Historic Oil Bust Delivers A Gut Punch To 1 High-Flying Texas County
In the endless boom and bust cycle of the oil business, there has never been anything like 2020. The oil patch is reeling from historic low prices. Futures for West Texas Intermediate crude closed at $25 a barrel on Friday, down from more than $60 a barrel at the beginning of the year.
On a normal day in Andrews County, look in any direction and you'll see, stretching to the horizon, the bobbing horseheads of pump jacks sucking up oil from deep in the earth. But these are anything but normal days.
"Right now it's scary, honestly," said Lendon Partain, a well technician in Andrews. He's standing next to an idled pump jack in the mesquite scrubland that overlays what experts consider "a monster oilfield."
"We drove out here and usually you would see with all these good wells that historically have done a lot of production, they would usually all be pumping. They look like caterpillars all running across the landscape. And that's not happening right now," Partain said.
All across the vast Permian Basin that straddles West Texas and Southeast New Mexico, wells have been "shut in," in the argot of the oil business. American oil companies are pumping a million fewer barrels a day than they were two months ago, according to the U.S. Energy Information Administration.
All the big players out here — ExxonMobil, Chevron, ConocoPhillips — have slashed production.
For Andrews County, the effect has been cataclysmic. The county is considering layoffs for the first time, and the City of Andrews will hold off repairing streets and building a new city hall.
"When you have a community that receives 85 to 90% of their tax revenue from minerals, it's a serious threat," said Andrews County Judge Charlie Falcon.
Other cities bemoan their closed businesses and hospitalizations. But Andrews has had only 21 cases of COVID-19 and everyone is recovering. For this community, the global effect of the virus is much more troubling than the local impact from the disease.
"Right now for us it's a double dip," said Max Mainord, vice president of Mid-West Truck Center in Andrews. "Even if the virus goes away in 60 days we're still going to be in the same situation in the oil patch. There won't be anybody hiring because there's just too much surplus oil in the world right now to get rid of."
Bob Stewart is also scared about what the future hold. His welding and machine shop has lost half its business amid the paralysis of the industry — and he considers himself one of the lucky ones.
Stewart is tall and lumbering and wears a seed cap. He's survived earlier downturns in his nearly 40 years in the business, but he's never seen demand evaporate like this.
"The whole world's stopped," he said. "There's no airplanes flying, there's no cars driving, there's no cruise ships cruising, there's no summer vacations going. We're producing a lot of oil for a world that's not consuming it. And that's what's been killing the price."
Stewart is grateful he hasn't had to lay off any of his 110 employees. He got $1.7 million through the federal government's Paycheck Protection Program. But that won't last forever.
"This is kind of a 9/11 do-over," Stewart said. "I don't know what it's going to look like, but when it comes out on the other side it's going to be different."
With 12,297 active wells in Andrews County, hydrocarbons have been a blessing to this community. There's an air-conditioned rodeo arena, a public water park and new Little League baseball diamonds. The schools have a planetarium and an Olympic-sized swimming pool. All over town, gleaming motorcycles and ski boats and behemoth pickup trucks are parked in driveways.
Though the one-two punch of the pandemic and the oil bust have left the region staggering, it should not have come as a complete surprise. Every oil-addicted town has been here before.
"I've been interviewed by the media three times and every time it's when Andrews is on the map for some dubious reason with the economy," said Russell Shannon, president of the National Bank of Andrews, with a chuckle. He said established companies that saved for a rainy day will weather this bust a lot better than others.
"As I try to tell some of the younger ones when they try to get into the business, there's a storm cloud out there," Shannon said. "Just because you don't see it today doesn't mean there's not one on the horizon. I mean historically we've just seen it too many times."
Max Mainord's trucking company has been through six downturns, by his count. And it has learned how to survive.
"It's just one of those situations that you hate to lay off people that have worked for you for 10 or 12 years, with young kids and families," he said. "You hunker down when 95% of your business is gone ... And in a year it starts moving a little bit."
The oilfield workers, with their six-figure salaries, thought it would never end. Even though it always does. Mario Fernandez was laid off three weeks ago as a workover-rig supervisor. Now he's realizing just how good the good times were.
"I didn't realize how much I spent when I was at work," he said with a laugh. "Breakfasts. Lunches. Buying my crews food. You want to (tell your guys), 'Hey, good job. Here's some steaks and baked potatoes or something for working your butts off.' "
Fernandez sits on the front stoop of house, having a smoke and catching the night air after a scorching 104-degree day. Now he stays home, helps his teenage son with his homework, they watch movies together, and he tries to keep a positive attitude.
"I used to be a worrier. I'm not anymore," he said. "The Bible says don't worry about tomorrow because we don't even know if we're gonna make it tomorrow. So I just have faith, and believing that it's all going to come back together."
The question is when, and how long folks can hold on.
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