2023 Saw BIG Win for Texas Oil & Gas – It Wasn't by Accident

Texans know the Oil & Gas Industries are essential to our state – in more ways than one

WASHINGTON, D.C. (Texas Insider Report) — The importance of Texas’ energy sector to the rest of the U.S. cannot be overstated. Texas is the top oil and gas state in the country, producing 42% of crude oil and 27%t of marketed natural gas, according to Texas Comptroller Glenn Hegar’s Office. Producing more electricity than any other state – roughly 12% of the nation’s total – energy is the lifeblood of Texas. While important to the country as a whole, the oil and gas industry is undoubtedly vital for our state and local economies.

“This type of unmatched economic performance doesn't happen by accident – but it's not guaranteed. We can't take for granted that this industry'll continue to rewrite its Record Books in the face of federal policies that blatantly undermine progress,” said Texas Oil & Gas Association president, Todd Staples.

Recognizing this unparalleled importance, the state legislature passed Senate Bill 13 in 2022, which established a list of financial companies that boycott energy companies and required state entities to divest from those firms.

Two years after enactment, some of those financial companies have shifted their shareholder voting records, seemingly echoing the greater market realization that too much focus on environmental, social and governance (ESG) matters is not the best, sole strategy.

A recent study from ShareAction looked at asset managers’ voting record with regards to climate goals. The analysis examined signatories of the Climate Action 100+ alliance’s 2023 voting records on shareholder resolutions related to environmental and social issues, finding a dramatic drop from years past.

The report found that, of the environmental resolutions assessed, only 3% were passed last year, compared to 32% in 2021. BlackRock, one of the companies on the boycott list, supported only 8 percent of environmental resolutions, according to the study.  It’s worth mentioning that although ESG support has dropped with asset managers, it has not with proxy advisory firms like Glass Lewis and ISS, that continue to push ESG proposals in companies and industries across the nation.

As we covered in November, these asset management companies also seem to be putting their money where their mouth is, recognizing the importance of Texas energy.

BlackRock and Texas-based Occidental Petroleum announced an ambitious joint venture at the end of 2023 to develop the world’s largest Direct Air Capture (DAC) plant. The development, STRATOS, will be designed to capture up to 500,000 tons of CO2 per year, and will be integral to enhanced oil recovery in the Permian Basin.

The new joint venture will extend the lifetime of maturing oil fields, increasing oil production over the long term.
The development even caught the attention of former Texas Governor and Secretary of Energy, Rick Perry.

Writing in Energy Intelligence, Perry noted that “reducing the concentration of CO2 in the atmosphere will benefit oil and gas producers,” as it extends the longevity of their fields.

Though on the Texas boycott list, Perry also illustrates BlackRock’s shift as it relates to energy. Their half-a-billion-dollar investment into enhanced oil recovery – as well as how the asset manager has shifted casting “votes on environment-related shareholder proposals” – demonstrates a significant change in the firm’s approach to Texas oil and gas, as well as a long-term commitment to the state’s economic and energy future.
Comptroller Glenn Hegar, the man in charge of the boycott list, deserves credit for BlackRock’s change in tune.

Former Governor Perry also points out that Governor Abbott and the Texas Legislature are equally responsible for “such a seismic – and positive – shift from one of the world’s largest corporations.” It’s commendable, and shows BlackRock is following their fiduciary duty, choosing to continue to invest in the state despite the boycott history and other ESG disputes in the state.

Also worthy of kudos is Lieutenant Governor Dan Patrick, who prioritized SB 13 for the sake of defending and supporting the oil and gas industry in the state.

Lt. Gov. Patrick is slated to speak at a Texas Power Grid Investment Summit hosted by BlackRock in February. Facing scrutiny, Patrick outlined his intentions with BlackRock on Twitter/X, writing,
“Mr. Fink reached out to me last year to meet. We've had two productive and positive meetings to date.

"He's bringing potential investors to Texas to encourage building the natural gas plants we need to strengthen our grid and to highlight the incentive plan we passed in SB 2627 (88R) by Sen. Schwertner, R-Georgetown.”

This is a productive way to engage with BlackRock as they continue to show interest in investing in the state and our fossil fuel industry.

Texans know the oil and gas sectors are essential to our state in more ways than one. Attracting investments of this size from Wall Street illustrates that the industry is not going anywhere.

Despite all the debates and discourse about renewables taking over, oil and gas is here to stay. Texas is poised to lead the U.S. into that energy future.