Energy 101: We Ask The Dumb Questions So You Don't Have To

0:00 Welcome to Energy 101, where we ask the dumb questions, so you don't have to. Today, we are with Shad Frazier, and we are going to be talking all about Permian Basin. What is it? Why does

0:13 everyone always talk about it? All about Midland and yeah. Yep. The Permian Basin is, I believe the most, um, what's the word? Like the highest producing basin in the country, right? Most

0:28 prolific basin in the United States. Okay. And on a world scale, is it close to? For many points in time inside of all of history, the Permian Basin has been the most prolific basin in the world

0:39 for production. And it's been that way since about the mid sixties. Right. So the goat of basins and, uh, it's, it's right down the road from us. Kind of. Hey, it's an easy Southwest flight

0:52 of an hour and a half. And you're writing in the middle of it. Yeah. Right. Yeah. I love taking some people out recently that it never been out to the basin before and that you know the. fly in

0:60 for the first time and you've never seen it and it's nothing but wells for miles and miles and miles of pads everywhere. And then you get them out of the plane and they see their first pump check.

1:09 They're like, it's real. This is real. It is so cool. I absolutely. Okay. So I grew up in Midland. So seeing all the infrastructure is normal to me. That's like my mountains, my scenery is

1:20 counting pump jacks. So I never really like knew how cool it was because I was just desensitized But now when I drive out there with my kids and seeing them get excited, especially with the wind

1:32 turbines, next to a drilling rig, next to a pump jack, like in a beautiful sunset in the background, it's just my favorite. So it is really cool to see if you've never been out there. Yeah.

1:45 I've joked about it with a lot of people. The fact that the people that live in Midland are living in the middle of the biggest industrial complex that's ever been built and millions and billions of

1:54 dollars have been spent on making it what it is today. the people there are the hardest-working people in the world and love what they do and would not go anywhere else if asked because that is the

2:05 heart of the action. Yep, yep, it's true. So the Permian Basin is the name of kind of like the greater basin and inside our subbasins, maybe is the right word. Correct, yeah. So the Permian

2:18 Basin is basically the description of the age of the rock that we produce from. So the paleozoic Permian timeframe. But when we deal with the Permian, we're dealing with the Midland Basin, which

2:28 is kind of on your far east side, the central basin platform, which is then the center, which is kind of this rock structure that uplifts and gets you out of the current plays that are going on and

2:39 gets you on to different rock. And then it drops back down into the Delaware Basin. So you end up having three different types of basins with very different types of rock that produce inside of the

2:49 one Permian Basin. And then you get way south of there and you get into actually the changes in the North American and South American plate. So you get into whole new basins with whole new

2:58 reservoirs as you get further south. That's so cool. I had no idea that they were like multiple basins. So these are like as you go underground, the rocks. Yeah, so, you know, and they're big

3:09 bowls. So you've got Midland Basin, Delaware Basin, and then you've got this big plateau in the middle. And the big plateau, if you actually wanted to understand it, is on the surface is

3:20 basically when you get to the side of Odessa as you get to Andrews. Okay And this is where the central basin platform in, as you drop off the central basin platform, you're getting kind of west of

3:31 Andrews and dropping off as you get into Mintone and everything else going out further west. So, you know, a lot of great rock as you go out there, and it goes for hundreds of miles as you get

3:41 closer and going out to El Paso. That's awesome. I never knew that, that's really cool. And you knew all those little towns you talked about 'cause you grew up there? Yeah, I like my mom went to

3:50 high school in Andrews. I'm like, I know in Andrew I don't know, I don't know where that is. Yeah, I mean, it's so prolific and you said, I mean, you said it goes back to the '60s. I mean,

4:03 technically it goes back to the '20s, right? Goes back to the '30s. And the '20s are kind of the expiration where people were starting, but really in the '30s is when you get to Santa Rita and you

4:13 get the very first well that was drilled. And we joke about it today 'cause you think about the Santa Rita was a well that took 60 days to get to 3, 000 feet and cable tool drilled, which means

4:25 somebody was dropping a chisel into the rock over and over and over and just hitting little bits of rock out every day for 60 days. And the guy drilling it is going out and trying to raise funds and

4:38 keeps having, you know, keeps having to go out for more money 'cause he's like, we're gonna hit oil, we're gonna hit oil, we're gonna hit oil and it takes him 60 days and then they finally hit

4:45 oil and the whole world changes because all of a sudden they start finding oil at 3, 000 feet and it becomes prolific enough actually starts moving out towards the Permian Basin to make it happen.

4:58 And then you get into the 40s, your 30s to moving into 40s, 40s is World War II. And by the time we get to World War II, 25 of the world's production is coming from West Texas. Wow. Of the world,

5:10 you said? 25 of the world's production was coming out of West Texas. That is so crazy. Yeah, we joke about it because, and think about it in terms of in 1942, the United States had to get oil

5:23 from West Texas to Boston, because that oil was going to feed the war effort in England and everywhere else. Well, you can't get oil from West Texas to Boston. You can't do it by train, you can't

5:37 do it by trucking the amount of volumes, 'cause we're talking, at that point, there's almost millions of barrels that are moving. And the United States government put together the legislation and

5:45 put together the funding for50 million to lay a pipeline from Houston to Boston,

5:53 That sounds to think about trying to lay a pipeline today that would go from Houston to Boston and try to do it for under 50. You know, you couldn't get out of Houston for under50 million today,

6:02 and they were able to get from Houston to Boston. And then, you know, the reason why they do that is you couldn't put ships into the Gulf of Mexico, because they were afraid of German subs sinking

6:12 all the oil tankers and that additional trip of time around, we couldn't defend all those ships. So we had to get it all to the Boston area and to those ports and then carry the oil from there

6:23 That's like our Pyramids of Giza in the US. I mean, that infrastructure, that project, I'm sure there's going to be like books and stories about that. That's insane. Yeah, there's so many great

6:33 stories, but it's the same time from when you think about people that when we're talking about the Panama Canal and things that, you know, great projects, huge undertakings that people would take

6:41 on. Now, was it as safe as it is today? Was it as efficient? No. But when things had to happen, people found a way. Were they surprised at how much oil they were able to produce at first? It's

6:56 always been a surprise. Even when people, when you talk about it in Finland, it's always like, we'll always find more. Even the people today, oh, the Permian Basin will never drop, we'll

7:06 always find another reservoir, we'll always find another play, and we'll keep going. And that's always been the mindset. And it's been great. My family has been out in the basin since the turn of

7:17 the century, and my grandfather was a geologist by hobby, not by training. And our family land is now underneath horizontal development. And he always said, one day, there's going

7:28 to be oil found underneath our property. And he never saw it in his lifetime. But 20 years later, that property is paying for all of his kids to retire and not have to worry about things because of

7:40 the royalty checks that have come in. That's amazing. Oh, yeah. I know. There's got to be stats on the amount of people to, like, make bank off a minute. mineral rights in Midland alone, or

7:53 just any basin in our country. And, you know, specifically our country because supposedly the US is the only country where we

8:02 have private mineral rights, not government, like what's your thoughts kind of, or maybe educate just in general how that works. Yeah, so, you know, as a family member who's had mineral rights,

8:11 you know, you have the opportunity to lease those rights out to an oil company and then the oil company basically comes and says, we'll pay you for the rights to go drill on your property And if we

8:20 drill, we're gonna give you X percentage of the production as it's yours to begin with. So we're gonna take a portion of it and we'll give you another, a smaller portion of it back. And then from

8:32 that, you'll get royalty checks for the rest of your life as long as those wells produce. So sounds really good, sounds great. And in today's society, when we look at it, the typical royalty

8:42 check is about 25 of the production that most people produce. But in the day when my family originally did it, it was actually an eighth. You know, our role T checks are not as big as they could

8:53 be, but an eighth. And people would sign leases. You know, my grandfather's original lease was signing it for50 an acre. And he did it on just drill to earn. All you have to do is drill to earn

9:05 those rights. And the first company that drilled to earn those rights, did it in the 80s, drilled a dry hole, but earned the rights to drill and produce on our property forever because of that one

9:14 well. So, you know, so many stories are about people just taking a risk and going out to the premium basin to do it Now, when you talk about wealth and the difference of wealth between Midland and

9:25 anywhere else, Midland is the highest GDP per capita of anywhere in the United States. And you wouldn't think it because, you know, it's people are landlocked in housing. So there's not a big

9:37 suburbs of, there's big homes and there's nice homes, but it's not like you come to Bel Air or some like that in Houston where these 10, 20 million homes, because it's so landlocked, people

9:47 haven't never built those type of homes out there.

9:51 The deal flow is different. I joked with my people that you join the petroleum club, you join the country club, not because you wanna be a socialite, it's because the deal flow that goes through

10:01 the people that you interact with changes on what happens. Just because of us living there for the last 10 years, I've had deals come to me from outside the oil and gas space. People when they need

10:14 to raise capital for things come to West Texas looking for money because people in West Texas are looking to put money somewhere other than the oil patch. And it's a give and take that really helps

10:25 the rest of the United States. That's all business. It is. Every day, millions of

10:34 deals are being done in this old petroleum club in downtown memory. People sit across the table and billion dollar deals have been signed inside of that building over crispies of bread with fried

10:47 cheese on top of it, French onion soup. and the staples of the patrolling club that everyone's seen. It is, it's so crazy to think about how much money flows through there. But that's why I'm

10:58 thankful I was raised there. I'm thankful for oil and gas in general because it's provided my entire life, but. Let me, let's keep going with the minerals right stuff. I mean, when you describe

11:11 it, you're like, of course that's how it works. Like at a layman and be like, oh yeah, you're on the land, they wanna borrow your land, you get a cut like no shit. So how come no one else does

11:21 this outside of the US? So every country outside of the United States basically keeps everything under the ground as ownership of the state. And that was the one thing that really separated the

11:33 United States from everywhere else is that we said that if you own the surface, you owned everything underneath the surface. And that was a huge, huge difference. That when you go deal with Saudi

11:45 Arabia, Doesn't matter who owns it, the Saudi Arabian National. You know government owns all the minerals underneath it. They owned everything underneath the surface So it really changes how

11:57 people were able to use that, you know that the base numbers are there's been in Texas There's been multiple trillions. It's actually somewhere around four trillion dollars in royalties paid out to

12:08 people and not just people Because you look at the Santa Rita the minerals for the Santa Rita number one were actually in the Texas land estate So they the money that the royalties that that well

12:21 generated actually went into funding Texas University of Texas University of Texas AM went to the school fund that then Generated these great colleges and institutions with some of the biggest

12:33 endowments There are based upon minerals and so the mineral estate that's been out there has made a huge impact for people for generations Wow, that reminds me of my question. I was gonna say The

12:47 and this just goes to Midland in general Although there's so much money that flows through there, there's not a lot being spent on schools and all of the things to do there. Like I grew up in

12:60 Midland, so I understand there's nothing for kids except trouble. Yep. So yeah, what are your thoughts on that? You know, I had an interesting conversation with someone the other day about that.

13:12 And the fact that, you know, you look at Texas in Houston, I'm getting ready to make the transition possibly to moving into Houston and dealing with what a home in Houston costs. And the taxes in

13:24 Houston on a house are three times what the taxes in Midland is for a house. You know, the people in Midland have fought for years to not raise their property taxes and not raise the taxes using the

13:37 infrastructure of the oil and gas space to try to pay for the taxes to pay for the schools. And, you know, my wife went to school there in the 90s, went to Midland LegacyMidlandly.

13:50 That school looked almost the same when we moved back into town. It hadn't changed in 20 years and is still in use today. So you have a school that's been in use for 40 years plus. And just this

14:02 last year, we finally got a bond passed. That bond's gonna allow us to build two new high schools, repair, redo things, billion dollar fund based upon a property tax increase because the state

14:14 was able to reduce the overall property taxes, the city increased the property taxes to match what was being reduced. And so all that difference, no one saw any reduction in their property taxes in

14:25 the county and all that money's gonna go now towards building new schools. So it's still one of the cheapest places to live in the state, but it's now gonna use some of those resources to make for a

14:37 much better place for kids, you know, the recent developments of the fact that some of the families inside of Midland are now gonna put a zoo in and give something back to the community for.

14:48 allowing the people that are out there something. I mean, it's five hours to anywhere from there. Seriously, my road trip was Lubbock. Oh yeah, oh yeah. Yeah, and my daughter was up there, my

14:59 son was up in Lubbock and it's an hour and 45 minutes door to door to get up to Lubbock and we do it all the time just because it would be different, different restaurants, different, just

15:07 different things things

15:09 to go do and see. And you know, but that's the way it is. Midland is an industrial complex. It is. It is It's a pleasure spot, you know, the running joke was at one time Disney was supposed to

15:20 theoretically build a amusement park somewhere outside of Dallas, Fort Worth and try to think about coming out to West Texas and they're like, No, we're not doing that. It's too far remote from

15:31 anyone to draw anyone here. And that's really the case is, you know, we joke about it as the family 'cause our mineral estates on the interstate and we can't even get buckies to come out to West

15:43 Texas because it's too far away, they won't come all the way.

15:51 It's just on the pitch. They would kill it out there. Oh yeah. But he's out in West Texas with just, it would rake in them. Oh my gosh. There's nice HGBs. There's nice HGBs. Great HGBs. Great

15:57 HGBs. They just opened Costco. They just got put in the door. Yeah. I mean, Sam's. The thing that I think about though, are the teachers and I don't know, I haven't looked at how much they're

16:06 getting paid, but will new facilities help the teachers manage the kids? 'Cause that's been, I have all my friends are still back there, all my family, so I have friends that have kids in junior

16:19 high at public schools and they just said it's like chaos. So I'm hoping there's a change in that, just because people out there like deserve good education and I think more exposure to the oil

16:33 field, like growing up there, I didn't really, I mean, I guess it's kind of on your parents to teach you, but school programs would be great. Well, and one of the things when we talk about this

16:44 mineral estate, Most of the people that own the mineral estate don't live there now. their grandparents were there. Their great grandparents were there. They were the ones that built the ranches

16:54 that are now being drilled and developed. They've now all left. And so only thing is left is their name. You know, it's great that their families have left foundations that are doing things for

17:06 the community, but they're not there. They don't live there. This education system in the Permian Basin is not really good. It's pretty poor. And a big part of that is the fact that, you know,

17:19 greater than 70 - it's right around 60 to 70 of the student population in the public schools is of minority descent, or is first - you know, English is not the first language in those homes. That's

17:32 a huge amount for those schools. And every one of those kids, when they start talking about it, is, you know, I think the number they were showing us, the other day was around 55, 60 of those

17:42 kids is on some type of food program. Because they don't have food when they go home, They may have a parent who's in the oil field, but they're working hard to make the money that they make.

17:55 They're not making mineral money. They're not engineer money. There are the pumpers. They are the roused abouts. They are the pipeline crews that are out there. And they're busting their ass

18:05 every day to make them every dollar they can. And it's not enough, especially with the cost of living and everything that goes along living in that area. In a boom town. In a boom town. Yeah,

18:16 yeah I mean, I actually wanted to take a lot of time to talk about kind of Midland in general, the infrastructure, the culture. I mean, there's a couple of things that come up, including

18:26 something you said, like, you know, the infrastructure, the schools. You know, it's systemic. You know, it's a boom town kind of habit, where one thing is that people, a lot of people don't

18:40 live there. In fact, people live very far away. Some people even fly in just to work and their days are live back to the city. Um, and other scenarios, like you mentioned, like the minerals and

18:52 stuff, you know, this contributes to people not being aware, not caring, being apathetic. They're not voting. They're not paying taxes. They're, they're literally taking advantage of Midland.

19:03 They go there to get what they want and they leave and they don't contribute to their community. And I think, I mean, how accurate is that? Well, and we were talking about the minerals state and,

19:13 you know, a lot of that goes into your ad valorem taxes, your city taxes, and so on, that go into public schools, but then the Robin Hood laws come into play. And so you have a school district

19:22 that gets a lot of money, but then that money is taken back by the state and then redistributed to school districts, other what else were in the state that don't get as much. So all of a sudden you

19:32 have the school district that's getting some money, but then it's getting ripped right back out of their hands where they can't use it. So they, you know, the state almost pushes you to pass your

19:40 own bonds because then you can control your money And it's not so much that people are coming and going and leaving. really about having people that have a vested interest in making the difference.

19:53 When you have a mayor who has her kids in the public schools who are in the school districts that are there and dealing with it and having families that are vested, the one of the things we found

20:05 really interesting being in Midland was the fact that in my age group, so I'm in the 50s, and inside of Midland, the 45 to 60 age group is dead. There is less than 10 of the population is not in

20:20 Midland in that age group because everyone that was in that age group is when oil was 10 to 12 dollars a barrel. So no one went to school to be oil and gas during that time frame or got laid off

20:32 early and didn't make it so they didn't stay in it, so they're not in Midland. So when you deal with things in Midland, you deal with a crowd that's over 60 and retired and done or you deal with a

20:43 crowd that's under 45. Typically, you know, the average age in Midland now is 35. So that means a majority of the population is super young and they want things for their kids. They want better

20:54 schools. They want these great things to come. And it's gonna change. It's gonna change because the demographics are gonna change. That's gonna put different elected officials in. The different

21:05 elected officials will change the rules, change the laws and bring some of this stuff in. Yeah, I mean transitioning back into the Permian, but kind of staying with this topic You know, I think

21:17 another issue is that these are crazy good jobs where you don't need a college education to start making six figures. I actually just heard at a panel a couple

21:33 of weeks ago, she meant, this woman mentioned that 30 of high schoolers drop out in Midland. And it's because they can, they could be 17, 18 years old and go drive a water truck for six figures.

21:42 Yeah, you can get some of that. You have to get a CDL and typically a CDL means you have to be over 18, you can't be under 16. But I had generations that were working for me in my past job where

21:54 grandfather, father, and son were all working on the same rig together. And these are generational families that have worked through ups and downs all through the oil patch and made a huge

22:06 difference to make it inside of their families and change their family's light, total livelihood of what did they do, where did they come from, brought more of their family members to come be there,

22:18 to come work. And it's changed the entire region. And it's changing it for the better. And it's, we all are having to adapt. Well, isn't it like to add on Colin is one of those people who he

22:32 went out into the oil field straight out of high school, he barely graduated, went out and then look at him now, like he changed the trajectory of our whole family. It's cool to see, it's cool to

22:45 see the opportunities. A lot of like my friends were in the same boat where they were right out of high school.

22:55 There's just opportunities there that aren't in other places. Yeah, and there is nothing to say that you can't make six figures in time. The whole thing with the oil patches, there is opportunity

23:07 of bounds. It's all a matter of how much hard work you wanna put in. Exactly how much risk, that is really the testament to the oil patch, is those that take the risk greatly succeed, but they

23:20 also take that risk on, and one out of nine, one out of ten oil companies fail. Because everyone goes out there and tries to make it, and one bust happens, and they don't have the cash reserves

23:31 to go on, and their assets get bought up by Exxon. Their assets get bought up by Chevron. Their assets get bought up by somebody else, and that's the story of the oil patch is, you know, it's a

23:42 story of success. failure, breeding to more success, breeding to more failure, and then back and forth and back and forth. And the stories are in every family that's out there. Let's get back

23:55 into the nitty gritty, the primary and stuff like that. You go to Midland and you see pump jacks, you see drilling rigs, you see frack spreads. So you're saying what I'm basically saying is that

24:07 you see conventional and unconventional. Can you explain, you know, the two broadly and maybe why they're both going on at the same time? Like it isn't like, okay, conventional is our old school.

24:18 Let's move on. It's both. They're both happening. Yeah. Why is that? So if we think about where we were talking about before, where we had Midland Basin, central basin platform, right now the

24:29 central basin platform is conventional. And when we mean conventional means that you can go drill vertical well, go into the zone, you'll have to stimulate it, but you can stimulate it and produce

24:40 that. Well, maybe makes 25. 30, 000 barrels, maybe 50, 000 barrels of oil over the life it's the well and can make a lot of money for the people that are doing it if they know how to operate it

24:51 effectively and efficiently. When we talk about unconventional, what we're dealing with is rock that you couldn't drill vertically and actually produce economically. So what we've then done is gone

25:02 back into those same vertical wells, but then when we get into the pay zone, turn them from being a vertical well into a horizontal well in the unconventional rock And now instead of having 20, 30

25:13 feet of pay, now we have 20, 30 feet of pay on its side and we're going 10, 000 feet of pay. And then stimulating that rock and then being able to develop it and produce it. So now what you used

25:25 to produce 50, 000 barrels from a vertical well has now turned on its side and now we're producing 50, 000 over 50 times that and now we're making 500, 000, 300, 000 barrels out of the same well

25:39 The economics are so much better than they ever were before. You know, a good vertical well. I joke about it with people that come into the industry now that when our first projects that we would

25:50 approve, we were looking for 20 rate of return type projects. Maybe 25 was a really good well. And now when we drill horizontal wells, anything under 50 is deemed as a bad economic well. It's not

26:03 worth it. There's too many other things that are worth above that we ought to be drilling. And so the economics of these horizontal wells is just so much more prolific, but only because of the

26:12 advancements of technology, the advancements of understanding have we been able to tap that and be able to bring that into what's produced today. So you go back into not that long ago, George Bush

26:25 is in office, so we're talking mid 90s. And in mid 90s, George Bush is, this is George Bush Jr's talking about the fact that we're gonna have to bring LNG into the United States 'cause we're not

26:36 gonna have enough gas and we're not gonna have enough oil be able to keep the country going.

26:43 goes forward, we start seeing horizontal development in natural gas wells, then then turns into horizontal development in oil wells. And the Permian Basin goes from four million barrels of day back

26:53 to almost eight million plus barrels a day of production because of the unconventionals. And those unconventionals are now a biggest part of what is being produced in the United States. And we're

27:03 actually able to export our oil all over the world. Yep. I have a question that might be dumb, but that's why we're here. Conventional is just means it's vertical. Unconventional means horizontal.

27:16 Or are you referring to the rocks? The rock itself. Really what you're talking about in my understanding of it is that the unconventional is this rock that would not be able to economically be

27:26 produced in the old way of doing things. We have to be able to touch it in a different way to be able to make it economic. So the old ways of a simple frack in a vertical well is conventional.

27:38 Going horizontal is taking that The best way I had her described one time, and this was way early in the gas unconventional timeframe, was Rex Alman was with Ann Adarco, and he's getting in front

27:49 of a group, and he's trying to explain to people that we are actually producing oil out of rock that looks like your driveway. Okay. And you can't see the oil in it. You couldn't even think about

28:02 it, but we're stimulating it and breaking apart that rock and drawing the oil out of that driveway pavement and actually making it produce And so the best way to describe oil out of an unconventional

28:14 is you're drawing it out of rock that you couldn't see the oil in if you just looked at it. Gotcha. And with a conventional, you basically can see it. It's still not a big lake that you could get

28:23 oil out of. It's still in the rock, but it flows. You could smell it, you could feel it. Got it. And the unconventional's, you have to do something to help make that rock work. Got it, okay.

28:34 I also have a dumb question, which is I have this understanding people still kind of like takeover. old wells. I guess legacy wells, one of the terms I hear, pump jacks, like it's almost like an

28:46 investment where it's like, instead of doing a whole big project, becoming an energy company. I mean, like you and a few guys can go get some pump jacks and just own it and run it, right? Is

28:58 that a thing? It's still a thing. It's just, it's not as easy as it was. You know, we talk about a decline curve and, you know, wells start off horizontal. They make hundreds of barrels of oil

29:07 the day, maybe a thousand barrels of oil a day. But as those wells decline at year 10, at year 15, now you're talking about a well that's maybe doing 50 barrels a day, or maybe it's 10 barrels a

29:19 day, especially the old conventional, the San Andreas, the central basin platform wells, they're making two barrels a day. And you can go buy those assets from companies that no longer deem them

29:30 as profitable. You know, the lifting cost on those wells isn't, you know, a horizontal new well lifting cost is under10 a barrel for almost everyone. But that's out there or some of these older

29:42 wells, it's30 a barrel. So all these big companies don't wanna own the vertical wells 'cause they don't wanna have high lifting cost production on their balance sheets. They just want the new good

29:52 stuff that's in the sub 10. So people can go out and go buy those assets and try to operate them and try to go out and try to make a living. And you can make a pretty good living off of producing

30:04 those wells. But the difference is the margin If you're, you know, oil60 a barrel and your costs you30 produce, it means you only make30 a barrel and it's not that much. But if you're doing a

30:15 horizontal, that means it's 60 and 10. So there's50 of margin. So how do you play those margins? Yeah, okay, let's transition one more time. We have, you know, let's talk a more like tech

30:29 future of that, but sticking with the pump jacks 'cause I was in Midland a couple of weeks ago doing filming some stuff with the students at TCU we were doing everything from conventional to

30:42 unconventional. And something I thought was interesting is that we were kind of in a patch full of pump jacks. And the operators were talking about how he checks on him every day, like he walks

30:57 around, he drives truck like well to well and he checks on him. And he says, you know, these days people avoid that by, you know, there's some kind of technology where you're able to just

31:07 monitor it freely And he kind of laughs at those people. He says, like, I don't know, like we're not there yet or that's wishful thinking. I don't know, like what is your thoughts on that? Oh,

31:18 it's not wishful thinking, it's today. You know, my last organization, we went through a complete digital revolution inside of an oil patch. And we took a whole bunch of old vertical wells that

31:29 were being produced that way. We would go around and hit every well every day and see how much production was being made. Then we started figuring out, oh, we could start collecting some of this

31:40 data with SCADA, which is basically putting small devices on them and those small devices relay information back. We built out a full infrastructure of microwave data transmission that ran across

31:51 all of our assets all over the Midland Basin. And with that data, we could then manage by exception, which meant that we were able to use data to do what the Pumper was doing, bring all that data

32:04 in, and then analyze it and determine what wells did we actually need to go see to go improve the production from the day before. So managing by exception allowed us to then not have manpower go out

32:16 to the field, but allowed us to use the data to bring the field to the man. And then our manpower was able to be then leveraged to go where could they have the biggest impact that day? Now, you

32:26 still have to go out and put eyes on in theory. We're testing technology in my current role where we're putting cameras with small, detectors and small data collection systems in remote areas where

32:39 we don't have to be on site to be able to collect. And it's been, you know, good trial. We're in the middle of it, but in the trial, of course, we had a leak show up. And if we would have had

32:49 a pumper going by every day, he wouldn't have caught that leak for maybe 12 hours, 20 hours, it could have been a much bigger leak. Instead, our camera caught it. Our guys watching our cameras

32:60 said, Hey, send somebody out there. We're out there in a couple hours fixing the leak Instead of multiple hours and fixing a much bigger leak. So the whole idea behind, we have to be out there,

33:11 the man has to be out there. We're replacing the man being out there to collect the data and turning that man or that person into a person that's managing the asset and improving the asset every day,

33:24 not by writing data down, but by finding ways to get more out of the ground. We described it as we used to have pumpers and we turned our pumpers into profit specialists.

33:35 The people in the field are your front line on how do you make the most profit off every barrel you produce. You have the coolest job, I will say. It sounds just like a. I love my job. Yeah, it

33:44 sounds like such a fun, like just to analyze a whole bunch of data and figuring out just how to get more coming from the ground. Sounds organized. Very OCD, you know. It's organized chaos is the

33:56 best way to describe it because it's just how much data is coming in and how do you sift through the noise to find the impact that you can make Inside of an organization and I think that's the best

34:08 part for everyone who works in these roles is the fact that you can see your impact every day when we're trialing another piece of software and that piece of software allowed us to visualize what we

34:18 were doing and we started at the beginning of this month at 51, 000 barrels a day and now this week we're at 55, 000 barrels a day. We've gotten 4, 000 barrels of production back because a new

34:29 software allowed us to visualize something different. Yep. And to see it in a different way. And those are the type of things when you can see wins like that, that's huge. It's huge, it's,

34:39 you're like testing things and seeing, it's a lot, and this is, I've never made this comparison before. But it's a lot like marketing, but just on a much larger, more fun scale where it's like

34:51 infrastructure and get to try out new software and technology. And the technology in the field, I think, is some of the coolest technology out there. They got drones We've got drones, we've got

35:04 AI, we've got tools. One of the things that we're looking at and testing right now is the fact that in the past, if you wanted to make an adjustment to one of your wells, you had to have somebody

35:13 go out to that well and actually key in the adjustment that needed to be made. Now we're putting AI technology edge devices on these wells, and those edge devices are able to make those connections

35:23 for you from somebody who's sitting behind a computer that can be here in the United States, that can be in Egypt, that could be in Indonesia, And 24 hours a day, someone's able to watch that well

35:34 in the Permian and make sure it's maximizing its production every hour of every minute of every day. So cool. That's the future, baby. Yeah. And I mean, speaking of the future, just to kind of

35:45 wrap up everything, like what do you see for the Permian in the future? It has it had its ups and downs. Is it trending up? Is it getting drained, dry? What is the future of the Permian? You

35:59 know, I've described it as the fact that the Permian has been a merry-go-round that everyone has been wanting to get on for the last 10 to 15 years. Everyone wanted to buy a piece of the Permian,

36:08 to get on the ride, to see what the ride was like. And we've been going up and down, producing every barrel of oil as fast as we could out of the merry-go-round. The easy stuff is going away. The

36:19 question is, is what replaces it? What comes next? There's always been what comes next in the Permian. Is it the Barnett? Does the Barnett open up, becomes something different?

36:33 Is there a lithium that we need to be producing from the produced water that could allow us to do something different? You know, it's how do we, the people out there are the smartest people in the

36:40 world because they're figuring out how to make something out of nothing and we'll figure out a way. Is it gonna be different? Yes, is it gonna be hard? Yes, but they will figure out a way to make

36:52 it work. I'm pumped. I know. That was like a coach speech. I know, it's exciting. It's very exciting Cool, let's wrap it up with our on-screen segment. Wait, can I ask a question first? This

37:04 is like a silly question. Yeah, we get all the dumb questions. What are your thoughts on land man? You're from the lift room, I know, right? Yeah, I love land man, 'cause I had to tell my

37:13 family outside of having the drug cartel involved. That was pretty much my job every day. It was listening to the stories of this wells down, this landowner's mad, this is going on. We've got to

37:24 renegotiate this contract, this person's coming in and out And that was a large part of what I was doing every day, you know, outside of dealing with drug cartels. And, you know, we were having

37:33 oil field theft, but not drug cartel stuff. But so what I really like about what Sheridan is doing with the storyline is he's teaching people about reality, you know, the storylines where Tommy is

37:44 getting out there and teaching the lawyer, she's like, hey, there's windmills. Why don't we live off the windmills? Let me tell you about why these windmills don't work. And he runs through the

37:53 whole diatribe of what, how hard it is to get the story across that windmills work, but they don't work for everything. And, but he doesn't do it in a negative way. He's just, matter of fact,

38:04 this is - Reality. Yeah, this is reality and let's talk about this and let's be real because it's not as easy as everyone wants it to make it out to be. So I think Landman does a good job of making,

38:14 of dumbing down the oil field into helping everyone understand it and how it applies to them today. Well, you're gonna love our segment. I was like, did I feel it? She queued it right up. All

38:25 right, so I got some - I had no idea. I got some screen grabs from Landman. Yep. And look at that, our first scene. We got, the main character is in some kind of San Silo with the cartel. So

38:39 how many times have you encountered a cartel? I have never encountered the cartel in

38:44 my role. You've never, you've never been kidnapped. I've never been kidnapped, had a bag over my head and someone beat me with a hammer, trying to get me to negotiate the deal. But at the same

38:54 time, have I been in some negotiations that felt like that afterwards? Yes, but that's the joy of the deal of trying to make something happen. All right. Yeah. Let's see. Yeah, I mean,

39:05 basically just share your opinions. Let us know if it's a bullshit meter, what level it's at. Yeah, pretty high on this one. I always say, Landman is like the Grey's Anatomy of the oil field.

39:16 Right, yeah, exactly Yeah, great. Okay, how many times have you seen a private jet parked in the middle of an interstate and then a truck runs into it and explodes? Yeah, no, that's pretty

39:28 high on the BS meter on this one. This is the first episode. Yeah, it started off with a bang. I mean, it really did. But

39:36 the bad news is that stuff like this happens but not to this level, if that makes sense. People steal things, people do that leads to issues to this level, no And the fact that you're out in the

39:51 middle of nowhere, the fact that the cartel could use a road that you built in the oil field, does that type of stuff could happen? Yes, it could happen. Does it happen everywhere? No. There

40:04 are other stories of it happening. Yes. So always a little bit of truth in every one of these scenes. All right. Next we got booby-calfe. Coffee cafes. This is real. My wife has been to it and

40:18 seen it in action. She wanted to figure it out. It's out by Odessa and you can actually go out and get coffee there. It has to be in Ecter County. You got a lot in New England County. There's

40:28 just one. It's in Ecter County and there is, it's all filled, does go by it. So it's out there. It gives me the, 'cause like you see this a lot in Texas, like Houston, Austin, like San

40:39 Antonio specifically loves like these little coffee shops that are like, you know, the size of this room And it's like a drive-through. And so when you see the exterior of this, it's that, but

40:48 there's, it's hooters inside. And I'm like, I'm like, oh my God, is this all over Midland? But I guess - Yeah, actually, yeah, I came across the Instagram that, yeah, I forgot the name of

40:58 it though. I can't remember it either. My wife would laugh at me 'cause she was telling me about it. But it's, it's a real place. Oobtown. Yeah, you know, but it's - Oh yeah, Boobtown,

41:06 that's a great name. They, they serve a need. And that need is to be open at 6 am getting coffee for all the crews that are going out. And like you said, a majority of these guys are guys that

41:18 are out there living in a man camp, going out to do a job. And

41:24 lo and behold, these girls take care of these guys in the best way possible, at least putting a smile on their face before they go out and go do a nasty job all day long. All right. They know

41:32 they're demographic. I can see a great marketing point. Right here. It says, Babe's brew. Babe's brew. I don't think that, you know. I don't think it's called that, but I know that I came

41:40 across the Instagram, like afterly. And they're proud of it. Yeah It's nothing no different than going to Twin Peaks. I mean, that's what they're serving. I mean, I'm just waiting for like, in

41:50 a few years, when next time we visit and there's like 20 of them, like that sounds inevitable. Yeah. What will happen? No. Especially not in Midland County. Like, Midland County will not allow

41:59 anything like that. Okay, very traditional. Yes, all of these things like that are gonna be - Oh, NASA. Yep. We'll save that for another podcast, Twin Cities. A whole episode on Ecter County.

42:11 Yeah, all right, we got it Um, weird friend eating beans and drinking beer in the middle of the day. Yeah, this is your petroleum engineer that is the driller. And have I seen that guy? Have I,

42:22 I haven't been that guy, but I have seen that guy and worked with that guy and stayed in his trailer for a period of time. And, you know, there are guys who just love to be on the job site. And

42:33 that's where they're, that's their happy place. And yeah, eating the can of ranch beans. Yes, yep. The beer, no, no beers allowed on all field sites, but you know, that guy, been around him,

42:47 know him well, and you know, the oil patch is full. Range style beans fell out there. Oh yeah, I think it's safe to say we know where he gets his coffee. All right. High school football, baby.

42:60 I've been to that stadium, I've been to that, you know, best games in the world, Odessa versus Odessa High, and you will never understand high school football till you go out and you see a 500

43:10 member marching band. And no matter how bad Odessa High's football team was, 500 kids are in the marching band showing up and marching at their hearts out. The girls on the dancing team are dancing

43:23 all game long. For three hours, they're in the stands dancing to whatever's going on. I mean, it is the lifeblood of the community on Friday nights. It's a lot of fun. And my kids went to a

43:34 smaller school when they were there. And if you were not at the high school football games, people were asking, why weren't you there? Yep It's just part of life. And I will say it was the

43:44 hardest transition when I went from Colorado and where I grew up and started playing football at Tech and all the guys I knew were playing football with were guys that had been in this world. And my

43:55 world, we couldn't get 200 people to show up for a high school football game on a good day. And yeah, it's just night and day difference. It's so true. They're celebrities of the town. And

44:05 actually that stadium is really cool. It's literally in the middle of nowhere. Like you're driving out I don't know if that's - That's right, Liff. It is, yeah. You're driving out. It looks

44:14 like the middle of nowhere and then there's just this really nice stadium out there. Yeah, all the fun it goes to the stadium. Stadiums, yes. Stadium was built in

44:24 1980, or even before. I mean, it's been there for years and the funny part is there are stadiums like it all over West Texas. You go to Andrews. Andrews Stadium is exactly like the seats 30, 000

44:33 in a town that has 30, 000 people. Stadium, oh yes. The stadium can fit everybody in town in it if they need to But it's the lifeblood on Friday night. You know, there's nothing else to do. So

44:44 everyone shows up for the game and gets their hot Cheetos with chili in the bag and goes out to the game with cheese on top. And that's just life. Yep. All right. Up next we got grilling and

44:59 drinking on site. This is on a well pad. No, it's not. This is the man camp. This is where it's allowed. So in the man camp, everyone comes together and this is no different than having four

45:09 guys anywhere else in the world. They're gonna have a bunch of beer, they're gonna have a bunch of steaks. There's not gonna be a single thing of green anywhere around this and they're gonna be

45:18 happy. And that's what happens out here. The man camp is like when you go like 12 days on, 12 days off you. Yeah, you're not on job site. So everyone comes back, you know, endeavor had a man

45:29 camp and the man camp, all you had was everyone had a room. In your room was a bed, a hot plate, a small fridge and a bathroom. And then you had communal areas and the communal areas, they had

45:40 cookers and things like that for everyone to come in. But it allowed people to come in from off, you know, elsewhere, all you need is a bed at night 'cause you're going right back out as soon as

45:48 it's daylight. So you're gonna work 14 hour days, your eight hours that you can sleep, all you're doing is sleeping. So. How far are these camps usually from the site? So most of these camps are

46:03 in and around the outskirts of town, but, you know, most of the job, the endeavor was lucky in the fact we're all within an hour to an hour and a half of our office. Yeah, that's the thing about

46:13 Midland is that everything is kind of right there. If you're like in Pittsburgh and you need to go out to like the Marcellus, you're driving hours, so. Yeah, that's where the, being able to do

46:24 something like this where you can localize people is huge. And you do this because you can put all those people and get, have the shared resource instead of having to build multiple of these all

46:33 over the place, 'cause there's no water. You have to bring power out to it And so having a man camp where you can brush water, put electricity out there, and make life livable for these guys that

46:45 are busting their ass all day long for you to be able to make the production, it's important. And make life as livable as possible inside of these facilities. Looks like a good time.

46:57 Next. It's like a speed up. I love modello nigra.

47:00 Okay, got a big, scary explosion. What kind of blowout or what's the word for this? Yeah, this is where we start hitting the BS meter on this 'cause they - The Grey's Anatomy part. Yeah,

47:10 everyone who's seen it knows that number one, they should have been using a brass hammer. Number two, we don't see explosions like this on most of these old wells 'cause they don't typically have

47:21 enough pressure now. Does not mean that this doesn't happen. You know, accidents happen in the oil patch all the time, but that's why we have EH and S teams that are out there trying to do their

47:32 best to make sure that everyone's being safe every day when they're doing their job. So that stuff like this doesn't happen. Now, that's the one thing land man just gets so wrong is everything they

47:42 do is breaking the rules. And, you know, there's a scene later where, you know, he's a, you know, one of the young man's talking to the lawyer and said, I haven't seen the railroad commission

47:52 come out and do an inspection on any of your sites. You haven't done any inspections on any of your equipment. Do you want to start calling those people today? That's why you're here offering us

47:60 money 'cause they're doing it wrong. And all the oil companies that are out there today are doing it as right as they possibly can. So 'cause your people are your most valuable resource. And I

48:10 think safety has come a long way in the past. Huge way, yeah. I hate to say it 'cause I was one of those, I was an injury statistic as a worm when I went out my first year as an intern in the oil

48:22 patch because we just weren't doing things safe And so I became a statistic and you don't want to be the statistic, you want to be the zero, zero safety card. This is what everyone wants to shoot

48:35 for. Cool, next we got wind turbines. So there, I mean, we've mentioned this, like they are all over Midland, kind of mixed with the oil, yeah. And there's a, there's like a famous line how

48:50 he kind of breaks it down like he mentioned earlier. Yeah, the windmills are out there and there was a huge deal of pioneer getting ready to do a power plant, a windmill power plant, install kind

49:00 of southwest of Midland and before the Exxon deal got done. And, you know, we all need electricity. The Permian Basin is energy starved. So, you know, when we left Endeavor to get a new power

49:13 drop, so that you could get power to an installation could take you up to two years of advanced permitting to try to get power. So everyone wants more windmills, everyone wants more solar panels,

49:25 everyone wants more power. Do we just need more power? You know, Endeavor spent millions, hundreds of millions of dollars to put power infrastructure into our oil field

49:40 so that we could control our own timing on when we could turn on wells. A lot of other operators are out there having to put remote generators, diesel generators on site to generate the power they

49:45 need to operate. So, windmills, great. We'll take any bit of power we can get. Is that what Endeavor did? We didn't know windmills. We actually work really, really hard at dropping or bringing

49:56 power into the Permian Basin so that we could take off the Highline Power and then distribute that power. But we were in negotiations at looking at putting in solar and putting in other things to be

50:06 able to help offset. Okay. I think wind turbines are perfect in West Texas because there's so much land and there is so much wind. Yep, you know, but it's all relative. It's, they cost a lot.

50:19 There's a lot of PA, you know, there's a liability for removing it, putting it on the place and a lot of operational that you have to deal with. Maintenance. Yeah, it's. Costly. It's no

50:29 different than any other power generation. There is costs that go along with all of them. And at the end of the day, what it really requires is that society needs power to do everything it does

50:40 every day and the more we have, the better off we will be. Yeah. All right, I'm next. Ben Lee's. How many fancy cars you see? It's funny, you go around middling on Friday. Monday through

50:53 Thursday, everyone drives their right truck and to work and everything else. Friday afternoon, the fancy cars start showing up. And someone had a Lambo that they had put a wrap on and like a gold

51:07 tent wrap on it. And the guy had bought a used Lambo, put a tent on it and made it look all brand new and everything, but it was used. I mean, everyone knew it in town.

51:18 The issue goes back to the fact there's more money than smarts in some cases, and people will do this. But the whole scene where she goes to the rental car store and says, I need a car. She's like,

51:31 Well, I've got her. And you say, Well, I don't want to look at a place you won't look at a place in Midland. Yeah. Yeah. All the wives are driving Mercedes, they're driving Land Rovers, and

51:40 there's not a Land Rover dealership for 500 miles from Midland. Because every one of those Land Rovers has to go to Austin, to Dallas, or Houston to get serviced. It's just, that's the way it is

51:50 out there.

51:52 Okay, now we got more cartel. You ever got a gun point at you? I've had many of my people had guns pulled on them by landowners, but never cartel, you know. And the even better scene is the one

52:05 follows this where all of his guys pull guns out and shoot aimed back at the cartel right after this scene. But, you know, it's, that is definitely a rule against most oil field companies of

52:15 having any, you know, any weapons inside of a vehicle is definitely a not on your safety radar Land owners can be scary. Well, as a landowner out there, we, you know, you want to defend your

52:27 land, you know, the issue we all run into is that the oil company comes in, drills their wells, and then leaves, and leaves their mess behind. I have 23 vertical wells that were drilled in the

52:39 60s on our property that no one wants to take care of. On your property? On our property in Big Spring right now. Okay. And we're fighting tooth and nail with the railroad commission to figure out

52:50 how are we going to get this cleaned up? Yeah. Because no one wants to deal with it. Wow. Jeez. Okay, I think we got a few more here.

52:58 Okay, how many times has the army been deployed in your time in Midland? Yeah. In Midland, not a whole lot. I will tell you that there was a lot of hard conversations during a Yuri when the

53:11 winter storm came through and - Oh, I'm sure, yeah. And after Yuri, there was a lot of questions about how do we do things better, but government, they like to get involved, but at the end of

53:21 the day, they know they don't know how to get involved and make an impact. Yep. Okay,

53:27 my favorite. Swimming in the, what is it called, the - This is a frack pond. The frack pond. Yeah, this is a frack retention pond, and they're out there swimming in it. It's a big swimming

53:37 pool. Romantic scene, by the way. It's a really romantic scene in that with the flare going off behind them, which doesn't happen, but you know, it's - I have never done that. Yeah, and the

53:48 funny part is, I still remember, you know, first one of these. And I built one way back in the 90s. We were putting, it was in the Rockies actually, wasn't even out in the Permian. And we were

53:59 having to build it because we had to have retention from moving from hill to hill. And you put in water in it and get in water out of it. You know, it looks pretty at the surface. You don't want

54:07 to touch the bottom. The bottom of those things is covered in salt. It's covered in grime and everything else. But this is the biggest piece of change in the oil patch. And especially with the

54:19 legislation that just got passed in the last year, the ability to now reuse produced water for irrigation.

54:27 This could change the whole dynamic of the Permian on the fact that if we don't need the water in the frack pond, people can use it to farm. Now you're talking about dry cotton that can actually be

54:37 watered with this stuff and actually make a good product. You know, for years, my family lost money every year trying to dry farm cotton in big spring. If you're talking about the fact that we

54:47 have water that we could use and irrigate, game on what you could possibly do. Why don't they, so I know like produced water is like a huge deal that they don't like currently, there's so much of

54:58 it that you're just injecting it back underground, is it, is there a reason for that? Salt. Okay. Most of the water that we produce out of the oil patch is heavy laden and salt. So you can't do

55:08 anything with it. So you can't do anything with it. With it easy. Okay. Now we can recycle and clean a lot of that salt up and then generate it to a water. There's several consortiums that are

55:17 being done right now at the universities on how do we get this water? Where maybe it's close to potable, where it's really good for irrigation, but now that the legislation has passed that it's

55:26 available for that. And now that the universities are working on it, we are talking about now that there's an opportunity on how do we use this water? Because at the end of the day, everyone who's

55:37 using it right now uses it for frack. When the frack crews leave, we're still gonna be producing this water. And how do we find a better use of that water to make West Texas something that is more

55:48 usable than just by oil and gas? Oh, I think you need to connect us with someone who's like a water guy, 'cause obviously that's kind of like involved in everything. And we went out to, when we

56:03 were in Midland, we were on a water site and Dave wouldn't even let me film. So gotta find someone who will share their secret suit, 'cause for some reason they didn't want us filming anything.

56:12 You know, it's always one of those things. Everyone's very touchy about the subject right now because of what is their proprietary, what is their cleaning process, how clean does it have to look?

56:22 'Cause they don't wanna have you showing pictures of their water and showing the nasty grime that's all on the edge of the pit. That just doesn't look good for anybody. So it's really about

56:31 controlling the narrative. We're doing our best. Sometimes our best isn't good enough, but every day we get a little bit better. And I think that's really gonna be the testament for everyone out

56:40 there is that water is hugely valuable to everybody in Texas. San Antonio is running out of it as it keeps growing Austin's running out of it for what they need. for all the population, and we have

56:53 got to find a way to use this water in more efficiently than just putting it back in the ground. Well, Chad, thank you for coming in, sharing us your Permian knowledge, your Midland knowledge,

57:04 lots of Midland knowledge from our own Julie. I think this is my favorite episode. I feel like it was like a history lesson. That's what I was kind of going for, yeah. It was just fun to be able

57:13 to sit around and talk about the oil patch. And so for all the things I said wrong today, for all those that are experts, I apologize, it was doing my best

57:22 Well, thank you so much. We appreciate you.