Loving
the price of oil
Superstock
By
Creighton A. Welch
Tracy Perryman turns a grungy valve, aims a short hose and
watches the mucky goo sputter into his white plastic bucket.
He cuts the valve, sticks his head in the bucket and inhales
the stench.
"
You can smell the sulfur in there," he says.
A few drops dribble out of the hose onto the hard red dirt.
"Most people think oil's black, but it's really almost
green," Perryman says as he points to the puddle.
In a time when oil prices make daily headlines, oilman Perryman
doesn't care what color it is, as long as its price stays high.
Most people in his 5,400-strong community of Luling, 60 miles
east of San Antonio, share that sentiment.
Perhaps
known more for attracting nearly 40,000 visitors to its annual
Watermelon Thump festival — currently under
way and going through Sunday — Luling also has a rich
history in the oil business.
In August 1922, Edgar B. Davis struck Luling's first oil patch
with the Rios No. 1. Eighty-five years later, the 2,600 active
oil wells in Caldwell County still fuel the economy.
"Everybody in Luling is directly or indirectly involved
with oil whether they realize it or not," Perryman said. "It
really has been the driving force here."
There are
more than 100 wells within Luling's city limits, pumping
away in backyards and in front of businesses. The American
National Bank had to detour its drive-through around a well.
The Dairy Queen has a derrick "dude" in the parking
lot greeting customers. Some of the oil derricks have eye-catching
decorations, like a watermelon, a butterfly and a cow jumping
over the moon.
Though times are good, most of the oil wells in the county
are stripper wells, meaning they only produce one to two barrels
of oil per day. It's not like the boom days of old when major
oil companies reigned.
"We're not getting rich; we're just making a living," Perryman
said.
Perryman is a third-generation oilman and owns B.J.P. Operating,
which runs 109 wells in Caldwell County. He's also president
of the Central Texas Oil Patch Museum.
The museum takes visitors back in time, to when Luling was
crowded with large corporations. Signs and hats from Phillips
66, Shell, Mobil Corp. and Halliburton hang on the walls. But
when prices hit their lows, they all pulled out.
Although the price of a barrel of oil is in the high $60s
now, it costs about $15 to get a barrel out of the ground.
This gives producers money to keep their wells functioning
and to pay their small staffs.
Still, producers in Luling take rants against high oil prices
personally.
"When people talk bad about oil, I get touchy because
that's all I've got and we've worked hard to get it," said
Cal Watts, owner of Eighty-Six Oil Co.
With such volatility in the oil industry, owners in Luling
are taking advantage of current prices to keep their equipment
maintained and ready in case hard times return.
"The last three to four years, it's been going up," Perryman
said. "In the '80s, people said times were good and that
prices would never go down. And sure enough, they did. In the
summer of '98, oil was $9 a barrel and it cost $10 to get it
out of the ground. Those were hard times."
Watts remembers a time when the low prices couldn't pay his
electricity bill, much less any workers. He went seven years
without hiring anyone.
"When prices get that low, you can't hardly run them," said
Watts, who operates 46 wells. "When it was as cheap as
it was, you'd do anything you could to avoid going to the supply
store."
Luling was shocked, Watts said, because oil was basically
the local economy's driving force, and the hard times were
felt all across town.
The oil economy still helps drive the town these days, but
a $1 million federal grant is helping Luling develop a 50-acre
industrial park to bring in other businesses. One company,
Security Cameras Direct, already has relocated to Luling, where
it plans to employ more than 100 people eventually.
"I'm really impressed with the progress in Luling," Merrily
Pierce said.
Pierce sits on the museum board and is one of the few people
who does not have family in oil. She does collect royalties
from wells on her land, though.
"I don't think Luling will ever experience growth and
be a big town," Pierce said. "But I do think there's
a feeling of renewal here. We used to be totally dependent
on oil, but the younger generation feels the need to have diverse
industries."
In its heyday, oil capacity in Caldwell County was near 12
million barrels per year. In 2006, it produced 942,442 barrels.
Texas Petroleum Investment Co. is the largest company in town,
producing about 35,000 barrels per month.
The problem is not supply. Perryman said there is probably
70 percent of the supply left, but it's too expensive for the
independent producers to get. He said new-drilling costs have
reached at least $200,000.
"We don't have the drive anymore; we've depleted the
formation and there's no push," Perryman said. "Oh,
we have the motivation. We're out here squeezing every drop
out of the ground we can."
Creighton
A. Welch is San
Antonio's Express-News Business Writer . Petroleumworld
not necessarily share these views.
Editor's Note: This article was first published by San
Antonio Express-News, 06/22/2007. Petroleumworld
reprint this article in the interest of our readers. Petroleumworld
reprint this article in the interest of our readers.
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