Business and Industry in Midland

Take a good look at Midland today because it will change dramatically in the next five to 10 years.

More schools. Many more houses. Expanded health care facilities. Miles of new roads. And new retail stores, restaurants and many other businesses to serve the massive influx of population.

All of this is due to Midland’s enviable position at the epicenter of the Permian Basin oil and gas industry, which has made it the fastest growing area in the country. It will bring tremendous change to the city and surrounding area in the years – even decades – to come.

“The opportunity largely comes out of the fact that the Permian Basin is experiencing a renaissance that makes the future look considerably brighter,” said Grant A. Billingsley, Executive Director of the Scharbauer Foundation in Midland.

Thanks to an unprecedented alliance between two organizations – one made up of companies that are in the energy business and another led by Midland city leaders – the city is addressing immediate needs and preparing for long-term growth:

• Permian Strategic Partnership is a regional collaboration that includes about 20 of the top oil and gas producers and service companies in the Permian Basin, which have a vested interest in helping Midland and the rest of the area address the need for more infrastructure, housing and other amenities.

• Priority Midland is led by elected officials and key community stakeholders who are working to accelerate funding and develop solutions for the growing community. The group includes all of the taxpaying governmental entities in the area – the City of Midland, Midland County, Midland ISD, Greenwood ISD, Midland College, Midland County Hospital District and Midland County Utility District. Also, there are about 200 residents participating in working groups and a Stakeholder Advisory Group.

Both organizations are working together, focusing on Priority Midland’s five key areas of growth – education, health care, quality of place, housing and infrastructure.

“It’s a way for the business community to combine with taxing entities and other stakeholders to move the area forward,” said Bobby Burns, CEO of the Midland Chamber of Commerce, which is playing a key role in bringing all parties together.

Why growth is predicted for Midland, and how much

One of the most dramatic American economic stories of the last 50 years has been the remarkable surge in oil and gas production in the U.S., with record oil production in 2019. This surge is largely driven by drilling in the Permian Basin, an area that covers 86,000 square miles between western Texas and southeastern New Mexico.

Drilling in the Permian Basin began in the 1920s, and there have been many ups and downs in production since then. But unlike previous oil booms that were followed by mild or severe downturns, energy companies and economists are confident that this one is going to last for many years to come.

A study by the Perryman Group commissioned by the Midland Development Corporation indicated the city’s tremendous population growth – more than 3% from 2010 to 2018 – will continue for many years. The Perryman Group estimates a population increase of between about 76,000 and 112,000 before 2030, resulting in a total Midland population of up to 280,000.

The report also stated that because of technological advancements, production cost reductions and global demand, there will be less market volatility than in previous oil booms, which means a more permanent workforce and population.

Many who have lived through the boom-and-bust cycle in Midland are now shifting their mindset.

“When we take a look at the Perryman report and the examination of the economy, it has three different price-per-barrel ranges – $40s, $60s and $80, and even lower numbers – $25 or lower,” Burns said. “It shows really clearly that this area is going to grow under almost any scenario.”

The report’s conclusions are echoed by producers, who are “not going anywhere,” said Tracee Bentley, CEO of the Permian Strategic Partnership.

Overall, PSP companies have made a $50 billion a year investment in the area and have put together 40-year plans for growth, Bentley said.

Thanks to relatively new drilling techniques known as hydraulic fracturing and horizontal drilling, companies are able to get oil from places they never could before. This technology has brought energy companies into more of a manufacturing mentality and has also driven down the cost of oil production, Bentley said.

“The Permian is the most prolific and secure oil and gas basin in the entire world,” Bentley said. “Companies have said, if they are going to be developing a resource anywhere in the world, it’s going to be in the Permian.”

Economist Ray Perryman, who leads the Perryman Group, said at a Priority Midland event that 85 percent of the regional gross product from oil and gas production in the Permian Basin goes to Midland. Also, companies based in the area employ more than 60 percent of the energy workers in the Basin.

How Midland can deal with growth

The certainty of growth in the Midland area has galvanized local officials to action, which led to the creation of Priority Midland.

“The real energy came when we got a consistent message from energy company leadership that said this is going to go on for a while – we need the communities to prepare for this,” said Billingsley, who is a member of the Priority Midland Executive Committee.

A key task is for local government entities to work together to develop a comprehensive plan, Billingsley said. “They’ll be the ones tasked with implementing it with taxpayer support,”
he said.

An example is planning infrastructure needs – the types of roads and where they will go, as well as figuring out the patterns for housing and commercial development.

“We’re planning so that the growth we know is coming is organized, thoughtful and intentional and not ad hoc,” Billingsley said.

Initial signs are very positive, as local governmental groups – and even some state officials – have been working together, Billingsley said.

“I have been in the Permian for about six months. I have been told that this level of coordination and organization has never been seen before,” Bentley said. “Working in and around other states and local governmental entities, I’ve also never seen this type of coordination, engagement and collaboration. So it’s very exciting.”

An example of dealing with growth: Education

The expected influx of new workers is likely to include many young families, which makes education a top priority. This is one area where both groups have already worked together on a solution.

“Our companies will tell you the No. 1 factor in recruiting younger families is access to quality education,” Bentley said. “Many other things are critically important, but as a young family, what type of education children have access to is very important.”

The Permian Strategic Partnership has taken a one of leading roles in funding the IDEA Public Schools initiative in Midland and nearby Odessa. A charter school company based in Texas, IDEA Schools has worked with local stakeholders in both communities – including Midland Independent School District – to provide the type of education opportunities the area will need for years to come.

As a result, the company will build seven charter school campuses around Midland and Odessa that will include a high school and grade school on each.

“We will transform the educational system in Midland-Odessa,” Bentley said.

Attracting talent to – and keeping it in – Midland

Priority Midland and PSP as well as other community leaders are pursuing initiatives – some short-term, others planned for many years to come – in health, infrastructure and housing.

“We hope to see fruits of these labors in 2020,” Billingsley said.

Right now, Midland leaders know the city has a lot to offer prospective employees who are considering a move to the energy epicenter of the country.

“For young families, this is an opportunity,” Burns said. “This is a very strategically important city. If a young person wants to have an impact on what’s going on and be at the forefront of the energy sector, Midland is where you go.”

Many new residents have told Billingsley they enjoy the quality of life in Midland, in part because it’s easier to get around than larger metropolitan areas like Austin and Dallas.

For example, many new restaurants have opened in recent years and major retail stores are expected to add locations in Midland. Add in an outstanding community theater, performing arts center and museums, as well as a football and baseball stadium tandem that plays host to area football and minor league baseball games, and there is plenty for residents to do, Burns said.

“We want it to be a place where people want to come, because they can enjoy those services and the quality of life in a place that’s growing and vibrant,” Billingsley said.

The companies that are part of the Permian Strategic Partnership will do all they can to help the area grow along with the population, Bentley said.

“It’s my hope that those living here now and those moving to the area will be excited and motivated to take part in a truly historic opportunity,” Bentley said. “We have a small window of time – five years, maybe – to show leadership and make some of these really big changes. If we don’t were not going to be able to sustain or keep up with the growth that’s going to happen. The Permian Strategic Partnership is ready to work with our communities to do just this.”