Oil Field in Desert, Oil Production

Some Ruminations on Social Responsibility

I’m an oil and gas guy. That’s what I’ve been for an entire career, which technically began in June 1979, when I went to work as an accountant for Coastal States Oil and Gas Company at Greenway Plaza in Houston. But my history with the oil and gas industry goes back much further than that.

I was born and raised in Beeville, the county seat of Bee County, situated about 55 miles inland from Corpus Christi. Beeville is a town whose population fluctuates between 13,000 to 14,000, depending on how the economy is. It sits in the middle of what most would consider to be South Texas, and right on the eastern edge of the dry gas third of the Eagle Ford Shale play.

My family owned a little farm in Goliad County, about 20 miles outside of Beeville, for more than a century, and the only time we ever made any money farming was when some independent producer came out and drilled a decent oil or gas well on the property. (We no longer own the surface, but have retained the mineral rights, because in today’s world, they are potentially valuable.) Because of that upbringing, and because the oil and gas industry has been a constant presence throughout South Texas for many decades, I had consistent exposure to the industry and its impacts, both good and bad, from a very early age.

On the bad side, we had that time in the late 1960s when one of those aforementioned independent producers, after having drilled a dry hole in one of the farm’s pastures, failed to properly backfill its mud pits. All hell broke loose when one of my uncle’s prize Hereford bulls wandered into it one night, got stuck and died there. On the bright side, my uncle got a nice, tidy settlement out of that deal, and when the same company got on the right side of the geologic fault and drilled a decent little oil producer a few hundred yards away the following year, all hard feelings were forgotten. Funny how that works.

Then there were the two summers I spent during my college years in the mid-1970s working as a welder’s helper on a pipeline construction crew. Trust me when I tell you that the oil and gas industry of 42 to 43 years ago was vastly different, dirtier and more primitive than the high-tech, environmentally-conscious business we see today.

The sum total of my “training” before beginning work in early June that first summer of 1975 consisted of about 30 minutes of the welder I’d be working with showing me how to handle the grinder used to polish the welds without electrocuting myself. That training worked, except for the one day when I did back into the leads and indeed electrocuted myself. That was around 11:00 in the morning. The next thing I remembered was waking up the next morning after a good night’s sleep. My co-workers insist I worked the rest of the day and even went out to the local bar that evening to have a few beers. I remember none of it, but I got up and went to work the next morning and nobody thought twice about it.

The crew on which I worked would leave behind a mess wherever we worked on any given day. That doesn’t happen today. Back then there were no safety briefings before work began — my briefing generally consisted of the ill-tempered welder I worked for walking up to me and saying, “Get your butt up in the truck and let’s go.”

Nowadays, every pipeline crew, rig crew, transportation crew, offshore platform crew and any other type of crew related to the oil and gas industry undergoes a detailed safety briefing prior to beginning work each and every day of the week. The last time I visited an active drilling site that briefing lasted more than half an hour. Things have definitely changed for the better.

There was far more to the good side of the oil and gas industry in those days than the bad side. In Beeville, you could always tell when the industry was doing well because all the tables at El Zarape and The American Café would be filled at lunchtime with brawny men wearing heavy cotton shirts and khaki pants. The local Piggly Wiggly (later HEB) and Bonham’s Food Store would often run out of milk, eggs and other staples by the end of the day. The town’s streets would be filled with new Fords, Chevrolets and Dodges — even the occasional Cadillac or Chrysler Imperial — purchased from the local car dealers, who during that time only sold American-made automobiles.

These kinds of impacts and so many more were why I found it so personally gratifying when, late in my career, I saw the very same things happening in Beeville and other towns all across South Texas as the massive Eagle Ford Shale play began to be developed in earnest. Little towns like Cotulla, which over the years often seemed on the verge of literally drying up and blowing away in the South Texas heat, found themselves home to building booms, with new hotels, man camps and apartment complexes springing up seemingly overnight.

There was one millionaire living in Beeville when I was growing up in the 1960s, a rancher named Dudley Dougherty. Predictably, the Dougherty wealth came not from raising cattle or harvesting corn, but from the oil and gas wells sprinkled throughout the family’s pastures.

By 2011, Beeville and surrounding towns were full of newly-minted millionaires who had seen Eagle Ford Shale wells drilled on their land, or otherwise benefitted from the new boom. During that time, the bonus checks for signing a lease alone created many new millionaires in the region.

Thus, a region that had historically seen little real money or economic development had suddenly become one of the hottest economic development areas in the entire country. County and school district coffers became flush with ad valorem tax receipts thanks to the fact that Texas is one of two states in the nation that allows these taxes to be levied not just on the industry’s capitalized equipment, but also on the value of its reserves of oil and gas while they are still in the ground.

(This tax system is a little-publicized source of great wealth to these taxing districts, as the average barrel of oil and cubic foot of natural gas are taxed several times before they come up out of the ground.)

As a result of this new revenue stream, new schools and football stadiums, new administrative buildings and hospitals, improved and expanded county roads started popping up all over the 21-county region that was impacted by the Eagle Ford play. Kids found themselves riding to school in brand-new school buses, performing band concerts and one-act plays in new or refurbished auditoriums, and playing basketball in new gymnasiums.

The reason I’m telling you about all of this is because the theme of this issue of SHALE Magazine is “social responsibility,” and that tag can mean so many different things. Oil and gas companies paying their royalties and taxes is a very important aspect of their “social responsibility,” an aspect that doesn’t get much attention in our state or national news media, but one that’s important to everyone; nowhere more so than in Texas. I hope you enjoy this issue.

About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at david@shalemag.com.

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