This data regarding the Variable Times role, in Shaping Capital. EagleFord economic impact.
SAN ANTONIO — The Eagle Ford Shale oil field had an $87 billion impact across South Texas last year and supported nearly 155,000 jobs, according to the University of Texas at San Antonio.
The university’s latest report on the oil boom, released this morning, shows that South Texas’ traditional ranching, farming and hunting economy is increasingly eclipsed by the region’s sudden reinvention as an oil field.
The study calculated the direct economic impacts of oil and gas exploration, as well as the so-called indirect and “induced” economic activity created from things such as service companies building warehouses or workers spending their paychecks.
The report found:
The direct impact alone is enormous: the study counted 51,652 people directly employed in the oil industry in 2013. That’s about 5,600 more jobs than in 2012.
The overall economic impact of the field increased by 43 percent in one year, up from $61 billion in 2012.
The Eagle Ford paid an estimated $6.8 billion in royalties in 2013, assuming that mineral owners get a 20 percent slice of the oil and gas that comes out of the ground.
A huge infrastructure build-out continues. Around 427 miles of pipeline, much of it for transporting crude oil, were laid in 2013 at a cost of $504 million.
By 2023, UTSA projects a $137 billion impact from the field. But there would be fewer jobs directly involved in the oil patch as there are now, as the field shifts from worker intensive drilling to production mode.
Of the 196,000 jobs the university expects to see supported by the field in 2023, nearly 158,000 of those jobs would be indirect or induced. Around 38,767 people would actually be working directly for oil and gas companies.
Eagle Ford crude oil production started from basically nothing — 352 barrels per day in 2008 — but is expected to cross the 1 million barrel mark this year.
UTSA’s Eagle Ford report was last updated in March 2013. The latest report was paid for by America’s Natural Gas Alliance, the South Texas Energy & Economic Roundtable and Shale Magazine.
UTSA looked at 15 of the busiest counties in the Eagle Ford region: Atascosa, Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Lavaca, Live Oak, Maverick, McMullen, Webb, Wilson and Zavala. Six neighboring counties with significant oil and gas business activity — but not drilling — were included: Bexar, Jim Wells, Nueces, San Patricio, Uvalde and Victoria. Those communities have become staging and office areas for the Eagle Ford.
The San Antonio area has been among the biggest beneficiaries.
The study pegs the number of full-time oil and gas workers in Bexar County at 13,919 in 2013, which could grow to 19,332 in a decade.
The payroll last year was around $48 million, with a total economic output of $3.2 billion.
Port cities Corpus Christi and Victoria are shipping crude oil and other goods such as sand for hydraulic fracturing.
State revenue from the boom, including severance taxes paid when oil and gas are “severed” from the earth, was more than $2.2 billion in 2013.
The study takes the first stab at trying to count the number of RV parks and worker camps, known more commonly as “man camps” that have appeared in South Texas.
UTSA counted 320 RV parks and worker camps with 7,600 units. There were an estimated 50 RV parks just in the city of Three Rivers.
Man camps and RV parks to house workers sprouted virtually overnight a few years ago when the sudden drilling activity filled up all the hotel rooms in the region. They’re everywhere, but hard to count. Some enterprising South Texas residents have cleared a patch of brush and added six to 10 RV slots as a way to capitalize on the boom.
But there are “no accurate means” to determine the number of RV parks and no centralized data source on the number of things such as septic tank permits.
It isn’t all good news and easy money in the region, though. Rents have increased 300 percent in Cotulla, the report says, and local officials have noted increasing air pollution is an issue. Longtime residents and those who don’t or can’t work in the oil field are struggling to pay rent and elevated prices.
Those who can leave their current jobs for the oil field often do. An estimated 30 percent of the city employees in Pleasanton have quit to take oil and gas jobs.
Per capita income increased to $33,474 in Atascosa County last year, up about 13 percent in two years.
It was $64,826 in McMullen County last year.
Workforce training is still an issue, even as colleges and universities have scrambled to add or enlarge programs for the oil and gas industry. “Now hiring” signs — especially for those with a commercial drivers license — are common across the region. Signs stapled on the sides of buildings and to telephone poles in Cotulla recently offered drivers a $1,500 signing bonus.
“Even now, there is so much activity that the existing South Texas workforce simply cannot supply all of the industry’s needs,” the report says.
The region is growing used to the activity, but a sense of awe remains.
At the August conference of the Texas Independent Producers & Royalty Owners Association in San Antonio, Timothy Dove, president and COO of Pioneer Natural Resources, showed a well-known satellite photo of the region. What was once dark at night is now a bright swoosh visible from space — the lights from drilling rigs, frac spreads, gas flares and more people in the region.
“What we’ve done south of here is basically create a new city called Eagle Ford,” Dove said. “It’s amazing when you look at that photo what the industry has accomplished. That was black or just a few little lights or sparkles back in 2008.”
With oil prices high — but expected to drop — companies have an incentive to drill now rather than later.
Rod Skaufel, president of the Houston-based BHP Billiton Petroleum, spoke in August at a World Oil breakfast event in San Antonio, and said the company looks at all of its planned wells and calculates the optimum time to drill each one. It considers its liquids-rich Eagle Ford wells, particularly in what it calls its Black Hawk field around DeWitt County, as “accelerated.”
“You want to do that today,” Skaufel said. “And so you see a push on us putting our capital into liquids largely because it says hey, this is where you’re going to maximize the value.” BHP gets a 70 percent or higher rates of return in Black Hawk.
Analysts say that kind of profitability is likely to keep the Eagle Ford humming even if activity drops off in other U.S. shale fields.
“It’s well established that this is a big, world-class play,” said Cody Rice, an analyst with Wood Mackenzie. “The question is, what’s the next 10, 15 years going to look like? It’s tough for people to say. Personally, I’m optimistic. The Eagle Ford is highly competitive on a world scale.”
Jeremy Sherby, also with Wood Mackenzie, said that most companies have a decade or more of drilling in their inventories already, and that assumes no improvement in drilling or production efficiency.
At a recent breakfast event, Leodoro Martinez, head of the Eagle Ford Consortium showed aerials images of Cotulla. It’s humming with activity, but was once known mainly as the poor community where a young Lyndon Baines Johnson first taught school.
“We used to have two little hotels in Cotulla,” Martinez said. “Now we have 24.”
People have stopped asking whether the Eagle Ford was really going to happen. Martinez said the question is now, “How long is this going to last?”
To that end, Tuesday’s report notes that by some accounts, Texas already has more than 1,000 ghost towns and “it is clear that the state does not need any more.”
UTSA recommends everything from geothermal energy exploration, olive growing to bird watching and history tourism as a way to diversify beyond oil. El Camino Real de los Tejas, the route the Spanish used to move between Mexico City and what’s now northern Louisiana, runs across much of the Eagle Ford. Gonzales, with it’s “Come and Take It” motto, is among the communities positioned to do well beyond the oil boom, it said.
But even with branching out beyond drilling, it’s clear that the continued economic activity at anything approaching these levels depends on hydrocarbons — in the Mexican side of the Eagle Ford Shale that has yet to be extensively explored or in the export of what the Eagle Ford in Texas is already producing.
Eagle Ford operators are pushing for the export of crude oil (currently banned), the light oil condensate (which is beginning to be allowed) and liquefied natural gas (in the federal permitting stage).
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