Texas Railroad Commissioner Ryan Sitton’s faith in the state’s energy industry remains unbowed.
The Irving native and his wife Jennifer founded Pinnacle Advanced Reliability Technologies in 2006. Sitton became commissioner for the oldest regulatory agency in Texas in 2015. Formed to regulate railroads in the late 1800s, the Texas Railroad Commission’s focus subsequently shifted to energy, which dovetails with Pinnacle’s role as an engineering and technology company focused on reliability and integrity programs for the oil, gas and petrochemical industries.
Sitton took a few minutes to discuss his outlook on Texas energy with the Fort Worth Business Press.
Let’s cut to the chase. Is Texas’ energy industry recovering? Seemingly every day comes news of more downsized oil and gas firms. Is there hope on the horizon?
Absolutely. Right now, we are seeing a lot of ramifications of the flat oil prices that we’ve had for the last year and a half. Oil prices have come back down, and we’re seeing supply and demand begin to tighten. It’s been in oversupply for, gosh, almost two and a half years now. We’re seeing the gap between production and consumption, globally, begin to narrow. At our peak a year and a half ago, we produced 2 billion barrels. Inventories are still staying high, but that’s due to the fact that people don’t want to see oil at such cheap prices.
What’s your outlook on oil prices? What can we see in the near future?
I still believe we’ll still see $70 a barrel, certainly in the $60 range by next year.
Your oil and gas background makes energy a personal issue for you. As a business owner, how has the turbulent oil and gas industry affected your business?
I think it’s important to note that while I do own the company [Pinnacle Advanced Reliability Technologies], I do not have day-to-day responsibilities with it. But you’re seeing customers in the industry being very judicious with their dollars, putting only discretionary dollars in things that have immediate payback. Service companies, energy firms, technology companies: we’re all feeling the belt tighten. The Texas Railroad Commission is feeling it, too. Over 80 percent of our revenue comes from industry fees and surcharges.
Fracking never ceases to make headlines. What’s your take on the issue, and what’s the future of hydraulic fracturing in Texas?
I will say this: If you look at the shift in the global landscape as to where people are investing their dollars, they’re looking more in Texas today than they have in 50 years. That’s entirely due to shale plays combined with horizontal drilling. Hydraulic fracturing has been around for 70 years. We expect it will continue to be a vital part of this state from an oil and gas perspective for a long time.
Worldwide demand for oil continues to rise. Meanwhile, U.S. oil production is actually dropping, from about 9.4 million barrels per day last year to an anticipated 8.6 million barrels per day this year and 8.2 million per day in 2017, according to the U.S. Energy Information Administration’s Short-Term Energy Outlook. Is that actually good news, considering that Texas had been overproducing?
We always want to see Texas as a leading producer. There’s a silver lining in that production and consumption numbers are coming back in line. Yes, our production is down, but we’re [the U.S.] only running half as many drilling rigs right now. The telling thing is we are able to maintain production through good innovation and hard work so that the average oil and gas producer is getting more oil produced for his dollar than he was a year ago.
Last year, you said the nation could become the world’s top fuel and natural gas supplier. Has that outlook changed?
No, not really. Right now, [the U.S. is] the largest hydrocarbon producer. The question is what does that mean in terms of long-term opportunity, and the big opportunity for us is not only being a big producer, but to be competitive on a global landscape. Oil and gas production, pipeline and transportation infrastructure and refining capacity: that’s where the huge opportunities are.