Jordan Blum, editorial director, Hart Energy: We are here at the Kay Bailey Hutchison Energy Center’s annual symposium in Austin, and we're joined by a legend of the industry. This is the Hart Energy Live Exclusive interview with Don Evans, the former U.S. Secretary of Commerce. Thank you so much for joining us, sir.
Don Evans: Yes, sir. Happy to be with you.
JB: So you started working in the Permian oil fields almost 50 years ago. Can I get your take on just kind of how it's evolved so much over the years?
DE: Well, I started as a roughneck, and so I was on the rig, and at the time that I went to work in the field, it was right after the oil embargo and the oil production in America and including the Permian Basin was going to decline for the next 45 or 50 years. And so my career was out there except for four years in Washington. And so I was in the middle of an oil and gas basin that was in almost permanent decline, never thinking we'd be able to reverse that. And then in the last 15 years or so, there was a renaissance that took place in the Permian Basin, and all of a sudden that got turned around because of the ingenuity and entrepreneurship and the wildcatting and the risk taking of those in the oil and gas industry. It really happened in Texas, as a matter of fact.
And so I saw quite a dramatic change. My career, I really was having a hard time seeing how we would ever reverse production in the United States, and this phenomenal technology that has changed the world both on the oil side and the gas side and the overall energy side has just been a complete game changer for the world and for America. So I've seen a dramatic change. It's a positive one, certainly in a big way for not only all the people of America, but when you look around the world and the number of people that have been lifted out of poverty because of energy, it's not hard to track it at all. You see energy increase around the world and you see people being lifted out of poverty. And we probably lifted up close to a billion people out of poverty in the last 10 or 15 years.
JB: Very good. I mean, the first Permian gusher was literally a hundred years ago, and there's been plenty of ups and downs, and now we're at record production and going higher for the foreseeable future it seems like. Is it surprising that we are where we are today and just how do you see it going forward?
DE: Well, certainly surprising. I mean, nobody saw this. I mean, the majors didn't see it. Even in the early part of this reversal of oil and gas production in the United States. First, it happened in the gas side, and that this horizontal drilling and frac technology that got introduced back in the early part of the 2004, 2005 period. It looked like it could be a game changer, and it turned out to be one. But those on the oil side didn't think there was any way for that to be translated into increased production of the oil because they say, well, these larger molecules of oil are not going to be able to flow through the rock. But that it will turn out to be wrong. And so will it continue? I think we will continue to be energy abundant in the United States for as far out as I can see. Oil and gas will continue to be a major part of the energy supply in the world for as far out as anybody can see.
Energy demand in the world will continue to grow and climb for as far as anybody can see. So we're going to need lots of other sources of energy, and that's what this period's all about, is focusing on what the whole world's talking about is an energy transition and what does that look like? And I think it's our responsibility in America to show how we can continue to deliver affordable, reliable, environmentally clean energy. And so I've seen a change in the industry unlike I ever would've predicted throughout my career. It was just phenomenal what's happened. And it's put America in a remarkable place. And the most important thing about it is it's put America in a place where we should be leading the world. We are the leader of the free world. We ought to embrace that we ought to think beyond our borders. We ought to work with other countries and their own energy transition. And so we're living in a remarkable time. And I guess my concern is just the isolationism of putting walls up around our own country when we're satisfied we got plenty. "We don't need anybody for anybody else." But that's not the case. We need to work with all the people around the world and we're in the best position we've been in quite some time to do that, particularly when it comes to energy.
JB: I mean, just looking at West Texas, it's leading in wind and solar virtually, and there's carbon capture. You have Occidental Petroleum doing direct air capture to suck carbon out of the sky. I guess what I'm asking is our we at a point where it's all of the above energy and really meaning it, not just saying it?
DE: It's all the above and more, but we're blessed to be here in the state of Texas. It's an incredible treasure for this state. But what we've got to also embrace is it's a treasure for the world. It strengthens our national security, our economic security, our energy security, as you say. We've got more wind power in the Permian Basin than any other state in America. We're building solar farms right and left. We're doing the carbon capture and carbon sequestration. We're looking at hydrogen. It's a wonderful incubator for the energy industry and not only the U.S., but the world. And so all these new kind of technologies we need to develop, I mean, we've been delivering affordable, available energy in the world for a long time. And we need to be able to continue to do that and it needs to be environmentally clean and it needs to be environmentally friendly. And look, we've taken on big challenges before. We've got some of the best scientists and engineers in the world. So we can solve these problems. I'm convinced we can, the environmental problems that people are concerned about, but we've got to do it in a thoughtful kind of way. We've got to take the politics out of it. We've got to get the right people around the table to work with the government and other institutions to come up with a thoughtful plan.
JB: Now obviously with all these solutions needed, there's energy workforce challenges as well. Can you elaborate just on the work being done with the energy center here and the multidisciplinary studies and how that's factoring in?
DE: Well, we ran a study in the Permian Basin, and the companies gave their data to McKinsey [& Co.] and asked McKinsey what it looked like and what was going to happen to the basin. And they said, well, "if you execute your plans, which they have been doing production from the Permian Basin, if you're a country, you'd be the third largest producing country in the world, but you'd need to move in 250,000 people." And that means talent. And that means not only attracting them but retaining them. So that's put a lot of pressure on the basin, just from an education system standpoint and healthcare and safe roads and all of those kind of things that I've been very much involved in trying to strengthen those areas of our economy. But yeah, it's a challenge, but it's coming. Wonderful programs like the Kay Bailey Hutchison Energy Center here makes people more aware of all the opportunities in energy, and there will be opportunities in energy far as far out as anybody can see. Exactly what the mix is going to look like. Nobody knows. But yeah, we continue to need to attract more and more into that industry. And I think that's what young kids need to see at an early age is the excitement of energy. I mean, too many people, for my money, have come through here looking for an investment bank to go to work for, or as opposed to getting in the oil field and getting on a path of science and math. And so anyway, we'll continue to put emphasis on it and hopefully continue to attract wonderful young people.
JB: Great. Well thank you so much for joining us today at the KBH Energy Center for this Hart Energy Live Exclusive. To read and watch more, please visit online at hartenergy.com.
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