Via: Abilene Reporter-News
ABILENE, Texas – The oil and gas industry’s in Texas is poised to take advantage of the next oil boom despite the challenging economic climate, Texas Railroad Commissioner Ryan Sitton told attendees of the Texas Alliance of Energy Producers luncheon Wednesday at the Abilene Civic Center.
Sitton, who was elected to a six-year term on the commission last year, poked fun at analysts for their predictions about the cost of oil, which has fallen from more than $80 a barrel in October 2014 to $44.59 on Wednesday.
“They talk about the new normal,” he said. “A year ago, they said the floor was $65 (a barrel) and that we’d never see the price below that again. Now they talk about the new normal and the price won’t ever get about $45 again. The price of oil is going to go up and it’s going to go down.”
Sitton predicted that the price would rise to more than $50 by the end of the year and early 2016, and he also painted an encouraging picture of the future for the audience, which mostly consisted of people in the oil and gas industry.
He noted that in 2008, the world was using about 85 million barrels of oil a day, with Saudi Arabia and Russia each providing about 9 million of those barrels, and the United States 5 million, which includes Texas’ 1 million. He said that today, the world demand is about 93 million with Saudi Arabia and Russia providing about 10 million barrels apiece.
However, the U.S. production has shot up to 9.6 million barrels a day, including Texas’ increase to 3.4 million barrels a day. Sitton said because of the glut of oil in the world market, Russia finds itself facing bankruptcy and unable to finance its military agenda.
“The point is, the things we do in energy not only reverberate around the country, but around the world,” said Sitton.
Sitton added that Saudi Arabia, in an effort to increase its production, will have to rely more upon unconventional methods to drill oil, driving up its production costs. He said that makes Texas and the rest of the U.S. more attractive to investors.
“If you have $100 million to invest, you’re going to invest in the United States and Texas,” he said. “The long-term fundamentals are better in the United States and Texas than they’ve been in 50 years. This time, we’re poised for a bigger boom that we’ve had in years.”
Sitton also said that the oil and gas industry was not opposed to regulations, especially those that stop “bad producers who give the rest of us a bad name. What we want are regulations that are based in science.”
Sitton, who received a mechanical engineering degree from Texas A&M and worked in the oil and gas industry until he ran for office, founded PinnacleAIS in 2006 with his wife. PinnacleAIS is an engineering and technology company that focuses on the energy industry. Sitton said he was the first engineer to sit on the three-member Texas Railroad Commissioner in the last 50 years.