The Permian oil boom is showing signs of overheating

BY: OIL AND GAS 360 -- The Permian Basin is six years into a boom sparked by advances in drilling methods that have unlocked a sea of hitherto unattainable oil buried inside a 90,000-square-mile stretch of sedimentary rock straddling Texas and New Mexico. But as the area’s production approaches that of Iran—the third-largest OPEC member—growth has begun to slow, throttled by shortages of pipelines, workers, power, and roads. There’s a lot, in terms of energy as well as geopolitics, riding on whether this is just a temporary blip or a longer-term deceleration.

The slowdown hasn’t registered in Midland. The city can’t hire enough police, corrections officers, or school bus drivers because it can’t match the salaries oil companies are paying. Plumbers and electricians are also in short supply, and every fast-food restaurant in town has a “Now Hiring” sign in the window, with the exception of McDonald’s, whose sign says “Always Hiring.” The lack of workers is the Permian’s “greatest challenge,” says Pioneer CEO Tim Dove. “With so much activity, the region is essentially experiencing negative unemployment.”