By Mitchell Schnurman
mschnurman@star-telegram.com
If you're looking for an economy in full bloom, check out what's happening in West Texas.
Many hotels in Midland and Odessa are filled during the week, and housing is so tight that four companies are bringing in man camps to accommodate thousands of laborers. In Midland, the city, community college, school district and hospital may jointly build an apartment complex so their new hires have a place to stay.
"It's a good problem to have, but it's still a problem," Midland City Manager Courtney Sharp said about Oil Boom 2.0.
The technological revolution that created the shale gas boom in North Texas has migrated to the Permian Basin oil fields, and the Midland-Odessa economy may never be the same.
While much of the country endures a slow recovery, Midland and Odessa can't find enough waiters, truck drivers, city planners and more.
Forbes magazine recently ranked 398 metro areas on job growth, and Odessa and Midland ranked first and second, respectively.
The surge in oil employment has boosted every job category, including construction, trade, hospitality and business services. Odessa even reported a gain in government jobs in April, a rarity among Texas cities.
Last month, the unemployment rate in Midland fell to 3.5 percent. That's less than half the national rate (7.7) and well below that of Fort Worth-Arlington (6.3). Odessa's year-over-year job growth was 9.8 percent in April, the 13th consecutive month of lofty increases.
Sales tax receipts are up 22 percent, car sales are up 40 percent, and the value of building permits more than doubled in Odessa. Home sales, hotel tax receipts and rig counts have increased in similar fashion.
Some restaurants must block off portions of the seating area because they can't find enough workers -- not when a high school grad can earn $70,000-plus in the oil fields, including overtime.
In the past four years, average weekly wages are up 24 percent. In 2007, Midland and Tarrant counties had the same average wage; since then, Midland's has grown by $196 a week, compared with $82 in Tarrant.
Competition for workers is so heated that Midland gave retention bonuses of $100 a month to city employees, Sharp said. At least seven candidates for professional spots, including planners and engineers, walked away from job offers because of the housing situation.
For more than a decade, Tarrant and surrounding areas have benefited from the boom in natural gas production. The impact on Midland and Odessa is greater, because energy and construction account for almost a quarter of employment.
In remote areas where oil and gas are found, such as North Dakota and Alaska, explosive growth is not unusual. But the Midland-Odessa region has a combined population of nearly 300,000 and a long history of oil production. It has infrastructure, just not enough to handle such rapid expansion.
Water shortages linger from last year's drought, and residents worry about urban drilling near homes. Both issues created controversy around Fort Worth, but production kept growing.
Some experts predict that the Permian will produce large for 10 to 20 years, and one local councilman said the current boom is in the first inning of a doubleheader.
Oil production in the Permian grew 8.5 percent from 2009 to 2011, according to the state. But drilling permits soared from 3,369 to 9,347 over the same period, an indication of what's to come.
As producers find better ways to get rich oil deposits, they're pumping in more money and personnel. Approach Resources of Fort Worth has nearly tripled its capital budget in the past two years, from $90 million to $260 million. It has boosted spending plans twice since late 2011 for opportunities in the Permian.
FTS International, another Fort Worth company that provides hydraulic fracturing services, has been moving its pressure pumping fleets to Odessa.
The company said its Odessa workforce has grown 68 percent in the past year.Trends could change if oil prices fall significantly, and they closed below $90 a barrel Wednesday.
Oil busts have waylaid Midland-Odessa several times, but economist Ray Perryman believes that today's situation is different.Emerging nations are driving strong demand, and new technologies are producing better results.
Companies are using horizontal drilling and hydraulic fracturing to find largely untapped deposits rather than extracting more oil from aging formations, he said. That means drilling would remain highly profitable even if prices fell 30 percent."The fundamentals are much more solid than in the 1970s," Perryman wrote in an e-mail, "and the current boom is likely to be more enduring."
Goliath Industries of Colorado plans a man camp for an influx of workers. Its temporary housing units are being built in Dallas and Houston, and a 52-acre site will open in late summer, said Ed Parker, regional sales manager.
The camp will sleep 1,250 single workers, he said, and each unit will have a bed, a bathroom, a flat-screen TV and Internet access. Tenants get two hot meals a day and a sack lunch, and Parker said that employers cover the costs.
Goliath has seven man camps in North Dakota, where oil drilling lowered unemployment to 3 percent.
"The Permian is about a year and a half behind North Dakota," Parker said. "We're on the front edge of the boom."
Mitchell Schnurman's column appears Sundays and Thursdays. 817-390-7821 Twitter: @mitchschnurman
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