University Lands

Two wind farms situated atop University Lands in West Texas contribute to Texas’ dominance in wind energy production, while providing funding for the University and clean energy for thousands of Texans. 

The Woodward Mountain Wind Ranch and Indian Mesa Wind Farm have been operational on University Lands since 2001. The office of University Lands leases the 2.1 million acres for various purposes, including oil and gas production, as well as the installation of pipelines and even a commercial winery, said Richard Brantley, associate director of surface and mineral interests for University Lands. 

“Energy companies pay a commercial lease, and they pay a royalty on the power that they produce,” Brantley said. “Everything we do is commercial. Our mission is to make money for the University of Texas System.”

The Woodward Mountain Wind Ranch is a 160-megawatt wind generation plant capable of providing power for 72,600 homes. The Indian Mesa Wind Farm is a smaller operation, producing 82.5 megawatts that can provide power for 20,500 homes. 

The wind farms are operated by NextEra Energy Resources, the largest wind energy generator in America. NextEra is one of 1,300 companies in industries directly and indirectly related to renewable energy that operate in Texas and employ nearly 100,000 workers, according to the 2012 Texas Renewable Energy Industry report. 

According to the report, Texas’ 10,394 megawatt wind energy capacity exceeds that of all but five countries. Much of Texas’ dominance in the renewable energy field is a result of the Texas Renewable Portfolio Standard, enacted in 1999 and extended in 2005 to increase the minimum statewide capacity for renewable energy production. According to the report, the state’s installed capacity reached the 10,000 megawatt target in early 2010 — 15 years ahead of schedule. 

The distribution of wind energy in Texas has not come without its pitfalls. Because the majority of operational wind farms are installed in West Texas, finding ways to transport energy eastward toward metropolitan areas has posed problems. 

“We don’t have enough capacity to bring the wind from where it’s being produced to where it’s needed,” Lance Manuel, an engineering professor at UT, said. “The amount of energy the farms in West Texas are producing is much more than that area needs. Wind is only needed where people can use it, like major metropolitan areas.”

Manuel said the expansion of wind energy production in Texas is likely to slow in the future. 

“We don’t have enough capacity to bring the wind from where it’s being produced to where it’s needed,” Manuel said. “It is possible to get the energy from West Texas to metropolitan areas in the east. However, it can’t happen at a sustained rate without some infrastructure by way of transmission lines and expansion.”

Photo Credit: Zachary Strain | Daily Texan Staff

MIDLAND — For many years, the landscape in West Texas was mostly uniform with dusty lots and artifacts of operating machinery left behind from a previous oil boom in the area. A generation removed from that boom, new oil rigs line roadways in the Permian Basin, where increased production will help the UT System bring in close to $1 billion in oil and gas revenue this year.

With a technologically driven oil-production boom, Midland’s landscape is transforming as the city works to build an infrastructure to support thousands of new residents while reaping the economic benefits associated with increased production. The UT System is also benefiting from the economic boom, and it doesn’t show signs of slowing down as dozens of companies have showed renewed interest in chasing the oil reserves on the 1.4 million acres the System has in the region.

Last October marked the first time land managed by the UT System produced more than 3 million barrels of oil since 1972 at the peak of the last oil production boom in the Permian Basin, said Jim Benson, executive director of University Lands.

University Lands, which has a Midland-based office, is responsible for managing the System’s 2.1 million acres that make up the Permanent University Fund.

The surge in production is part of a massive oil boom under the Wolfcamp Shale formation accessible through drilling technologies and techniques — horizontal drilling and hydraulic fracturing — that were not commonly used during the last boom in the area.

“This kind of changed everybody’s mind-sets to, ‘Now, we can go produce these source rocks or unconventional plays,’” Benson said. “That is what’s happening in the resurrection of the Permian Basin.”

With 50 oil and gas rigs actively drilling, 25-50 wells being assembled and 500 more permits waiting to be built on its land, Benson said University Lands still stands to increase its profits in the next two years as oil and gas companies leasing on the System’s land in the Permian Basin move into full manufacturing mode by 2015. 

“Even though there’s not a lot of manufacturing, there is a lot of capital expense, and our revenues are increasing in terms of the royalty rate,” Benson said. “Two years down the road, provided oil and gas prices stay as they are, we’ll make more than we did in the previous years.”

The Texas Railroad Commission defines the Permian Basin as an oil and gas producing area in West Texas 250 by 300 miles in area.

Benson said he expects University Lands to receive $850 million in royalties from production on leased land on top of the $112 million the System received in lease sale profits in the last fiscal year. 

In the last five years, the number of drilling permits approved by the Railroad Commission in the Permian Basin has almost doubled, increasing from 4,703 in 2007 to 9,3335 in 2012, according to Railroad Commission figures.

Oil and gas lease sales first skyrocketed during the September 2010 sale as the boom took off with total profits increasing during the following two sales, including a record high sale in September 2011 that brought in more than $310 million in profits.

The University of Texas Investment Management Company invests the sale profits and royalties and returns on investment make up the Available University Fund, which benefits the UT and Texas A&M systems. Last year, $205 million of UT-Austin’s $2.34 billion 2012-2013 operating budget came from the fund.

Profits from subsequent sales decreased substantially because fewer acres were available to be leased as companies jumped to lease in 2010 and 2011 when the boom picked up, Benson said. The most recent sale made only $70 million with about 16 percent of the acreage up for lease during the September 2011 sale. 

Oil was first discovered on UT lands in 1923, and the lands in the Permian Basin saw high levels of production during an oil boom in in the 1960s, during which the entire area produced 607 million barrels of oil over several years, according to the Texas State Historical Association.

Overall production in the basin totaled 312 million barrels of oil just last year, according to Railroad Commission figures. Production on University Lands, which fall mostly in the Permian Basin, reached 32 million barrels of oil in 2012 alone. 

Development and challenges

In a city where pump jacks are as common in backyards as swing sets, millions of gallons of water are being used per well for fracking. Despite a long-standing drought in the area, most locals’ concerns revolve around increased traffic and the faster-paced lifestyle that has resulted from the oil-driven migration to Midland. 

In 2005, the city’s population stood at about 99,000, according to city estimates. According to the U.S. Census estimates, the population stood at about 114,000 in 2011.

Some locals complain about the lack of supplies in grocery stores. A trip to the local Wal-Mart proves that multiple aisles have completely empty sections, including bottled water, raw chicken, sports drinks and toilet paper. Others complain about increased traffic in the area as travel time increases and major streets and roadways become a caravan of large oil transportation trucks and Super Duty Ford trucks emblazoned with oil and gas company logos.

Midland Mayor Wes Perry said the technology behind the current oil boom is essential to development in the area because it has boosted sales tax revenue, which the city is using for one-time capital projects after seeing increases in sales taxes.

“At this particular time, it’s not the typical situation like we had it in the past because it is driven by technology, not so much the price of oil,” Perry said. “When the price of oil drops, things will slow down, but it’s not going to be like it used to be where it was a boom and then a big bust cycle.”

Midland is currently undergoing various development projects to improve infrastructure, including highway widening projects and waterline extensions to industrial areas.

The increase of oil workers in the area has also transformed the city’s skyline with the construction of dozens of new hotels, which bring in hundreds of thousands of dollars in revenue for the city.

Perry said private sector developers are taking advantage of the financial opportunity in the housing market, which has faced increased levels in demand. Available and upcoming housing in Midland is projected at 5,300 available units, including 2,079 apartments and 1,301 hotel rooms, according to city housing documents.

City spokeswoman Sara Higgins said hotel units are also considered part of the available housing units because companies rent out multiple rooms and floors at some hotels during the week.

Not all have benefited from the oil boom in the area though. Local resident Marc McPeters moved to the area during the previous boom and has lived on the same plot of land for decades.

Back then, McPeters said she had to purchase her mobile home from New Mexico because housing was scarce.

Today, Endeavour Energy Resources operates an oil rig on almost half of McPeters’ property, but she said she doesn’t receive royalties from production revenue because Endeavour owns the mineral rights to her land. In Texas, land rights and mineral rights are sold separately. 

When Endeavour approached her about drilling on her property, McPeters said she wasn’t aware that her property ownership didn’t include mineral rights, which would entitle her to royalty payments on any oil production on her land.

“How they got them, I don’t know,” McPeter said. “They paid me $8,500 to put that pump jack there, and I had to pay taxes on that. They said ‘This is what we’re going to give you. Get out of the way.’”

Employment

The boom has also resulted in the lowest unemployment levels in the state as new drilling corporations have set up shop offering thousands of new jobs for locals and field workers who have moved into the area. In February, the unemployment rate dropped to 3.2 percent for the Midland metropolitan area — the lowest rate in the state and one of the lowest in the nation — according to a monthly report by the Texas Workforce Commission. The state unemployment rate, which has increased slightly this year, is 6.5 percent.

Adam Chavez, field coordinator for EagleOne, an independent transportation company that does oilfield transportation, said he moved to Midland from Plainview in 2011 because of the work opportunities in the area.

Chavez, who started as a company driver and was on call 24/7, travels home to visit his family during the weekend but lives in one of multiple RV campgrounds that have emerged throughout the Permian Basin. Some RV parks rent out space to oil workers who sleep in tents on makeshift grounds that locals call “man camps.” Man camps are not permitted on System land, according to a University Lands official. 

“I’ll be here as long as there is work and if the work doesn’t move north,” Chavez said. “I’ll be here until they say it’s dried up.”

Midland became the fastest-growing metropolitan area in the nation last year with a population increase of 4.6 percent, and Midland County was ranked as the 10th-fastest growing county, according to the U.S. Census Bureau.

High employment opportunities in the oil fields have left local restaurants that offer lower-paying jobs struggling to staff their operations while demand increases.

In the last two years, Gerardo’s Casita, a local Mexican restaurant, has lost cooks and kitchen staff to the oil fields, forcing Jerry Morales, Midland City Council member and owner of the restaurant, to step into the kitchen almost four times a week.

Morales said his restaurant has benefitted from the boom with tables occupied from open to close every day as the community thrives economically, but he has also had to make changes to adapt to the staffing challenges that come along with an increased amount of patrons.

It’s not unusual to see managers and owners working hosting and busboy duties in other restaurants, Morales said.

“It’s been very hard for us in the retail business to compete with an industry where they’re working 80 hours overtime in a week at 22 years old, bringing home a $3,000 check,” Morales said. “I’m probably paying $2-3 more [an hour] than I was 24 months ago.”

Gerardo’s Casita now closes for three hours between lunch and dinner and is closed all day on Sunday because Morales said he doesn’t have the staff to cover sufficient shifts to avoid paying current employees overtime. The restaurant has also increased menu prices to make up for the increased wages.

“It took a little while for us to understand [the boom] and it took a little to see if it was really going to last,” Morales said. “I don’t really call it a problem. It’s just a challenge.”

Photo Credit: Zachary Strain | Daily Texan Staff

MIDLAND — For many years, the landscape in West Texas was mostly uniform with dusty lots and artifacts of operating machinery left behind from a previous oil boom in the area. A generation removed from that boom, new oil rigs line roadways in the Permian Basin, where increased production will help the UT System bring in close to $1 billion in oil and gas revenue this year.

With a technologically driven oil-production boom, Midland’s landscape is transforming as the city works to build an infrastructure to support thousands of new residents while reaping the economic benefits associated with increased production. The UT System is also benefiting from the economic boom, and it doesn’t show signs of slowing down as dozens of companies have showed renewed interest in chasing the oil reserves on the 1.4 million acres the System has in the region.

Last October marked the first time land managed by the UT System produced more than 3 million barrels of oil since 1972 at the peak of the last oil production boom in the Permian Basin, said Jim Benson, executive director of University Lands.

University Lands, which has a Midland-based office, is responsible for managing the System’s 2.1 million acres that make up the Permanent University Fund.

The surge in production is part of a massive oil boom under the Wolfcamp Shale formation accessible through drilling technologies and techniques — horizontal drilling and hydraulic fracturing — that were not commonly used during the last boom in the area.

“This kind of changed everybody’s mind-sets to, ‘Now, we can go produce these source rocks or unconventional plays,’” Benson said. “That is what’s happening in the resurrection of the Permian Basin.”

With 50 oil and gas rigs actively drilling, 25-50 wells being assembled and 500 more permits waiting to be built on its land, Benson said University Lands still stands to increase its profits in the next two years as oil and gas companies leasing on the System’s land in the Permian Basin move into full manufacturing mode by 2015. 

“Even though there’s not a lot of manufacturing, there is a lot of capital expense, and our revenues are increasing in terms of the royalty rate,” Benson said. “Two years down the road, provided oil and gas prices stay as they are, we’ll make more than we did in the previous years.”

The Texas Railroad Commission defines the Permian Basin as an oil and gas producing area in West Texas 250 by 300 miles in area.

Benson said he expects University Lands to receive $850 million in royalties from production on leased land on top of the $112 million the System received in lease sale profits in the last fiscal year. 

In the last five years, the number of drilling permits approved by the Railroad Commission in the Permian Basin has almost doubled, increasing from 4,703 in 2007 to 9,3335 in 2012, according to Railroad Commission figures.

Oil and gas lease sales first skyrocketed during the September 2010 sale as the boom took off with total profits increasing during the following two sales, including a record high sale in September 2011 that brought in more than $310 million in profits.

The University of Texas Investment Management Company invests the sale profits and royalties and returns on investment make up the Available University Fund, which benefits the UT and Texas A&M systems. Last year, $205 million of UT-Austin’s $2.34 billion 2012-2013 operating budget came from the fund.

Profits from subsequent sales decreased substantially because fewer acres were available to be leased as companies jumped to lease in 2010 and 2011 when the boom picked up, Benson said. The most recent sale made only $70 million with about 16 percent of the acreage up for lease during the September 2011 sale. 

Oil was first discovered on UT lands in 1923, and the lands in the Permian Basin saw high levels of production during an oil boom in in the 1960s, during which the entire area produced 607 million barrels of oil over several years, according to the Texas State Historical Association.

Overall production in the basin totaled 312 million barrels of oil just last year, according to Railroad Commission figures. Production on University Lands, which fall mostly in the Permian Basin, reached 32 million barrels of oil in 2012 alone. 

Development and challenges

In a city where pump jacks are as common in backyards as swing sets, millions of gallons of water are being used per well for fracking. Despite a long-standing drought in the area, most locals’ concerns revolve around increased traffic and the faster-paced lifestyle that has resulted from the oil-driven migration to Midland. 

In 2005, the city’s population stood at about 99,000, according to city estimates. According to the U.S. Census estimates, the population stood at about 114,000 in 2011.

Some locals complain about the lack of supplies in grocery stores. A trip to the local Wal-Mart proves that multiple aisles have completely empty sections, including bottled water, raw chicken, sports drinks and toilet paper. Others complain about increased traffic in the area as travel time increases and major streets and roadways become a caravan of large oil transportation trucks and Super Duty Ford trucks emblazoned with oil and gas company logos.

Midland Mayor Wes Perry said the technology behind the current oil boom is essential to development in the area because it has boosted sales tax revenue, which the city is using for one-time capital projects after seeing increases in sales taxes.

“At this particular time, it’s not the typical situation like we had it in the past because it is driven by technology, not so much the price of oil,” Perry said. “When the price of oil drops, things will slow down, but it’s not going to be like it used to be where it was a boom and then a big bust cycle.”

Midland is currently undergoing various development projects to improve infrastructure, including highway widening projects and waterline extensions to industrial areas.

The increase of oil workers in the area has also transformed the city’s skyline with the construction of dozens of new hotels, which bring in hundreds of thousands of dollars in revenue for the city.

Perry said private sector developers are taking advantage of the financial opportunity in the housing market, which has faced increased levels in demand. Available and upcoming housing in Midland is projected at 5,300 available units, including 2,079 apartments and 1,301 hotel rooms, according to city housing documents.

City spokeswoman Sara Higgins said hotel units are also considered part of the available housing units because companies rent out multiple rooms and floors at some hotels during the week.

Not all have benefited from the oil boom in the area though. Local resident Marc McPeters moved to the area during the previous boom and has lived on the same plot of land for decades.

Back then, McPeters said she had to purchase her mobile home from New Mexico because housing was scarce.

Today, Endeavour Energy Resources operates an oil rig on almost half of McPeters’ property, but she said she doesn’t receive royalties from production revenue because Endeavour owns the mineral rights to her land. In Texas, land rights and mineral rights are sold separately. 

When Endeavour approached her about drilling on her property, McPeters said she wasn’t aware that her property ownership didn’t include mineral rights, which would entitle her to royalty payments on any oil production on her land.

“How they got them, I don’t know,” McPeter said. “They paid me $8,500 to put that pump jack there, and I had to pay taxes on that. They said ‘This is what we’re going to give you. Get out of the way.’”

Employment

The boom has also resulted in the lowest unemployment levels in the state as new drilling corporations have set up shop offering thousands of new jobs for locals and field workers who have moved into the area. In February, the unemployment rate dropped to 3.2 percent for the Midland metropolitan area — the lowest rate in the state and one of the lowest in the nation — according to a monthly report by the Texas Workforce Commission. The state unemployment rate, which has increased slightly this year, is 6.5 percent.

Adam Chavez, field coordinator for EagleOne, an independent transportation company that does oilfield transportation, said he moved to Midland from Plainview in 2011 because of the work opportunities in the area.

Chavez, who started as a company driver and was on call 24/7, travels home to visit his family during the weekend but lives in one of multiple RV campgrounds that have emerged throughout the Permian Basin. Some RV parks rent out space to oil workers who sleep in tents on makeshift grounds that locals call “man camps.” Man camps are not permitted on System land, according to a University Lands official. 

“I’ll be here as long as there is work and if the work doesn’t move north,” Chavez said. “I’ll be here until they say it’s dried up.”

Midland became the fastest-growing metropolitan area in the nation last year with a population increase of 4.6 percent, and Midland County was ranked as the 10th-fastest growing county, according to the U.S. Census Bureau.

High employment opportunities in the oil fields have left local restaurants that offer lower-paying jobs struggling to staff their operations while demand increases.

In the last two years, Gerardo’s Casita, a local Mexican restaurant, has lost cooks and kitchen staff to the oil fields, forcing Jerry Morales, Midland City Council member and owner of the restaurant, to step into the kitchen almost four times a week.

Morales said his restaurant has benefitted from the boom with tables occupied from open to close every day as the community thrives economically, but he has also had to make changes to adapt to the staffing challenges that come along with an increased amount of patrons.

It’s not unusual to see managers and owners working hosting and busboy duties in other restaurants, Morales said.

“It’s been very hard for us in the retail business to compete with an industry where they’re working 80 hours overtime in a week at 22 years old, bringing home a $3,000 check,” Morales said. “I’m probably paying $2-3 more [an hour] than I was 24 months ago.”

Gerardo’s Casita now closes for three hours between lunch and dinner and is closed all day on Sunday because Morales said he doesn’t have the staff to cover sufficient shifts to avoid paying current employees overtime. The restaurant has also increased menu prices to make up for the increased wages.

“It took a little while for us to understand [the boom] and it took a little to see if it was really going to last,” Morales said. “I don’t really call it a problem. It’s just a challenge.”

Marc McPeters, Midland resident with an oil rig on her property.

Photo Credit: Zachary Strain | Daily Texan Staff

For many years, the landscape in West Texas was mostly uniform with dusty lots and artifacts of operating machinery left behind from a previous oil boom in the area. A generation removed from that boom, new oil rigs line roadways in the Permian Basin, where increased production will help the UT System bring in close to $1 billion in oil and gas revenue this year.

With a technologically driven oil-production boom, Midland’s landscape is transforming as the city works to build an infrastructure to support thousands of new residents while reaping the economic benefits associated with increased production. The UT System is also benefiting from the economic boom, and it doesn’t show signs of slowing down as dozens of companies have showed renewed interest in chasing the oil reserves on the 1.4 million acres the System has in the region.

Last October marked the first time land managed by the UT System produced more than 3 million barrels of oil since 1972 at the peak of the last oil production boom in the Permian Basin, said Jim Benson, executive director of University Lands.

University Lands, which has a Midland-based office, is responsible for managing the System’s 2.1 million acres that make up the Permanent University Fund.

The surge in production is part of a massive oil boom under the Wolfcamp Shale formation accessible through drilling technologies and techniques — horizontal drilling and hydraulic fracturing — that were not commonly used during the last boom in the area.

“This kind of changed everybody’s mind-sets to, ‘Now, we can go produce these source rocks or unconventional plays,’” Benson said. “That is what’s happening in the resurrection of the Permian Basin.”

With 50 oil and gas rigs actively drilling, 25-50 wells being assembled and 500 more permits waiting to be built on its land, Benson said University Lands still stands to increase its profits in the next two years as oil and gas companies leasing on the System’s land in the Permian Basin move into full manufacturing mode by 2015. 

“Even though there’s not a lot of manufacturing, there is a lot of capital expense, and our revenues are increasing in terms of the royalty rate,” Benson said. “Two years down the road, provided oil and gas prices stay as they are, we’ll make more than we did in the previous years.”

The Texas Railroad Commission defines the Permian Basin as an oil and gas producing area in West Texas 250 by 300 miles in area.

Benson said he expects University Lands to receive $850 million in royalties from production on leased land on top of the $112 million the System received in lease sale profits in the last fiscal year. 

In the last five years, the number of drilling permits approved by the Railroad Commission in the Permian Basin has almost doubled, increasing from 4,703 in 2007 to 9,3335 in 2012, according to Railroad Commission figures.

Oil and gas lease sales first skyrocketed during the September 2010 sale as the boom took off with total profits increasing during the following two sales, including a record high sale in September 2011 that brought in more than $310 million in profits.

The University of Texas Investment Management Company invests the sale profits and royalties and returns on investment make up the Available University Fund, which benefits the UT and Texas A&M systems. Last year, $205 million of UT-Austin’s $2.34 billion 2012-2013 operating budget came from the fund.

Profits from subsequent sales decreased substantially because fewer acres were available to be leased as companies jumped to lease in  2010 and 2011 when the boom picked up, Benson said. The most recent sale made only $70 million with about 16 percent of the acreage up for lease during the September 2011 sale. 

Oil was first discovered on UT lands in 1923, and the lands in the Permian Basin saw high levels of production during an oil boom in in the 1960s, during which the entire area produced 607 million barrels of oil over several years, according to the Texas State Historical Association.

Overall production in the basin totaled 312 million barrels of oil just last year, according to Railroad Commission figures. Production on University Lands, which fall mostly in the Permian Basin, reached 32 million barrels of oil in 2012 alone. 

Development and challenges

In a city where pump jacks are as common in backyards as swing sets, millions of gallons of water are being used per well for fracking. Despite a long-standing drought in the area, most locals’ concerns revolve around increased traffic and the faster-paced lifestyle that has resulted from the oil-driven migration to Midland. 

In 2005, the city’s population stood at about 99,000, according to city estimates. According to the U.S. Census estimates, the population stood at about 114,000 in 2011.

Some locals complain about the lack of supplies in grocery stores. A trip to the local Wal-Mart proves that multiple aisles have completely empty sections, including bottled water, raw chicken, sports drinks and toilet paper. Others complain about increased traffic in the area as travel time increases and major streets and roadways become a caravan of large oil transportation trucks and Super Duty Ford trucks emblazoned with oil and gas company logos.

Midland Mayor Wes Perry said the technology behind the current oil boom is essential to development in the area because it has boosted sales tax revenue, which the city is using for one-time capital projects after seeing increases in sales taxes.

“At this particular time, it’s not the typical situation like we had it in the past because it is driven by technology, not so much the price of oil,” Perry said. “When the price of oil drops, things will slow down, but it’s not going to be like it used to be where it was a boom and then a big bust cycle.”

Midland is currently undergoing various development projects to improve infrastructure, including highway widening projects and waterline extensions to industrial areas.

The increase of oil workers in the area has also transformed the city’s skyline with the construction of dozens of new hotels, which bring in hundreds of thousands of dollars in revenue for the city.

Perry said private sector developers are taking advantage of the financial opportunity in the housing market, which has faced increased levels in demand. Available and upcoming housing in Midland is projected at 5,300 available units, including 2,079 apartments and 1,301 hotel rooms, according to city housing documents.

City spokeswoman Sara Higgins said hotel units are also considered part of the available housing units because companies rent out multiple rooms and floors at some hotels during the week.

Not all have benefited from the oil boom in the area though. Local resident Marc McPeters moved to the area during the previous boom and has lived on the same plot of land for decades.

Back then, McPeters said she had to purchase her mobile home from New Mexico because housing was scarce.

Today, Endeavour Energy Resources operates an oil rig on almost half of McPeters’ property, but she said she doesn’t receive royalties from production revenue because Endeavour owns the mineral rights to her land. In Texas, land rights and mineral rights are sold separately. 

When Endeavour approached her about drilling on her property, McPeters said she wasn’t aware that her property ownership didn’t include mineral rights, which would entitle her to royalty payments on any oil production on her land.

“How they got them, I don’t know,” McPeter said. “They paid me $8,500 to put that pump jack there, and I had to pay taxes on that. They said ‘This is what we’re going to give you. Get out of the way.’”

Employment

The boom has also resulted in the lowest unemployment levels in the state as new drilling corporations have set up shop offering thousands of new jobs for locals and field workers who have moved into the area. In February, the unemployment rate dropped to 3.2 percent for the Midland metropolitan area — the lowest rate in the state and one of the lowest in the nation — according to a monthly report by the Texas Workforce Commission. The state unemployment rate, which has increased slightly this year, is 6.5 percent.

Adam Chavez, field coordinator for EagleOne, an independent transportation company that does oilfield transportation, said he moved to Midland from Plainview in 2011 because of the work opportunities in the area.

Chavez, who started as a company driver and was on call 24/7, travels home to visit his family during the weekend but lives in one of multiple RV campgrounds that have emerged throughout the Permian Basin. Some RV parks rent out space to oil workers who sleep in tents on makeshift grounds that locals call “man camps.” Man camps are not permitted on System land, according to a University Lands official. 

“I’ll be here as long as there is work and if the work doesn’t move north,” Chavez said. “I’ll be here until they say it’s dried up.”

Midland became the fastest-growing metropolitan area in the nation last year with a population increase of 4.6 percent, and Midland County was ranked as the 10th-fastest growing county, according to the U.S. Census Bureau.

High employment opportunities in the oil fields have left local restaurants that offer lower-paying jobs struggling to staff their operations while demand increases.

In the last two years, Gerardo’s Casita, a local Mexican restaurant, has lost cooks and kitchen staff to the oil fields, forcing Jerry Morales, Midland City Council member and owner of the restaurant, to step into the kitchen almost four times a week.

Morales said his restaurant has benefitted from the boom with tables occupied from open to close every day as the community thrives economically, but he has also had to make changes to adapt to the staffing challenges that come along with an increased amount of patrons.

It’s not unusual to see managers and owners working hosting and busboy duties in other restaurants, Morales said.

“It’s been very hard for us in the retail business to compete with an industry where they’re working 80 hours overtime in a week at 22 years old, bringing home a $3,000 check,” Morales said. “I’m probably paying $2-3 more [an hour] than I was 24 months ago.”

Gerardo’s Casita now closes for three hours between lunch and dinner and is closed all day on Sunday because Morales said he doesn’t have the staff to cover sufficient shifts to avoid paying current employees overtime. The restaurant has also increased menu prices to make up for the increased wages.

“It took a little while for us to understand [the boom] and it took a little to see if it was really going to last,” Morales said. “I don’t really call it a problem. It’s just a challenge.”

Sources of revenue on University Lands are well developed today and include successful business ventures in the energy, beverage and agriculture industries, but the pathway to creating that network of income has been riddled with interesting experiments and proposals, university officials said.

For every successful business venture proposed on University Lands, there’s another long list of failed ideas that never amounted to much, executive director James Benson said.

“We’ve had tons of crazy ideas proposed over the years,” Benson said. “Most of the time they just show up at the door. People look for large blocks of land, so we’re a target because we have those large blocks of land. It’s in the desert, so no one thinks it has value. They just believe we would welcome anything.”

Ideas are proposed by both academics and entrepreneurs, Benson said.

“Some are just plain crooks,” he said.

Others ideas are not economically feasible, Benson said.

“My favorite one was called EnviroMission,” Benson said. “The guy wanted to build a tower in the middle of the desert that would be as tall as the empire state building.”

He said the tower would be hollow and have a greenhouse umbrella to generate a convection current that would turn wind turbines to generate electricity.

“Now, we’re talking millions of dollars to generate about 100 megawatts of power — which would be very expensive per kilowatt hour,” Benson said. “I thought we should get a bungee jumping concession to make some money off that.”

There is a delicate balance the managers of University Lands have to strike when considering ideas, Steve Hartmann, former University Lands executive director, said. Hartmann said juggling the various interests on University Lands involved a lot of decision making during his 35 years of director, but was also enjoyable.

“It was always interesting,” Hartmann said. “One of the things I always enjoyed was that you were always having to learn something new for the things we got involved with. By the time you thought you had seen everything, you’d find out you haven’t.”

Timeliness can be a factor to the viability of a proposed University Lands project. Although Hartmann and Benson both recall failed negotiations with companies interested in growing native guayule on University Lands for rubber production in recent years, the plant was successfully marketed by the University System a century ago.

Regent George W. Brackenridge was praised in the April 15, 1910 edition of the University of Texas Record for his work in facilitating the sale of $30,000 of guayule that grew on University Lands. Maximum annual revenue for the University Lands during Brackenridge’s tenure was $120,000, the publication said. The UT Board of Regents in their 1908 biennial report called the sale of the guayule a “windfall” that helped raise funds for a University power plant and library. On Oct. 21, 1943, the Tulia Herald also reported a purchase of guayule from University Lands by the U.S. Department of Agriculture. For an undisclosed amount of money, the USDA purchased guayule shrubs on 176,000 acres of University Lands according to the report.

“We try a lot of different things in terms of trying to find the best use of the land,” Hartmann said. “One of the goals is always to diversify the revenue stream. Over the years we’ve tried to grow a number of different crops. That’s how we got the vineyard.”

What started out as a research experiment involving grapes in 1974, transformed one patch of University Lands into Texas’ largest vineyard. Other attempts to grow almonds, pistachios, algae, olive trees and jojoba beans didn’t succeed, Hartmann said.

He said finding the space to accommodate new projects on University Lands can be difficult.

“There is not a single acre that is not leased,” Hartmann said. “In many cases it’s leased for multiple purposes. You have a lot of people out there. When someone comes in with an idea, generally it’s going to move someone else out of the way. It’s got to have significant merit before we tell someone else to get out of the way.”

Limited space was a problem when UT Austin researchers approached Hartmann about testing a rail gun invented by the Center for Electromechanics. The gun used electromagnetic force, rather than chemical energy to fire projectiles.

“This thing would shoot a projectile at phenomenal speeds and phenomenal distances,” Hartmann said. “We were looking for a place to shoot this thing for a number of miles and we couldn’t have any power lines in the way. We couldn’t have any oil wells nearby or any pipelines. I looked for many days and there wasn’t a single place on the 2.1 million acres where there was a place to test the rail gun.”

Just because an idea doesn’t have a future on the University Lands doesn’t mean it is without merit, Hartmann said. Some of the projects find success elsewhere. The rail gun eventually was tested in the early 1990s at the Pickle Research Campus, where it propelled a projectile into the ground according to Lori Moore, administrative manager of the Center for Electromechanics.

“We haven’t used it since the end of the project, but we still have a rail gun pointed into a 150 [foot] hole in the ground,” Moore said.

Hartmann said profitability and feasibility factor in with potential impact on the land.

“A lot of these things produce a lot of long-term changes on the land that you might not even think of, so you have to be pretty judicious about how you do it and where you do it,” Hartmann said.

University Lands contract workers Terry Burgess, Marin Millen, Holly Mello and Kathleen Burgess working to survey and record a petroglyph site along the abandoned Atchison, Topeka and Santa Fe Railroad built in the 1800s. Photo courtesy of Solveig Turpin. 

As the number of development projects on University Lands increases, further inspections of the land are needed. In turn, archeologists are expanding their knowledge of West Texas — and finding hundreds of Native American artifacts along the way.

In the last year and a half, more than 500 sites have been found, examined and documented, according to Solveig Turpin, a UT alumna who owns Turpin and Sons Inc., an archeological surveying company that regularly inspects sites for University Lands. The sites can range from an area of a few ancient hand tools to engraved drawings known as petroglyphs.

“With the petroglyph it’s always interesting and exciting to see something like that and try to understand what they were doing,” Turpin said. “[The petroglyph] isn’t an isolated phenomenon. The more sites we get, the more we can see a pattern.”

Jonathan Jarvis, UT Texas Archeological Research Laboratory record keeper, said cultural research, including archeological investigations, must be conducted when development projects are approved to use public land, or can be publicly funded or require a federal or state permit. The investigations help guide oil and gas explorations if development could harm a significant site.

Turpin, who has worked with University Lands for three decades, said once an area is declared an archeological site, any plans for that area have to be altered to avoid damaging the site. Turpin said University Lands has also sponsored archeological projects.

“We excavated a bison kill site in a lake bed that was 18,000 years old because a pipeline was coming that way,” Turpin said. “When we find [sites] we plot them on a map and the University knows where they are, so when these projects come in they can tell if anything is in the way.”

Turpin said finding these sites also allows them to be protected. Once they are recorded in state records, the state antiquity committee can designate sites as archeological landmarks, which offers stricter legal protection against removal of artifacts or vandalism. The Native American Grave Protection and Repatriation Act also helps deter damage to the sites with penalties for looters.

“We excavated a cave because relic hunters had excavated a mummified child,” Turpin said. “We excavated the site after because they were obviously intent on taking the human remains. But nobody can watch that much land.”

Jarvis said the findings from these sites have created a collection of documented sites to survey and information for archeologists and graduate students to study.

“The archives that we have with sites can actually be analyzed to predict if there may be other sites near by, in advance of a project” Jarvis said.

Anthropology sophomore Kelsey White said the findings with recorded locations will aid future analyists with information of the site locations and proximity to other sites.

“It’s really important to be able to examine this kind of information because there is context,” White said. “Texas is a really important state because it’s so large; there have been many different groups through the years. We know where the artifacts are coming from and often times in archaeology there isn’t a context of where artifacts are found.”

Turpin said as the University continues using lands for various projects, more sites will be discovered and the information about the people who once used the land will grow. Turpin said hopefully someday, with enough information, archeologists will be able to piece together how these
people lived.

Swaths of West Texas ranches dotted with cattle, sheep, rattlesnakes and cacti have never been much to look at, Sammy Hooper says with a laugh. Nevertheless, the 74-year-old rancher and his wife Mima Hooper say the recent drought and influx of the oil and gas industry have greatly impacted their operation. 

The boom of the oil industry in the Permian Basin and severe drought have taken a toll on the couple’s ranching operation. The Hoopers are one of 112 grazing lessees on University Lands’ 2.1 million acres. The drought will break eventually, but unless University administration takes some interest in preserving the natural environment, the Hoopers’ ranching future remains bleak, he said.

“We’ve spent 20 years or so ranching on University property,” Sammy Hooper said. “We’re sickened by what’s happened in the past five years.”

The problems began with the onset of drought several years ago, and the lack of water has been exacerbated by the influx of oil companies in the past two years, Hooper said. Since 2011, the Hoopers’ herd size was reduced by a third. 

“The biggest problems are when the oil field has come in and torn up our water lines, and we’re not even notified about it until it’s too late,” Hooper said. “I’m really worried about this fracking system. They’re using a lot of water for these oil wells, and I just worry they aren’t conserving the water the way they should. If oil is more important than ranching, we’re out.” 

According to Hooper, they have to pump water from deep underground to reach their herds, and the deeper the well, the more expensive it is to pay for the electricity to pump it. 

“Our only source of income is through livestock,” Hooper said. “If we have no water there’s no ranch. There’s no grass, there’s no rain, there’s no ranch.” 

Hooper said he recently tested some of his wells and discovered their levels were too low to water his herd. 

The western part of Texas has seen below average rainfall for the past two years according to Ken Rainwater, director of the Water Resources Center at Texas Tech University. The area received less than a third of its average yearly rainfall in 2011 and didn’t meet its rainfall average last year either, Rainwater said. 

University Lands Executive Director Jim Benson said no lessee has priority to water on University Lands. Benson said oil companies, which usually need millions of gallons of water for fracking wells that crack shale formations in order to extract oil and gas, are required by University Lands to minimize their water use by reusing wastewater. 

“The policy has always been that if we could prove that an oil company damaged a lessee’s well, then that company would be responsible to provide that water to the lessee,” Benson said. 

Hooper said in the past two years there has been a disconnect between how the oil companies and ranchers are supposed to operate and how those relationships interact in reality. 

“In this influx of oil invasion, we have no say,” Hooper said. “We’ve spent our last dime buying leases from the University and they have allowed the oil companies to come in and destroy the land.” 

Torn up water lines are just a small piece of the damage that’s been done, Hooper said.  

Whole pastures are now coated in limestone surface rock called caliche used to create roads for oil field workers. Grass won’t grow on caliche, and its dust coats the grass nearby, making it inedible for cattle, Hooper said. Wildlife such as deer and quail have left the ranch because of oil field traffic, according to Hooper.

“All that to get oil,” Hooper said. “If oil’s more important than the habitat of nature then that’s really messed up.” 

Hooper said ranchers previously received money from University Lands to help cover the cost of damages to their leases, but the money has stopped within the last six months. Benson said the University Lands office has budgeted money to help make improvements in the past, but funding for those projects is not always available. 

He said it is disheartening to see public land damaged by the industry, but he doesn’t have much hope for the situation to change. Hooper said anything short of directives from top university officials will be futile in protecting the grazing lands. 

“The Board of Regents are going to have to lay down the law about what the oil companies can and will do,” Hooper said. “We have talked with the local University people at great length. They apparently have no authority and it looks like their hands are tied.”

UT spokeswoman Karen Adler was unable to say how involved the Board of Regents was in monitoring interaction between ranchers and oil companies.

Deep below the dry dust surface of University Lands is groundwater that breathes life into the ranches, vineyards and oil wells that sit on top of it.

University Lands has a long history of managing its water between many divided interests, Executive Director Jim Benson said, but the recent oil boom in the region has outside regulatory entities concerned about the sustainability of water resources in the area. Bills filed in the Texas Legislature aim to impose more regulations on water extracted by oil and gas companies, while other pending bills would relax existing restrictions.  

“We’re always concerned with water in West Texas — always,” Benson said. “We don’t have any surface water on University Lands. It’s all groundwater, so we’re always concerned.”

Groundwater beneath the University Lands are part of the Ogallala, Cenozoic Pecos Alluvium and Gotham aquifers, Benson said. The exact amount of water the University Lands have in each aquifer is difficult to quantify, he said.

“We have considerable amounts of water, but I can’t tell you the exact amount we have because we haven’t spent the revenue to explore all of it,” Benson said. “As far as a massive study to explore the volumes of water, at this point it would be beyond our ability to budget that.”

The biggest consumers of University Lands water are municipalities, which Benson estimates use approximately 28 million gallons per day. The water isn’t always of the best quality, but is treatable and desirable in the climate where the resource is limited, he said.

“It’s pretty salty,” he said. “It’s fresh. You can drink it, but it doesn’t taste great.”

Up to half of the water consumed by Andrews — a town of about 11,000 people — comes from wells on University Land, said Danny Griffin, director of water production and plant management for the city. Andrews has purchased water from University Lands for more than 50 years and just signed an agreement to extend its contract for another 25 years. Although the price of water from University Lands has increased by 12 percent since 2010 and now must be mixed with surface water to dilute arsenic levels, the deal Andrews and University Lands have worked out is fairly favorable, Griffin said.

“It’s not a bad rate,” he said. “Especially because water’s a scarce resource.”

Energy companies also use freshwater in a process known as hydraulic fracturing or fracking, which uses millions of gallons of water mixed with chemicals to crack shale formations and extract oil and natural gas from deep below the earth’s surface, Benson said.

The University has tried to reduce the impact of these wells on its freshwater supply by requiring the energy companies to reuse water from fracking that would otherwise be pumped back into the ground in a disposal well at a different location. No federal or state laws or regulations force companies to reuse their wastewater if they do not operate on University Lands. 

“We’re trying to minimize the impact of oil and gas activity on the freshwater by utilizing this produced water that would otherwise be disposed of,” Benson said.

The University Lands also implemented its first groundwater management plan this year, which requires any entity drilling a water well on its property to seek approval from University Lands. 

State law requires all entities that use more than 25,000 gallons of water per day, with the exception of oil, gas and mining companies, to seek a permit from a local groundwater conservation district, if one exists, and report the amount of water they withdraw. And while oil and gas companies have to register wells with the groundwater conservation district, they don’t have to account how much water they withdraw, said Cindy Weatherby manager of the Santa Rita Groundwater Conservation District in Reagan County. 

“Oil and gas is our biggest problem right now,” Weatherby said. “There’s no way to put a finger on how much they are impacting us because they’re exempt from reporting.”

The districts are responsible for managing groundwater in the state, but that task is difficult when oil and gas companies don’t have to account for the water they use, Weatherby said. In the past year, her office has been overwhelmed by drilling registrations.

“The registrations come in so fast, I can barely keep up with putting them in the computer,” Weatherby said. “There’s some legislation that might help us. We can only pray.”

A bill, filed by state Sen. Glenn Hegar, R-Katy, and passed by the Senate Natural Resources Committee on Tuesday, would require oil and gas companies to report how much water they use for fracking to groundwater conservation districts. Lisa Craven, Hegar’s chief of staff, said current regulations on oil and gas companies drilling for fracking water were implemented before the practice was invented and need to be reformed.

“Senator Hegar believes that the oil and gas companies should have to follow the rules that apply to everyone else,” Craven said. 

Bills filed by state Rep. James Keffer, R-Eastland, and state Sen. Carlos Uresti, D-San Antonio would exempt water wells drilled for fracking purposes from the groundwater conservation district’s permitting process. 

“It’s the exact opposite of what our bill would do,” Craven said. 

The Office of Business Affairs, which directs University Lands, sold almost $250 million of oil and gas leases Wednesday during its most lucrative semiannual lease sale in history.

The sale included oil and gas leases for 117,000 of the 2.1 million acres of Permanent University Fund land.

The Republic of Texas set aside 220,000 acres of public land in 1839 as an endowment for a public university. Oil was first discovered on the land in 1923 in Reagan County, according to the UT System’s website.

This sale and the last one in September 2010 collected considerably more money than any previous sales, said Stephen Hartmann, executive director of University Lands, which is dedicated to managing and leasing the lands.

The September 2010 sale totaled $207 million, and the highest sale before that came in the ‘80s and totaled $52 million, Hartmann said. Other sales have topped at about $40 million.

Hartmann said oil and gas, drilling or brokerage companies bid on specific plots of land before the date of the sale based on the amount of oil or gas they think they can get from the area. He said the bidders have no way of knowing information about other bids for the plots they bid on.

He said this forces companies to bid in relation to how much they can get from the land.

“If you’re bidding on this, you take your best shot because you don’t know,” Hartmann said. “If you really want it, you better make it good. I had one guy say, ‘You ought to at least provide doughnuts for making us go through this.’ I took a look at his bids and said, ‘I should bring Wheaties instead.’”

In addition to oil and gas leases, the Land Office leases land for pipelines and fiber-optic cables, wind farms, businesses and a commercial winery.

The University of Texas Investment Management Company invests the profits from the lands that make up the Available University Fund. The University of Texas System receives two thirds of the returns on investment, and the Texas A&M University System receives one third.

For its 2010-11 budget, UT Austin received $166 million from the returns, which comprise the Available University Fund.

Much of the land is leased for multiple uses, but because the three-year oil and gas leases have different statutory requirements than the 10-year surface leases, they are sold separately, said Jim Benson, director of business operations of University Lands.

Benson said all oil and gas leases are sold in sales similar to Wednesday’s and approved by the Board for Lease of University Lands, and the rest are negotiated individually and approved by the UT System Board of Regents.

He said the office expected a successful sale because of high oil prices and political events worldwide.

“Worldwide demand and probably the instability in some of the other oil-producing regions in the world have driven people back to domestic oil,” Benson said.

He said a few key players always influence sales, but which companies bid year to year is unpredictable.

ConocoPhillips purchased tracts of land for between $500,000 and $2.3 million, according to the Land Office’s preliminary sale numbers. Official numbers will be released Thursday morning.

“We are always looking for good opportunities. We believe the tracts purchased today in Crockett and Reagan counties are among them,” said Davy Kong, a ConocoPhillips representative, in a statement for the company.

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1. Andrews 50,414.31
2. Upton 52,400.00
3. Ward 134,918.08
4. Winkler 519,440.00
5. Schleicher 649,102.35
6. Pecos 893,836.63
7. Crane 5,037,009.54
8. Ector 5,266,078.34
9. Reagan 35,399,122.46
10. Crockett 193,864,094.51


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