Historic Oil Bust Delivers A Gut Punch To A High-Flying Texas County | WYPR

Historic Oil Bust Delivers A Gut Punch To A High-Flying Texas County

May 11, 2020
Originally published on May 11, 2020 2:23 pm

In the endless boom and bust cycle of the oil business, there has never been anything like 2020. The oil patch is reeling from historically 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, you can look in any direction and see the bobbing horse heads of pump jacks stretching to the horizon, 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 on 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.

Andrews County Judge Charlie Falcon stands in front of the courthouse. His community, which depends heavily on the oil and gas industry, is making tough decisions right now.
John Burnett / NPR

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 holds. His welding and machine shop has lost half its business — and he considers himself one of the lucky ones.

Stewart is tall and lumbering and wears a seed cap. He has survived other 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."

Bob Stewart's machine shop has lost half its business, but he said federal relief money helped him avoid layoffs.
John Burnett / NPR

Stewart is grateful that 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-size 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," Russell Shannon, president of the National Bank of Andrews, said 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 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.' "

Mario Fernandez lost his job in the oilfield but has faith that these troubled times will pass.
John Burnett / NPR

Fernandez sits on the front stoop of his house, having a smoke and catching the night air after a scorching 104-degree day. Now that he stays home, he 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.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

STEVE INSKEEP, HOST:

People in the oil business are familiar with the cycle of boom and bust - prices soar. Prices plunge. But they've never seen anything like 2020, when the pandemic abruptly brought prices to record lows, even below zero. NPR's John Burnett reports from the Permian Basin, the heart of oil country in West Texas.

JOHN BURNETT, BYLINE: On a normal day in Andrews County, look in any direction, and, stretching to the horizon, you'll see the bobbing horse heads of pump jacks sucking up oil from deep in the Earth. But these are anything but normal days.

LENDON PARTAIN: Right now, it's scary, honestly.

BURNETT: Lendon Partain is a well technician. We're standing in mesquite scrubland that overlays what experts call a monster oil field.

PARTAIN: We drove out here. Usually, you would see, you know, with all these good wells that historically have done a lot of production - they would usually all be pumping and kind of looks like caterpillars all running across the landscape, you know? And that's not happening right now.

BURNETT: All across the vast Permian that straddles West Texas and southeast New Mexico, wells have been shut in in the argot of the oil patch. American oil companies are pumping a million fewer barrels a day than they were just two months ago, according to the 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. And the city of Andrews will hold off preparing streets and building a new city hall.

CHARLIE FALCON: When you have a community that receives about 85 to 90% of their tax revenue from minerals, it is a serious threat.

BURNETT: County Judge Charlie Falcon follows the news and hears about other cities taking a hit from closed businesses and hospitalizations. Andrews has had only 21 cases of COVID-19. And most people have recovered. Nonetheless, West Texas is getting a double dip of trouble.

FALCON: Not only do we have oil dropping - we have coronavirus. And we don't know how long it's going to stay around. You know, with people not working, not being able to shop, not being able to, you know, now sell oil - creates a serious problem for us.

(SOUNDBITE OF POWER TOOL)

BURNETT: Bob Stewart’s welding and machine shop has lost half its business amid the paralysis in the oil patch. A few jobs keep trickling in.

(SOUNDBITE OF POWER TOOL)

BURNETT: Stewart is tall and lumbering and jovial. He's done this for nearly 40 years. He's survived downturns before, but he says he's never seen demand evaporate like this.

BOB STEWART: The whole world's stopped. 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 using, not consuming it.

BURNETT: Bob Stewart is grateful that he has not had to lay off any of his 110 employees. He got more than a million and a half dollars through the federal government's Paycheck Protection Program. But that's not going to last forever.

STEWART: This is kind of 9/11 do-over, you know? I don't know what it looks like, but when it comes out the other side, it's going to be different.

BURNETT: With more than 12,000 active wells in Andrews County, hydrocarbons have been good to this community. There's an air-conditioning rodeo arena, a 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 are parked in driveways. And behemoth pickup trucks roar down Main Street.

(SOUNDBITE OF CARS DRIVING)

BURNETT: 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.

RUSSELL SHANNON: I've been interviewed by the media three times. (Laughter) And every time, it's when Andrews is on the map for some dubious reason with the economy.

BURNETT: Russell Shannon, president of the National Bank of Andrews, says established companies that save for a rainy day will weather this bust a lot better than others.

SHANNON: As I try to tell some of the younger ones when they try to get in the business, there's a storm cloud out there. Just because you don't see it today doesn't mean there's not one on the horizon. I mean, we've just - historically, we've just seen it too many times.

BURNETT: The oil field 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 he had it.

MARIO FERNANDEZ: Wow, I've noticed so much. Didn't realize how much I spent when I was at work - breakfasts, lunch, taking guys out to eat, buying my crews food, you know? Of course, you want to, you know, give your guys, hey, good job. And, you know, here are some steaks and some baked potatoes or something for doing - you know, working their butts off.

BURNETT: Fernandez sits on his front stoop in Andrews, 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. And he tries to keep a positive attitude.

FERNANDEZ: I used to worry a lot. The Bible says not to worry about what's tomorrow because we don't even know if we're going to make it tomorrow. So I just have faith and just believing that it's all going to come back together.

BURNETT: The question is when and how long folks can hold out. John Burnett, NPR News, Andrews, Texas. Transcript provided by NPR, Copyright NPR.