ENV 712A: Hydrocarbons: Production to Policy

Visit H-M Oil Drilling and Production Sites at Brookshire, TX
by -- October 12th, 2013

Presentations:

  • Future Energy Challenges: Dwight Peters, Schlumberger
  • Shale Gas: Rob Jacobs, Atlantic Exploration
  • Geopolitics of Energy: Joe Barnes, Baker Institute, Rice University
  • Energy of Economics: Russell Sherrill, Global Energy Capital LP

For many of the students on the trip, the visit to the H-M Oil drilling and production sites were the highlight of the trip. We had the pleasure of being hosted by Randy Little, Vice President & Secretary of the company. The drilling site we saw housed about four pumpjacks, an oil and water separator, and storage tanks. The operations were lean and efficient.

H-M Oil is a family-owned business that was started by Randy’s late father, who was one of the world’s experts in well logging. The company is tiny; just Randy and his brother are the only two full-time employees. Randy’s outlook on the company was quite matter-of-fact: provide a living for him, his children, and grandchildren. (We got a glimpse at his personal life through a generous invitation from him and his wife to host us for dinner at their ranch outside Houston.) He said that neither his children nor nieces were interested in taking over the business, so he and his brother will eventually dissolve the company upon retirement.

Randy and H-M Oil represent a generation of independent oil producers whose presence is rapidly declining. When I asked Randy why this was the case, he replied: “I’m a dinosaur. We’re all dying off.” That pretty much sums it up, but there is also the question as to why the entrepreneurial spirit is not more present in the industry. Randy spoke about the increase cost and risks associated with exploration and production. Conventional sources of oil are declining, and the industry must now forge ahead into reservoirs of tight, shale, offshore, and other unconventional sources that are exponentially more expensive to tap, requiring large companies equipped with the capital and assets to finance such endeavors. As Randy put it, the costs are becoming too high for the small guys to play.

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