Goodbye to the Boom?

By Sarah Snyder
NewsWest 9

The slowing economy and lack of credit is creeping it's way over to West Texas. 
On Thursday, the State Railroad Commissioner predicted less oil drilling permits will be handed out.

It's just a waiting game right now. 

A couple of local organizations say, at this point, there's really no guarantees, but while there may be fewer drilling permits, they predict our economy will stay strong.

"I think all of us in West Texas are curious as to how the global economic crisis is effecting us here," Kirk Edwards, Former President of the Permian Basin Association, said.

A change is moving in on the Basin.

"Everybody's waiting to see if it's going to get soft and how soft it's going to be, so everybody's in a wait and see attitude right now," Edwards said.

They believe the lack of credit and lower oil prices will have an impact on drilling.

"We've been using borrowed money for awhile to drill also and what's happened now is with the credit drying up, we don't have the money we can borrow nowadays," Jim Henry, CEO of Henry Petroleum, said.

And many businesses are starting to feel those effects.

"Chesapeake has cut their drilling budget over the next couple of years by $3 billion which is a lot," Henry said. "And Sandridge, another company which drills out here a lot has cut their budget from $2 billion to $1 billion."

Petroleum companies believe the price will go down, but overall, our economy will stay healthy.

"It will go down, but not too much, in my opinion," Henry said. "It will stay active and our economy in the Midland/Odessa area will stay good."

And what about those gas prices?

"We're probably going to see gasoline prices drop into the mid $2 range here over the next two weeks," Edwards said.

And the Petroleum Association says, there's no bust in sight.

"The risks are that unemployment could rise here in West Texas and equipment becomes softer and things like that," Edwards said. "But I think the great thing about Midland/Odessa is that we've diversified so much over the last decade away from energy is that when energy is good, our economy is good, things are spectacular right now. It won't hurt us as much as it did back in '86 or 1999 when we had similar price softenings."

Oil and gas industry leaders say there's typically a three month time span between the price going down and the related activity. They say it may be 2-3 months before we see a big change.

"We'll get affected but not as much," Henry said. "I think you'll see a slow down in, but not at least in my opinion, a recession in the oil industry. We're still going to go strong."

And just this week, a few New Mexico oil rigs are sitting still. That's according to a Houston-based company. 

And nationally in just the past few days there are several more rigs out of commission; just under 2,000.