big picture.
It’s no secret that the oil and gas industry has been rough on roads. Depending on the county, the damage could call for repair or full roadway replacement. During the 83rd Session of the Texas Legislature, lawmakers approved a one-time appropriation of roughly $225 million to help counties fix damaged local roads. Of the state’s 254 counties, 191 applied for grant money; together these counties identified more than $1 billion in needed road improvements. The biggest grants went to counties in West and South Texas with the heaviest oil and gas production.
Now three sessions later, state leaders have once again called for further study of the oil industry, road impact, and avenues for road improvements. Speaker of the House Joe Straus and Lt. Gov. Dan Patrick released their interim charges for the House of Representative and Senate last fall, and both included a focus on roads and the energy sector.
Senate Committee on Energy Resources
- Evaluate the impact energy exploration and production have on state and county roads and make recommendations on how to improve road quality in areas impacted by these activities. (Joint charge with the House Committee on Transportation)
House Committee on Transportation
- Monitor the usage of state funds by the Texas Department of Transportation for improving road quality in areas impacted by Energy Sector activities.
The adverse effect of the oil and gas industry on roads is one side of the coin. The other side is just as important, considering that the oil and gas industry has been referred to by many analysts as an “anchor of the Texas economy.” The economic impact of the oil and gas industry is a full story in and of itself, with impressive statistics on job creation and revenue generation that directly funds schools and other key services. According to the Texas Oil and Gas Association, the industry paid about $9.4 billion in state and local taxes and state royalties in fiscal year 2016. During that time period, Texas school districts received $1.7 billion in property taxes from mineral properties producing oil and gas, from pipelines and from gas utilities, and counties received $529.8 million in oil and natural gas mineral property taxes.
Suffice it to say, the two-sided coin is not news, and very few if any argue that the industry brings both benefits and difficulties. However, during a boom cycle the spotlight often turns again to the challenges, especially when it comes to roads: increased traffic is inevitable, as is the damage to roads, some of which were just repaired during the last downturn.
One Texas county has been dealing with the two-sided coin since 1935, when the first well was drilled in the Wasson Field near Denver City. As the Denver City Chamber of Commerce tells it, “Located in the southwest corner of the Texas Panhandle, Denver City was founded in 1935 as the last West Texas town created solely on the discovery of oil.”
The Yoakum County Approach
“There are many advantages to having minerals in your county,” shared Yoakum County Commissioner Tim Addison.
“The increase in the tax base and the increase in jobs helps our entire community,” echoed Yoakum County Commissioner Ray Marion. Yoakum County is in a rural area and has very little economic base besides oil and gas.
While technology has been cited as part of the recent boom, Yoakum County takes a decidedly non-technical first step in connecting with oil and gas personnel.
When oil companies seek road-use permission in Yoakum County, there is not an online option; rather, a representative must appear in person in the office of the Yoakum County Judge, who then matches the representative with the appropriate County Commissioner and gives him/her the required paperwork. As seen in the excerpt from the paperwork below, the petitioner must contact the County Commissioner multiple times throughout the process.
This approach allows for immediate person-to-person contact, Addison offered, and helps establish a relationship.
The two-page document also addresses returning the road to the condition in which it was first found.
The County Commissioners are so hands-on, that it is up to each Commissioner in his individual precinct to decide whether or not the company should use an open cut or a bore.
The county did not always charge an administrative fee, Addison explained. However, in the past companies have approached the county with permission for every potential road crossing over a lengthy time period. The fee has helped decrease the number of filings for erroneous crossings, Addison said.
When it comes to general wear and tear on county roads, Yoakum County took full advantage of grant money offered by the Legislature several years ago, using every bit of the $3,035,154 allotted by the State of Texas.
Yoakum County’s relationship with the oil and gas industry is not limited to road issues. For example, Occidental Petroleum Corporation (Occidental), which has a heavy presence in the area, has employees who live and work in the county. Earlier this year, Occidental made a million-dollar contribution to help replace the Yoakum County Community Center, which is used regularly for special large-group and family occasions and by Occidental Petroleum for safety and operational meetings (see related story).
Give and Take
Occidental’s U.S. business is focused in the Permian Basin of West Texas and Southeast New Mexico, one of the largest and most active oil basins in the United States, accounting for approximately 16 percent of the total U.S. oil production, said Clint Williamson, manager of communications and public affairs for Occidental Petroleum Corporation.
Occidental manages operations in the Permian Basin through two businesses: Permian Resources, which consists of growth-oriented unconventional opportunities, and Permian EOR, which utilizes enhanced oil recovery (EOR) techniques, such as carbon dioxide flooding and waterfloods. The Denver City operations are part of the Permian EOR business.
The Denver Unit, which is part of the Wasson Field, was discovered in 1935, Williamson said. The Denver Unit was unitized in the 1960s to implement the secondary recovery method known as water flooding. In 1984, an additional recovery method, carbon dioxide enhanced oil recovery (CO2 EOR), was introduced in the Denver City area. This CO2 EOR method accounts for about 90 percent of the oil produced today, Williamson added. Occidental officially began operations in Denver City in 2000 with the acquisition of Altura.
“Yoakum County has well-established policies and procedures in safely permitting the oil and gas industry,” Williamson offered. “They are a firm and fair local government entity that works transparently with Occidental. For example, when Occidental identifies the need for new boring, we know where to go to apply for a permit—the County Courthouse in Plains—and what is necessary to obtain approval.”
“Developing good working relationships with the Commissioners Court is a key component to our success in Yoakum County,” Williamson added. “Our employees live in the community, so we value being a good neighbor.”
When it comes to road issues, Occidental engages in open conversation with affected parties; after all, those same roads are used by Occidental’s own employees who live in the area.
“Occidental has a history of open communication with local governments where we have a presence,” Williamson stated. “If there was a concern, we would have a dialogue with local officials and review proposed solutions. As one of the largest producers in the Permian Basin, the Basin is also our home.”
Julie Anderson, formerly the editor of Permian Basin Oil and Gas, is the editor of County Progress Magazine. She and her husband recently relocated from Odessa, Texas, to Lubbock, Texas.