Community Archetypes in the Permian Basin and their relationship to energy resources
Roughnecks and Howdy-Do’s
Growing up in Northern Texas, road trips involved an hour or more to get anywhere. While on the road, the landscape was dotted with what my family called “howdy-do’s” – an affectionate name for a pump jack’s waving motion up and down. I remember the dark black and green fluid pulled from the ground and the regular royalty checks that allowed my farming relatives to buy a new pickup, paint the house or pay off a farm debt. Of course, I also remember the spending power (and appetites!) of the roughnecks and many other workers who made my father’s restaurant successful. I also remember the downturns that chased the wildcatters out of the market, consolidated production and finished the North Texas fields, leading to recession.
The Permian Basin, which spans the Texas-New Mexico border, has long been a leader in energy production. Indeed, it is the most important production site in the United States, and, with strong ground some may argue, the world. Coming out of the world’s financial crises of 2008, energy producers in West Texas fully adopted the drilling technique of hydraulic fracturing or “fracking” that allowed highly efficient production of natural gas and crude oil at a scale few would have predicted when Santa Rita No. 1 hit oil in 1923 after two years of effort.
With Boom Comes Bust
The oil and gas industry always “feels” busy, but it is economically vulnerable due to its focus on raw commodity products and dependence on international market forces outside of its control. These make the region susceptible to boom and bust cycles. The Dallas Fed has tracked oil and gas jobs and oil prices and, in Chart 1, below, one can see at least five busts and six booms since 1993 alone. [1]
That is whiplash for the state, the Permian Basin, and especially for the people who live and work in the region. Currently in a boom, the Permian absorbed the huge economic shock of the pandemic and has grown stronger, with production topping pre-pandemic levels and predicted to see an 8% year upon year increase in 2024. [2] Despite these historic highs in production, oil and gas jobs have not rebounded from the pandemic crash in production. Current employment is down 20% from pre-pandemic levels. [3] Greater productivity of existing wells, automation and expanding opportunities in clean energy appear to be behind the slow job recovery in the oil fields. [4]
The whiplash presents complex challenges. How do you build infrastructure, fund schools and conduct “normal” economic development functions; accommodate an influx of outside workers, intense competition over wages and overuse of roads and infrastructure; all while keeping your eye on the looming threat of high unemployment, low tax revenues and aging infrastructure?
There are no easy answers. The current demand for more skilled workers, more diverse energy jobs and higher quality of life for families – not “man camps” – requires a new mindset and renewed community investment. Further, success for communities – their well-being, health, employment, access to clean air and water – depends on smoothing the boom-and-bust history of the region.
As the jobs reports cited above suggest, new economic opportunities are available in the form of new energy production, storage and transportation technologies growing in the Permian. These new industries offer economic opportunities to calm the boom-and-bust cycles while expanding jobs and economic growth for the region.
But energy transitions are not driven solely by economic forces; culture, values and perceptions of the residents are important. [5]
“Communities are active participants in a process of change – either encouraging participation or rejecting it.”
This is a key a question for the Permian Energy Development Lab, a consortium aimed at advancing innovative energy development while benefitting and creating opportunities for energy communities to continues to lead in the future. [6] PEDL secured a National Science Foundation award to develop a new regional innovation engine in the Texas and New Mexico Permian Basin. This two-year grant is purposed to position the consortium to compete for a ten-year, $160M or larger NSF investment. [7]
Engaging any community to participate in an energy transition is a challenge, anywhere. But the Permian Basin is more daunting. The Permian Basin and service area is both vast – more than 75,000 square miles spread across 66 counties – and deeply committed to traditional energy production. It is home to diverse communities ranging from mid-size cities (e.g., Midland and Odessa with populations of more than 131,000 and 112,000, respectively) to many small towns and sparsely-populated counties of a thousand or fewer residents. Adjacent to the Permian Basin is El Paso, a major economic force of the southwestern United States. Each community has its own unique industrial, economic and cultural relationship with the energy industry. The diversity of Permian communities and the physical distances between each makes an “every community” analysis virtually impossible due to resource constraints.
Community Archetypes – A Strategy for Understanding a Complex Region
To overcome this challenge, we used a community archetype strategy that uncovers similarities that may form the basis for common concerns and opportunities across counties and allows us to understand important shared features. [8] To build initial archetypes, we collected available data describing economic, socio-demographic, cultural, educational, health and relationship to the energy industry for each county in the region. In our study, we added to the core New Mexico and Texas Permian Basin counties those adjacent physically and economically. [9] These counties will be included in PEDL’s outreach and research efforts; thus, our analysis included 66 counties. Using these data, we aggregated counties based on similar criteria into different archetypes using clustering methodology. The archetype framework identified six archetypes clustering 64 of the 66 Permian Basin counties. Two additional archetypes were each composed of a single county, ones with extremely high and low populations (See Figure 1).
Figure 1. Archetype Locations in the Permian with brief descriptions and county numbers included in each archetype in parenthesis.
Through the archetype approach, we built a detailed profile for each county while revealing unexpected similarities between counties. The archetype framework allows us to engage the diversity of the Permian counties with strong background understanding and focus research on representative communities from each archetype.
How Archetypes Will Guide PEDL’s Efforts
Through future studies, we will identify challenges and opportunities associated with participation in the energy transition and propose fitted strategies promoting new economic growth. The archetype framework articulated in this article will be the basis for assessing, designing and implementing PEDL’s future energy technology research, educational and outreach programs to equitably develop and deploy advanced energy technologies that benefit the communities throughout the Permian Basin. Energy and economic opportunities flow from PEDL’s research agenda to foster development and deployment of new energy technologies in the Permian that show improved environmental and economic performance.
Image courtesy of the author
The first effort will demonstrate the efficiencies and value associated with integrating renewable energy, carbon capture and storage, water treatment and hydrogen generation into the current economic mix. Mapping economic, talent, physical, built and energy assets will illuminate opportunities for new energy and industrial engagements tailored to each archetype. Further, conveying the understanding of community values can encourage cooperation and investment to realize new economic initiatives and reduce the amplitude of boom-and-bust cycles.
While the era of the “howdy-do” is not gone, new technologies are rising. Today in the Permian Basin, clean energy strategies are producing, transforming, storing and transferring energy – these strategies com e with the promise of new jobs, an economic buoy to smooth the oil and gas boom-and-bust cycles. Further, this transition will model how the United States can continue to lead in technology, talent and energy production. How and where new technologies will find a “home” starts with this county archetype study and continued work of the Permian Basin Energy Development Lab.
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