LULING, TEX., AUG. 9 -- Whenever there is a world crisis involving oil and the Middle East, it becomes apparent how different Ross Cheatham and many fellow Texans are from other Americans. Cheatham, a production foreman for the Salt Flat Pipe and Supply Co. in this south-central oil town, had what Yankees might consider an unusual reaction last week when he heard that Iraqi troops had invaded Kuwait.
"The first thing that entered my mind was stripper wells," Cheatham said. "That's about what most everyone around here was thinking: 'Hey, we've got a chance to get our stripper wells pumping again.' "
Stripper wells, in oil-field parlance, are those that produce at a marginal level, pumping no more than 10 barrels a day. Although northerners might think of Texas as one gushing oil spout, the nation's leading energy-producing state is more like a scattering of leaky faucets accumulating oil drip by drip. Of the state's 190,000 productive wells this year, 132,000 are modest strippers.
When oil prices are low, hundreds or thousands of stripper wells are taken out of business. Some are plugged permanently with cement, and more are shut temporarily, awaiting return of higher prices.
When Iraq invaded Kuwait, prices rose in the U.S. market, and oil-field workers such as Cheatham and his roughnecks started putting stripper wells back in action. The phrase describing that process is "pulling a well." He and his crew have pulled one this week and were working on another late Wednesday in a mesquite-shaded field between Luling and Austin.
There is great uncertainty about long-term effects of the latest Mideast events on Texas and the oil industry. Oil prices on the spot market jumped markedly Monday, then dropped noticeably Wednesday, and whether they settle eventually near the $25-a-barrel mark or closer to $20 is a matter of intense speculation.
If the higher figure sticks, according to a computer model developed by Bud Weinstein, director of the Center for Economic Development and Research at the University of North Texas, $8 billion will be added to the gross state product over the next year, creating 64,000 new jobs and more than $250 million in additional state and local tax revenue.
The state has a $314 million budget deficit in its Department of Human Services alone and a projected budgetary shortfall exceeding $1 billion, but no one is counting on new oil dollars.
It is apparent, however, that Texas remains inextricably linked to the Mideast as if by an invisible cord stretching more than 7,000 miles from Luling and Odessa to Kuwait City and Baghdad. A push over there produces an immediate tug over here.
Texans in energy and related industries exhibited a renewed sense of purpose this week, feeling empowered anew to call for oil-import fees and other national policies that will help them. They thrive within the contradiction of knowing that their success often is tied to events painful to other parts of the country. Editorial cartoonists statewide have played with variations on the theme of Texans or oil-company boards nominating Iraqi leader Saddam Hussein as the Lone Star's "MVD" -- Most Valuable Despot.
One Houston oil executive, John Faulkinberry of Paramount Petroleum, described the atmosphere in Texas as "an air of expectancy." In the Permian Basin oil fields near Odessa, Alps Oil Co. Manager Bob Coleman said the mood was "upbeat." Tom Sullivan, spokesman for Oryx Energy in Dallas, the nation's largest independent driller, boasted that his company's stock topped $50 a share the day after the invasion, "a momentous benchmark" reflecting the Mideast crisis and the company's success with new drilling techniques in Texas.
Patricia Farmer, a Salt Flat manager and vice president of the Luling Chamber of Commerce, said her small town is infused with a new spirit, tempered by fear. "We're as terrified as anyone else about what's happening over there in Kuwait," she said. "But there's that one difference. It also means jobs for us."
Despite such relative optimism, however, few Texans are talking about another big boom. Although oil-field activity has increased, it will take two or three months of high oil prices to send wildcatters into a drilling frenzy.
"The feedback we're getting from the industry is they're taking a wait-and-see attitude," said Brian Schiable of the Texas Railroad Commission, which oversees the state's energy industry. Added Coleman: "Talk to me a few months from now, and I'll tell you whether this Kuwait thing had any real impact."
Even if oil prices stabilize at a profitable mark, conditions in Texas have changed markedly since the last boom a decade ago. In 1980, the energy industry comprised 35 percent of the state's economy. Ten years later, because of the intertwined forces of depression and diversification, only 15 percent of the economy comes from oil and gas. Oil-production levels also have dropped appreciably over the decade from 931 million barrels in 1980 to 651 million barrels last year.
But while production has declined yearly since 1972, natural-gas production has increased. Many Texas officials and analysts think of natural gas as "our ace in the hole," as economist Harold Gross put it. If prices remain higher than $20 a barrel, Gross said, he expects gas production to increase by 20 percent annually, providing a competitive alternative. "For the long term," said Weinstein of the University of North Texas, "the energy future of Texas is gas, not oil."
Weinstein has spent 15 years studying the economic relationship between Texas and other U.S. regions. Texas has always been "somewhat contrarian," he said, booming when the Northeast was busting, then taking a dive in the mid-1980s when the East Coast was thriving. During the Texas recession, which began in 1986 and ended last year, the state's per capita income went from being 12 percent higher than that elsewhere in the country to being 2 percent below the national average.
But recent oil-price increases, combined with the massive savings and loan calamity largely centered in Texas, again has made the state a convenient villain for northerners. "The regional antagonisms have intensified this week," Weinstein said. "I've been listening to this stuff on C-SPAN. It's deja vu all over again, as Yogi Berra would say. The same speeches saying the same old things. Texans are bandits ripping everybody off again. I feel like throwing up when I hear that stuff."
Foreman Cheatham does not worry about regional emotionalism engendered by oil. Caked in mud and oil from boots to hardhat, he spent today concentrating on pulling a well in 93-degree heat near Lytton Springs. During its heyday, the well produced 45 barrels a day. It was down to a quarter-barrel, slightly more than 10 gallons when it was shut down a year ago. It needed a lot of work. With his red-brown rusted pulling truck, a pump truck and a crew of four, Cheatham had been working on it since Tuesday.
Four times he had to clean the pipes. The first test brought up only water, then a little oil with water, then more oil than water and finally all oil. One week after the Iraqi invasion, the Lytton Springs well was pumping again. If everything goes according to plan, it might produce 10 barrels a day.
But Cheatham is cautious, skeptical. He has worked around stripper wells for 23 years, since he was a senior in high school, and has been through the booms and busts one too many times. "When you've been up and down like we have," he said, "it gets to the point where you don't want to believe nothing. At least not yet."