< Previous124 T E X A S E C O N O MI C DE V E L O P M E N T G U I DEhe Texas Oil and Gas Association has a lot to celebrate this year. In addition to being the organization’s 100th anniversary, these are exciting times for this industry as well as others that thrive on the refining of petroleum, shale and the manufacture of chemical products in Texas.“No matter how diversified our economy has become, the oil and natural gas industry remains the backbone of the Texas economy and has fueled our state’s success,” said Todd Staples, president of the Texas Oil & Gas Association — the statewide trade group representing every facet of the Texas oil and gas industry. “You’d be hard-pressed to find a story more dynamic, inspirational and impressive than the story of the Texas oil and natural gas industry over the past 100 years.”Economist Ray Perryman of the Perryman Group — an economic and financial analysis firm in Waco — wrote in one of his recent trade newsletters that the industry is indeed growing at a “phenomenal pace, and the entire state economy is benefiting.”Perryman said the Permian Basin is currently one of the most prolific oil-producing regions in the world, one of the top producers globally and that production levels could likely double over the next five years during a time when levels already are 50-percent higher than the all-time record by FRANK REDDYT Fueling the State’s SuccessPE TR O L E U M R E F I N I N GPhotos courtesy of Texas Oil and Gas Association126 T E X A S E C O N O MI C DE V E L O P M E N T G U I DEset in 2016.According to the U.S. Energy Information Administration, Permian oil production is projected to rise from about 3.3 million barrels per day in 2018 to 3.9 million in 2019.In the Permian Basin and beyond, refining industries are an ever-changing landscape, with a steady stream of news and updates from the companies that call Texas home.In March, Exxon Mobil and Chevron both said they planned to boost growth in the Permian basin by a substantial amount — with Exxon boosting production to 1 million barrels per day in five years and Chevron at 900,000 barrels per day in four years.According to the Texas Independent Producers & Royalty Owners Association’s newest State of Energy Report, overall oil production in Texas totaled 1.54 billion in 2018, besting the previous record set in 1973.The report also stated that Texas led the country in oil and gas industry employment with more than 350,000 jobs — representing 40 percent of the nation’s oil and gas jobs.With that kind of economic impact on the state, it’s no surprise that the landscape is ever changing. In the past year alone, Phillips 66 announced plans for two oil pipeline systems to the Texas Gulf Coast; Qatar Petroleum and Exxon Mobil continued to move forward the Golden Pass Products LLC export project at Golden Pass LNG in Sabine Pass; Sentinel Midstream announced plans for the development of a proposed Deepwater Crude Oil Export Terminal near Freeport; and petrochemical producers saw growth shift to the U.S. Gulf Coast as shale producers extracted natural gas from the large reserves of West Texas.Staples said petrochemical manufacturing centers and refineries are at the center of several pipeline projects “planned or underway that will transport product … to meet our nation’s needs and those of our trading partners.”As home to 30 percent of the nation’s refining capacity, 96 percent of the products consumers rely on every day — makeup, cell phones, water bottles, tires, medicine and more — are made from a component of oil and natural gas. “As we look ahead, we expect the upward trends in production, refining and export capacity, job creation and tax revenues we saw in 2018 to continue,” Staples said. “Through ingenuity and a commitment to excellence, Texas oil and natural gas has excelled for a solid century, and we’re just getting started.” 128 T E X A S E C O N O MI C DE V E L O P M E N T G U I DEhen it comes to renewable energy, Texas is all in. None other than big oil is exploring alternatives such as biofuels and teaming up with clean energy companies. Wind farms are blowing power options throughout the state as solar energy sheds light on energy alternatives. by CAROL CARTERWENERGYR E N E W A B L E E N E R G Y & E L E C T R I C U T I L I T I E SHome-BlownPhoto: Getty ImagesHome-Blown130 T E X A S E C O N O MI C DE V E L O P M E N T G U I DEExxonMobil ExxonMobil, based in Irving, is funding research into biofuels as new energy sources, focusing on algae, corn stover, switchgrass or methane emitted from microbial activity in landfills. ExxonMobil and Iowa-based Renewable Energy Group recently partnered with Swiss chemical company Clariant to advance cellulosic biofuel research. The partnership evaluates the potential use of cellulosic sugars from sources such as agricultural waste and residues to produce biofuel, which could help reduce greenhouse gas emissions.In another development, ExxonMobil and California-based Synthetic Genomics Inc. announced in March 2018 a new phase in their joint algae biofuel research program that could lead to the technical ability to produce 10,000 barrels of algae biofuel per day by 2025. A new phase of research includes an outdoor field study important to understanding how to scale the technology for potential commercial use.Phillips 66 and Valero EnergyHouston-based Phillips 66 also teamed up with Renewable Energy Group of Iowa to construct a large-scale renewable diesel plant on the West Coast, using feedstocks including waste fats, oils and greases, animal fats and used cooking oil. The companies expect to make a final investment decision this year. If approved, production at the new facility could start in 2021.San Antonio-based Valero Energy is one the nation’s largest producers of ethanol, with 11 plants across seven states and an annual production capacity of 1.4 billion gallons. ShellIn February, Shell New Energies agreed to acquire European company Sonnen, a pioneer of technologies for clean energy and a leader in smart energy storage systems. The Sonnen battery uses solar power for households and supplies nighttime energy using stored solar power generated during the day. Shell’s U.S. headquarters is in Houston.Wind and Solar PowerDallas-based Tri Global Energy announced in March 2018 the beginning of construction on the Blue Cloud Wind Energy Project. Denmark-based Copenhagen Infrastructure Partners will own and operate the project long-term. Located in Bailey and Lamb counties in Texas, the project covers 19,000 leased acres of privately owned farm land.In May 2018, construction began on the Hale Wind Project near Plainview. The Hale Wind Project is made up of four wind farms in which Tri Global Energy was the developer and manager. As with the Blue Cloud Project, local landowners and community investors have the opportunity to partner with and have some ownership of the project. In January of this year, Enel Green Power North America Inc., based in Massachusetts, began construction on the Photo courtesy of ClariantHigh Lonesome Wind Farm in the Texas counties of Upton and Crockett, a $600 million investment. The company already operates the Snyder Wind Farm in Scurry County. In December 2018, MMEX Resources Corp. of Fort Stockton announced its membership in the Texas Solar Power Association. CEO Jack W. Hanks noted that MMEX is committed to developing a solar power plan to provide the electric power to MMEX’s planned 10,000 barrel-per-day crude distillation unit and its crude oil refinery in Pecos County. Earlier, in July 2018, MMEX announced the formation of MMEX Solar Resources LLC and filed a trademark to develop a solar power project to potentially supply solar power renewable energy to its refinery projects. Electric UtilitiesSchneider Electric, based in France, last year opened an expansion of its El Paso plant, creating 100 hourly and 20 salaried jobs. Schneider, with its U.S. headquarters in Boston, provides integrated solutions that combine energy, automation and software.Dallas-based Oncor Electric Delivery Co., which is 80 percent owned by Sempra Energy of San Diego, acquired InfraREIT, a real estate investment trust, in 2018, a move that gives Oncor access to high-quality transmission assets adjacent to Oncor’s service territory. The InfraREIT acquisition, said Oncor CEO Allen Nye, “positions us to make future investments in transmission infrastructure that will better serve the Electric Reliability Council of Texas’s market and our customers.” Leave it to Texas to embrace energy in all its forms. 132 T E X A S E C O N O MI C DE V E L O P M E N T G U I DEhile two of the state’s biggest forces in automobile manufacturing might build different makes and models, at their core each have something essential in common: their belief in the business-friendly atmosphere Texas embodies.“With its pro-business approach, educated workforce and central location in the U.S., the environment in the Lone Star state is built for growth and success,” said Jim Lentz, CEO Toyota Motor North America.Meanwhile at General Motors, which has been building vehicles in Arlington since 1954, there seems to be no slowing the wheels of progress.“The Arlington area’s superb infrastructure is absolutely critical for material flow to enable high-capacity production,” said Tom Read, General Motors communication manager at by FRANK REDDYWA U T OM O T I V E MAN U F A C TU RI N GCadillac Escalade Photo courtesy of GMT E X A S E C O N O MI C DE V E L O P M E N T G U I DE 133“With its pro-business approach, educated workforce and central location in the U.S., the environment in the Lone Star state is built for growth and success.” — Jim Lentz, CEO, Toyota Motor N.A.Arlington Assembly.Added Read: “The area also includes a strong network of knowledgeable and capable suppliers, which is another key to deliver consistent, high-quality vehicles to customers.”It’s that same strong network that keeps the automotive industry forging ahead in Texas. According to the Texas Comptroller’s Office, the state builds everything from cars and trucks to trailers and automotive parts.Industries have continued to expand rapidly of late, with contributions to real state GDP by 352 percent since 1997. In the most recent Comptroller’s Office report, these companies also employed nearly 39,000 Texans and supported around 67,000 jobs, while the state exported $13.7 billion in automotive-related products. Wages for jobs in the auto industry averaged about $60,700.And, the momentum keeps building, with new developments every day as business booms and companies grow. Within just the past year, Flex-N-Gate, a major supplier to GM’s Arlington plant, bought a new facility in Grand Prairie, plans to employ about 800 people and move its Texas division corporate offices there as well. Meanwhile, Fortune 300 company and car retail giant Sonic Automotive expanded its eighth EchoPark Automotive in Houston — a specialty pre-owned vehicle store.With big developments like this always on the horizon, it’s no surprise the state has been consistently ranked nationally in the top ten for automotive manufacturing employment and establishments, for the size of its vehicle retail market and the number of vehicle registrations.The state is also part of the ever-growing NAFTA (North American Free Trade Agreement) auto corridor – sharing the longest Mexican border of any U.S. state. This positions Texas for international automotive trade. As such, there’s billions of dollars in auto goods shipped from Texas every year as part of what’s come to be known as “auto alley,” which runs north from Mexico through a number of southern U.S. states up to the Midwest.Between auto alley and the state’s major passenger vehicle assembly plants, it’s easy to see why cars and trucks are such an integral part of the state’s economy. Or, in the words of Lentz:“Toyota is proud to call Texas home.” Next >