A recent $118 million lease sale of state lands to oil companies will continue funding UT and Texas A&M universities through oil and natural gas wells.
The lease of approximately 44,000 acres of land was announced last Thursday by University Lands, an entity that manages the surface and mineral interests of West Texas state lands that fund UT and A&M Systems through the Permanent University Fund. The Texas Constitution mandates two-thirds of the fund to the UT System, at least 45 percent of which goes to support maintenance and administrative costs at the UT-Austin campus.
Karen Adler, director of media relations and communications programming of UT System, said the fund helps the UT System’s many students by fulfilling facility costs.
“Money from the Permanent University Fund directly benefits students by funding state-of-the-art classrooms, labs and clinical facilities at UT institutions,” Adler said in an email.
Each year the UT System Board of Regents dispenses 4 to 7 percent of the current $19.5 billion Permanent University Fund to UT and A&M universities. The lease added the $118 million to the fund and could lead to future revenue from oil drilling.
University Lands CEO Mark Houser said over the past few years, the lease of the oil-rich lands have generated millions, which have contributed to projects like UT’s Dell Medical School. Funding through oil fields proves to be one of the most sustainable sources of University income, since University Lands’ 2.1 million acres “sit on top of great oil,” Houser said.
“There is still more oil left to be produced in West Texas than has already been produced,” Houser said. “If we do it right we should have a good predictable revenue source for a long time.”
This year’s land lease to 25 oil and gas companies was the University Lands’ fourth largest sale, Houser said. Although recent oil price decreases led to a slightly less-successful lease sale, Houser said the development of new oil wells on the leased West Texas lands will bring in additional revenue at no cost to the UT System.
Oil companies must pay well and drilling costs but give University Lands about 20 percent of the profits from every barrel of oil sold. With one square mile of land typically holding 20 to 30 wells, according to Houser, potential barrels of oil are numerous.
“West Texas is one of the largest oil fields in the world,” Houser said, adding that University Lands expects the creation of at least 300 new wells on the newly leased land.
Kari Ross, a campaign organizer for environmental advocacy group Environment Texas, said University Lands could do more to reduce methane emissions from oil drilling in West Texas.
“I feel like a lot of people know that oil and gas operations are happening on land owned by UT, but they don’t know really know that there are sustainable measures that can be taken,” Ross said. “UT doesn’t require that of companies.”
Houser said University Lands also leases land for solar energy, but renewable energy could not fulfill energy and university revenue needs alone.
“Education is being funded through oil and gas development, and (it’s) lowering energy costs for everybody,” Houser said. “Oil and gas, frankly, is a good thing.”