Oil and gas production in Texas began on January 10, 1901 when the Lucas No. 1 well spewed mud, oil, and gas more than 100 feet into the air. Although capped nine days later, Spindletop changed Texas forever. Little did we know that cold winter day near Beaumont would give us the energy resources necessary to power railroads, cars, and other equipment that would, in time, diversify our state's economy from its rural agricultural roots to a modern, urbanized, and industrialized economic behemoth that currently is the world's 10th largest economy.
Fast forward 80 years and George Mitchell is experimenting with different hydraulic fracturing techniques in the Barnett Shale, trying to identify and perfect a way to economically extract oil and gas from shale rock. By 2013, fracking was in widespread use across the state and country. This caused an economic boom in Texas and was broadly credited for causing the "shale revolution" that has made American energy independence a real possibility.
Energy independence isn't the only benefit of oil and gas production. The oil and gas industry directly employs more than 400,000 people in Texas with an average annual salary over $124,000. Additionally, 570,000 Texas families receive annual royalty income of $16.5 billion. In 2015, oil and gas activity contributed more than $135 billion to the Texas economy and paid $13.8 billion in state and local taxes.
This year, it is estimated that oil and gas companies will pay more than $2 billion in severance taxes to the State of Texas, which will be used to provide health care to the poor, teach our children, and maintain our roads. Without the oil and gas industry, there would be significantly less funding for roads, schools, universities, water projects, and there would be no Rainy Day Fund. The tax burden on hardworking Texans would be much greater.
There is no doubt that Texas is better off with a thriving oil and gas industry than without it. However, there are challenges to production that deserve to be acknowledged and monitored. As the chairman of the Senate Committee on Agriculture, Water & Rural Affairs, what comes to mind first and foremost is the large amount of water used by oil and gas production. The Railroad Commission estimates that it takes 1.2 million gallons of water to hydraulically frack a well in the Barnett Shale and more than 3.5 million gallons in the Eagle Ford Shale.
According to the Texas Water Development Board, nearly 220,000 acre-feet, or more than 72 billion gallons of water, was used for mining in 2014. This is roughly the same amount nearly two million average Texans use to drink, cook, clean clothes, wash dishes, and bathe for an entire year. While this seems high, water used for mining, which includes oil and gas production, accounts for less than 1% of the total amount of water used in Texas. Furthermore, the TWDB expects water used for mining to rise to 343,000 acre-feet in 2020 and then decrease to around 290,000 acre-feet by 2070.
This expected decrease in water usage is no accident. Using les water is good for oil and gas companies because it is good for the environment and their bottom line. Oil and gas companies have invested hundreds of millions of dollars to better manage, conserve, and recycle water. These companies have participated in a joint research project with industry, agriculture, academics, and the government to irrigate a West Texas cotton crop using recycled water from energy operations, and have invested in using less fresh water by substituting recycled water or brackish groundwater. These efforts are the reason it takes 1.3 million gallons of less water to frack a well in the Eagle Ford today than it did just a few short years ago. The responsible and informed use of natural resources by companies using innovative technologies should always be the rule, not the exception.
The oil and gas industry and Texas have enjoyed a long, productive, and mutually beneficial relationship. The industry continues to employ hundreds of thousands of Texans and pay billions in taxes every year by producing millions of barrels of oil and gas a day — all while using less and less water. For these reasons, I expect the great relationship between the oil and gas industry and Texas to continue long into the future.