Bloomberg: Forget Silicon Valley; entrepreneurial millenials are heading to the Texas oil patch

posted at 1:21 pm on May 21, 2014 by Erika Johnsen

California Gov. Jerry Brown practically laughed in Texas Gov. Rick Perry’s face when Perry brought to California his ongoing campaign to promote the Lone Star State’s business-friendly tax and regulatory charms to major companies, but Texas’s economic prowess combined with their eagerness to get on board with the unconventional drilling techniques that have spurred an oil-and-gas production boom on state and private lands in just the last few years is already taking its toll on the more chimerical California.

As Joel Kotkin at City Watch detailed back in March, a handful of big energy companies have been pulling up from California and planting roots in Texas recently as California’s regulations and permitting process become increasingly and deliberately onerous, and as Bloomberg reports today, it isn’t just well-established energy companies looking for better opportunities elsewhere. The young and the restlessly entrepreneurial are noticing that some of today’s best chances for technological innovation and wealth creation aren’t necessarily in Silicon Valley anymore:

Mark Hiduke just raised $100 million to build his three-week-old company. This 27-year-old isn’t a Silicon Valley technology entrepreneur. He’s a Texas oilman.

The oil and gas industry is suddenly brimming with upstart millennials like Hiduke after decades of failing to attract and retain new entrants. Now that a breakthrough in drilling technology has U.S. oil and gas production surging, an aging workforce is welcoming a new generation of wildcatters, landmen, engineers, investors, entrepreneurs and aspiring oil barons. …

Hiduke’s company, Dallas-based PetroCore LLC, received the $100 million commitment from a local private-equity firm in May. He and his three partners plan to buy underdeveloped land and drill shale wells, he said. They’ll draw on the expertise of their engineer, who, at 57, is old enough to be his father.

The shale boom has “created a lot of opportunity for young professionals to jump in and be given enormous responsibility,” Hiduke said by telephone May 6. “It’s pretty much tech and then energy.”

As oil and gas producers change their focus from grabbing land to drilling, young entrepreneurs are forming companies to trade everything from minerals to leases and wells to equities. They’re competing against, and sometimes collaborating with, industry veterans twice their age.

I don’t know how many more testaments we could possibly need to reaffirm the fact that the booming oil-and-gas industry is one of the few supports holding up an Obama economy that is otherwise being held together by spit, but this is definitely one of them.


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Koch brothers: 1
Zuckerberg, et al.: 0

BuckeyeSam on May 21, 2014 at 1:24 PM

Don’t broadcast this too widely.

Obama will find out and do his utmost to screw it up. Maybe some endangered sand flea in West Texas, or not enough transgendered fruit loops working on the rigs.

txdoc on May 21, 2014 at 1:27 PM

Send them back to their liberal California paradise.

FrankT on May 21, 2014 at 1:30 PM

Shout out for the grand state of TEXAS for doing what needs to be done to provide for the people of TEXAS!!

Scrumpy on May 21, 2014 at 1:33 PM

Meanwhile, Moonbeam is sitting on the floor in his office playing with his choo-choo.

GarandFan on May 21, 2014 at 1:36 PM

Wish I was way younger, I would take full advantage of this boom in TX!

Any working man or woman in their 20′s to 40′s would be stupid to not go and make their dreams come true!

Scrumpy on May 21, 2014 at 1:41 PM

The Mickey D’s in Midland start out at around $15.00/hr-’course the rents there are through the roof because housing is now in such short supply.

annoyinglittletwerp on May 21, 2014 at 1:44 PM

Meanwhile, Moonbeam is sitting on the floor in his office playing with his choo-choo.

GarandFan on May 21, 2014 at 1:36 PM

As a 50+ year San Diegan, I resent that you beat me to saying that.

Patrick S on May 21, 2014 at 1:44 PM

You know I think I’m ready to have Texas secede. I don’t like all these blue staters coming here. At this point we don’t need the U S, they need us. Come on Gov Rick lets call it a failed experiment and call it a day.

So long and thanks for all the fish

neyney on May 21, 2014 at 1:46 PM

We welcome all hard working, responsible, and conservative people. Liberal parasites can stay the hell away.

DAT60A3 on May 21, 2014 at 1:49 PM

Yeah, I have been looking for a farm or ranch around Waco…..
Land prices are going through the roof.

I might have to move to Kalifornia….LOL

redguy on May 21, 2014 at 1:54 PM

I was listening to some talk radio show the other day and the caller(oil industry) had recently been told by the host (can’t remember who) to go to Texas. The caller had done that and was describing life in Midland. He said he make a good six figure income as a contractor and that when he recently went to some steak place there was both empty tables and 45 minute wait. Apparently even young people make more working part time for the oil companies than they can make waiting tables.

Cindy Munford on May 21, 2014 at 1:58 PM

God Bless Texas

workingclass artist on May 21, 2014 at 1:58 PM

Well said Scrumpy.

ceraphym on May 21, 2014 at 2:01 PM

There is also a lot of drilling going on in Ohio. I don’t know the details but…

crankyoldlady on May 21, 2014 at 2:03 PM

I was listening to some talk radio show the other day and the caller(oil industry) had recently been told by the host (can’t remember who) to go to Texas. The caller had done that and was describing life in Midland. He said he make a good six figure income as a contractor and that when he recently went to some steak place there was both empty tables and 45 minute wait. Apparently even young people make more working part time for the oil companies than they can make waiting tables.

Cindy Munford on May 21, 2014 at 1:58 PM

The thing is other industries grow around the oil industry. Restaurants, contractors, retail, etc. Schools will have more kids.

crankyoldlady on May 21, 2014 at 2:06 PM

You know I think I’m ready to have Texas secede. I don’t like all these blue staters coming here. At this point we don’t need the U S, they need us. Come on Gov Rick lets call it a failed experiment and call it a day.

So long and thanks for all the fish

neyney on May 21, 2014 at 1:46 PM

As I have posted elsewhere, Washington DC is lost to us. Fall back to the states. Texas will be lost if it doesn’t secure the border.

crankyoldlady on May 21, 2014 at 2:09 PM

My son just got on with an oil company out in west Texas, he says they’re hiring all kinds of labor all the time and the pay and benefits are outstanding. It’s hard work, but he was tired of teaching and coaching out there for a mere fraction of what he makes now.

scalleywag on May 21, 2014 at 2:12 PM

I don’t expect Obama and his cronies to stop the oil boom, although he may use the EPA to try to slow it.

I do expect Obama and his cronies to do their best to transfer the Federal tax revenue generated from the oil production to Blue states as much as possible.

Past experience has shown this to be the SOP, especially with an election coming up later this year.

s1im on May 21, 2014 at 2:13 PM

In defense of many of the people moving to Texas from other parts of the country, most are capitalist and conservative just that they are outnumbered by the locals in their former states. The real danger in Texas, like California before it, is academia. In other words Austin and the big University of Texas system. They are educating young Texans and that education is probably going to be leftist unless conservatives in Texas pay attention to their educational system.

I would say the biggest failure of conservatism and libertarianism is that we don’t pay enough attention to educational issues, top to bottom. I am not talking about funding, I am talking about what they teach. Everyone talks about that California was conservative at one time, and then immigrants came in and changed it.

I think that is wrong, what happened was the leftist movements in America came into California and took over the University system there that was well financed. California conservatives paid no attention, writing them off as kooks that no one could possibly listen to. Wrong…those kooks are teaching your future!

Not only are conservatives going to have break up the public educational system k-12 with things like vouchers to get kids into private schools who are at least more independent and possibly religious, but also create more College and University level departments that teach conservative issues. That is going to take public and private money. If the Saudis can buy their own departments at Harvard and Georgetown, wealthy conservatives should be able to do the same at Texas and Texas A&M…etc. That is a place were wealthy conservatives can do a lot of good for the conservative cause.

William Eaton on May 21, 2014 at 2:14 PM

Don’t broadcast this too widely.

Obama will find out and do his utmost to screw it up. Maybe some endangered sand flea in West Texas, or not enough transgendered fruit loops working on the rigs.

txdoc on May 21, 2014 at 1:27 PM </blockquoteThey have tried, look up sand dune lizard. I am sure they are still trying!

bluemarlin on May 21, 2014 at 2:19 PM

crankyoldlady on May 21, 2014 at 2:06 PM

True. I got the impression that this guy could live with the wait and was encouraging more folks to come on down, the water’s fine.

Cindy Munford on May 21, 2014 at 2:20 PM

I don’t expect Obama and his cronies to stop the oil boom, although he may use the EPA to try to slow it.

I do expect Obama and his cronies to do their best to transfer the Federal tax revenue generated from the oil production to Blue states as much as possible.

Past experience has shown this to be the SOP, especially with an election coming up later this year.

s1im on May 21, 2014 at 2:13 PM

They will take credit for the better economy there and when the marxists seize power they will nationalize the oil industry. You’ve seen how they are grabbing land. If the Texas government isn’t paying attention to these possiblilities you need to keep on them.

crankyoldlady on May 21, 2014 at 2:21 PM

William Eaton on May 21, 2014 at 2:14 PM

Their university has been ultra liberal for decades but sanity prevails outside of it. Students ran out the hippies when Reagan visited UT in the early 80s.

It is not the universities it is the upbringing of children that is key.

Kermit on May 21, 2014 at 2:21 PM

Better be careful that Obama doesn’t make all of Texas a memorial.

Cindy Munford on May 21, 2014 at 2:21 PM

My kids have both gone to UT Arlington and Dr Allan Saxe is a professor there and has a building named after him on campus. Both my kids took his class and enjoyed it. He is a libertarian Republican as he describes himself but told my daughter’s class that he leans conservative. The point is that there is Austin schools and then there is the rest of the state.

neyney on May 21, 2014 at 2:24 PM

William Eaton on May 21, 2014 at 2:14 PM

I taught in a Catholic school in California back in the 60′s. My great uncle was a teacher and principal earlier than that. The public schools have always been abysmal at teaching basic subjects. This is just a theory but I think this is what made them fertile ground for the socialist activists. I was taking a class at the U. of Pittsburgh in the 80′s and fell int conversation with a Californian. I asked her did they teach you that meaning things like math and English. She said oh yes we had journalism and anthropology. I thought, geeze, those kids could barely read and write and they’re learning journalism.

(Sorry about my lack of punctuation. I always think it gets in the way).

crankyoldlady on May 21, 2014 at 2:29 PM

Their university has been ultra liberal for decades but sanity prevails outside of it. Students ran out the hippies when Reagan visited UT in the early 80s.

It is not the universities it is the upbringing of children that is key.

Kermit on May 21, 2014 at 2:21 PM

The point is never, ever take your eye off it. Just assuming it will never leave Austin is the same mistake Californians made with Berkeley. Upbringing of children is important, but not all children get as good a upbringing and it would be helpful if they did not get pounded with leftist ideology all the time…without some kind of alternative view of things. They will be voters one day too…

William Eaton on May 21, 2014 at 2:41 PM

Send them back to their liberal California paradise.

FrankT on May 21, 2014 at 1:30 PM

Thank you. Someone gets it.

I cannot for the life of me understand why conservatives get giddy over this phenomenon, just as I cannot for the life of me understand why Gov. Perry goes to the worst states in the Union and invites their parasites to settle in one of the few sane places left in the country.

avgjo on May 21, 2014 at 2:42 PM

crankyoldlady on May 21, 2014 at 2:29 PM

Exactly, which is why if we are going to be forced to pay for education with tax money, might as well send them to schools that are real schools, and not indrination factories.

Plus I think the GOP has a wonderful wedge issue with school choice that could make inroads with minorities, instead of pushing goofy things like amnesty. Call it “educational emancipation”…that sounds good…who wants to be enslaved educationally.

Sorry for taking this comment section off track…back to fracking.

It is good for the economy….duh. Frankly Texas (and everyone else) should be happy California is not fracking. Let them go down the tubes. Once they hit bottom and their educational system is not funded, Hollywood is gone, it might be a decent place to return to one day.

William Eaton on May 21, 2014 at 2:50 PM

Oil is creating lots of great jobs. But there is a key difference between tech and oil. The amount of startup capital needed to launch a tech startup is not all that much, especially if the entrepreneurs are the ones doing the development work. For an oil business, not only do you need members of the team who are petro engineers, but you need a significant amount of capital to get the leases and the drilling equipment. Kids who have connections could probably get the funding necessary to start an oil company, but it’s much harder to get started there than in tech.

IR-MN on May 21, 2014 at 2:53 PM

The thing that leftists and blu-staters don’t understand is that wealth is being created here in Texas and in the Bakken in ND.

Literally, where there was nothing, the industry is creating, extracting something with tremendous value.

The boom is a microcosm of trickle-down economics; outsiders may not understand that the entire structure of the energy industry is a few big oil companies who own the leases and a vast pyramid of smaller and smaller and smaller companies that do the actual work; whether that work is drilling wells and building pipelines and facilities or providing catering to the fracking crews.

The wealth that is extracted from the ground by the big energy companies is in turn paid to a myriad of smaller companies, from the crews that run the drilling rigs, the trucking companies that bring in the frac sand, other companies to truck out crude or drilling fluids, to the company that provides the 24 hr gate security, to the local contractor who hauls away the garbage or provides drinking water, to the taco truck that sits at the intersection of Franklin Ranch Rd and Hwy 97.

I couldn’t begin to name the number of people, independent companies and types of jobs involved in the energy business.

An otherwise-conservative poster here once tried to state that only skilled labor makes high wages in the oil patch, and that’s simply not so.

The energy boom is a tide of monumental proportions, and all boats in Texas are floating high and sassy.

Dolce Far Niente on May 21, 2014 at 2:54 PM

My husband works in Odessa three days a week. The cost of a hotel room is out of sight. And while the economy is booming, Odessa is looking pretty run down in places. It’s always been the “working mans” town vs the more upscale Midland, but the hubs says it’s getting sketchy in places. As happy as I am that Texas has a great economy, I hope the oil boom stays out of Lubbock for awhile yet. As a state employee my wages will not increase enough to meet the higher living costs.

maables on May 21, 2014 at 3:06 PM

There are some good things and some bad things about a boom. Look at the gold boom towns in the 1800′s.

crankyoldlady on May 21, 2014 at 3:11 PM

Scrumpy on May 21, 2014 at 1:41 PM

You don’t have to move there to participate! Just stay away from the internet promoters in Dallas!

tomshup on May 21, 2014 at 3:33 PM

maables on May 21, 2014 at 3:06 PM

Try the private sector.

tomshup on May 21, 2014 at 3:34 PM

Dolce Far Niente on May 21, 2014 at 2:54 PM

You are wrong about the big energy companies. There are many smaller operators in Texas and Oklahoma doing big things through the drill bit!

tomshup on May 21, 2014 at 3:38 PM

…unconventional drilling techniques that have spurred an oil-and-gas production boom…

Erika, there is nothing unconventional or even novel about fracking. It has been around for longer than all of us have been alive as it was first started in 1865 using actual explosives. Today it is more safely done with fracking fluids and pressure.

earlgrey on May 21, 2014 at 3:48 PM

Don’t broadcast this too widely.

Obama will find out and do his utmost to screw it up. Maybe some endangered sand flea in West Texas, or not enough transgendered fruit loops working on the rigs.

txdoc on May 21, 2014 at 1:27 PM

…not to worry…they’re coming across the border in droves from the south…all under 16 years of age!

KOOLAID2 on May 21, 2014 at 4:17 PM

Any businessman who prefers California’s economic climate to that of Texas is the type of person who would also enjoy having his face shoved into a stopped-up public toilet, at a bus station, with a plunger.

MaiDee on May 21, 2014 at 4:20 PM

maables on May 21, 2014 at 3:06 PM

You’re in Lubbock too?
Nice!

annoyinglittletwerp on May 21, 2014 at 4:37 PM

People have been underestimating Perry for years, especially liberal governors.
Perry 2016.

lonestar1 on May 21, 2014 at 4:55 PM

Texas, beware the millenial ‘entrepreneurs’ and the culture they bring with them, they will turn your state blue in no time.

jimver on May 21, 2014 at 4:59 PM

I do lots of work for energy and tech firms. It’s great that new energy firms are starting up in TX but Erika is ignoring the growth in CA. The energy sector does produce excellent engineering and construction jobs but it is still a commodity based industry and subject to the price variances of that commodity. Some of us are old enough to remember the TX crude oil boom …and the bust that followed. Look at current and forecasted natural gas prices. I know that many of the fields I analyzed four or five years ago are now certainly uneconomic as gas prices bottom out. The good news is that oil pricing is primarily set by a cartel so hopefully they can still keep energy prices high enough that TX can still benefit but as renewables continue enjoy falling costs and increased efficiency you will see pricing convergence ($/kwh) in the not too distant future.

CA and TX both have strong economies and both are net contributors to the US economy. TX have low wages and property prices and a favorable tax structure. CA has the entrepreneurial concentration and knowledge base which is part legacy and partly a product of its excellent colleges and universities. Sure CA taxes are high but after taxes folk in CA still end up with more take home pay than they would for the same job in TX.

lexhamfox on May 21, 2014 at 5:03 PM

We welcome all hard working, responsible, and conservative people. Liberal parasites can stay the hell away.

DAT60A3 on May 21, 2014 at 1:49 PM

You’re damn right.

Ward Cleaver on May 21, 2014 at 5:09 PM

Any businessman who prefers California’s economic climate to that of Texas is the type of person who would also enjoy having his face shoved into a stopped-up public toilet, at a bus station, with a plunger.

MaiDee on May 21, 2014 at 4:20 PM

You have just described Sillicon Valley as a collective (w)hole. The ‘public toilet at a bus station’ comparison couldn’t have been more apt in the current SanFran context …the latest grievance of the SanFran 99% is the mind-blowing ‘privilege’ of the Sillicon Valley techies who apparently are hauled by buses (paid by their own companies in SilVal, mind you) between their work places in SilVal and SanFran where most of them reside. I mean, imagine the luxury of going to work by bus, as opposed to the great discomfort of your own car :)…Dang, these privileged kids, they take the bus to work :)… Funny thing it was not long ago when the same SanFran crazies were advocating for more carpooling and public transport to save the environment :)..as for the techies, no sympathy there, they deserve it and more, they’re all rabid lefties, their response to this latest ‘bus’ outrage was to appease the crazies by contributing more money to the city coffers and by volunteering hours to clean parks and public spaces :) (picture this: billionaire Zuckenberg emptying a garbage bin in Union Saquare :)…I suppose it’s not such a bad thing after all :), but they have to look elsewhere for a serious treatment of their Stockholm syndrome though…

jimver on May 21, 2014 at 5:24 PM

CA has the entrepreneurial concentration and knowledge base which is part legacy and partly a product of its excellent colleges and universities. Sure CA taxes are high but after taxes folk in CA still end up with more take home pay than they would for the same job in TX.

lexhamfox on May 21, 2014 at 5:03 PM

That is actually true, as much as I hate the cali politics, doing business here is not bad at all.

jimver on May 21, 2014 at 5:31 PM

If that Silicon Valley bunch ends up in Texas, it will not take them long to turn it into another California. Look at what all those Califorians did to Colorado.

savage24 on May 21, 2014 at 5:42 PM

That is actually true, as much as I hate the cali politics, doing business here is not bad at all.

jimver on May 21, 2014 at 5:31 PM

The notion that CA is full of leftists and TX is a conservative paradise is pure bunk. I know lots of CA residents who would vote GOP if the policies and tone were tweaked… I hear it all the time. People aren’t happy with CA politicians but the GOP needs to present a viable alternative in CA. Acting as if CA is parasitic or heading for economic disaster is ridiculous and counterproductive. Regionalism is for regional parties… not a national party. The constant attacks on CA as parasitic and on the brink of failure are funny since Hot Air is seldom is ever critical of the real welfare states (AK and the South with TX as the only exception).

lexhamfox on May 21, 2014 at 6:44 PM

CA has the entrepreneurial concentration and knowledge base which is part legacy and partly a product of its excellent colleges and universities. Sure CA taxes are high but after taxes folk in CA still end up with more take home pay than they would for the same job in TX.

lexhamfox on May 21, 2014 at 5:03 PM

That is actually true, as much as I hate the cali politics, doing business here is not bad at all.

jimver on May 21, 2014 at 5:31 PM

The obvious downside is that your “take home pay” doesn’t buy nearly as much in CA as it does in more-competently governed states.

slickwillie2001 on May 21, 2014 at 6:52 PM

The notion that CA is full of leftists and TX is a conservative paradise is pure bunk. I know lots of CA residents who would vote GOP if the policies and tone were tweaked… I hear it all the time. People aren’t happy with CA politicians but the GOP needs to present a viable alternative in CA. Acting as if CA is parasitic or heading for economic disaster is ridiculous and counterproductive. Regionalism is for regional parties… not a national party. The constant attacks on CA as parasitic and on the brink of failure are funny since Hot Air is seldom is ever critical of the real welfare states (AK and the South with TX as the only exception).

lexhamfox on May 21, 2014 at 6:44 PM

Those attacks are absurd (that california is parasitic), and often times downright idiotic, I also don’t think in any way that california is headed for disaster, I live here and I see no evidence for that, good demographics, good high education, as you pointed out, no reason not to sustain itself. but it is undeniable that california trends left big time, and policy tweaking by the GOP would pass unnoticed here, as in it won’t capture the masses’ imagination, not in the absence of a very charismatic leader (but then, you know, beware the charismatic leaders, we had that variety too and it didn’t make any difference).. Also the idiocracy promoted by the hollywood culture and propaganda (and fast spreading) doesn’t help things much either…Personally, my criticism (and my hyperboles that I attach to it) is mainly directed at the culture, as in political culture mostly, also the inane policies (a lot of them are), the obsession of politicians and policy makers here with minor issues, that get disproportionate attention and allocated resources, and the rest of the usual nonsense that I associate with the left politics in general…I wouldn’t comment on Texas since I never lived there or anywhere else in the US (other than california), but it’s a fact that transplants in great numbers shift the political orientation and leaning of any place, large or small…if Texas gets more of the Sil Val entrepreneur types, it will also get more of the liberal mindset, they usually come in a package, with minor exceptions……

jimver on May 21, 2014 at 8:20 PM

jimver on May 21, 2014 at 8:20 PM

I can certainly echo those sentiments but here is an example of what I mean… If you look at Asians and Indians they are natural conservatives for the most part. The GOP lost them… they are still here in CA but put off by the chatter of the far right. I don’t believe the GOP needs to reinvent itself so much as change the emphasis and make it appeal outside of a certain demographic. The GOP is having a hard time getting away from the Southern Strategy which served it so well in the past.

But yeah the politicians/politics here suck and people are tired of it.. even here in SFO. It’s ripe for change.

lexhamfox on May 21, 2014 at 8:30 PM

Why would Texas want to import liberal Californians to Californicate Texas?

Obamatrix on May 22, 2014 at 12:27 PM