$61 Billion Payoff From Eagle Ford

By SA2020 | Mar 28 2013

By Jennifer Hiller, Staff Writer MySA.com


AUSTIN — Last year, the Eagle Ford Shale had a $61 billion impact and supported 116,000 jobs across a 20-county swath of South Texas — a once-sleepy region increasingly defined by an oil and gas boom.

The latest numbers from an ongoing University of Texas at San Antonio study continue to show a ballooning financial effect as the industry races to drill oil wells in the region.

The results of the study were released Tuesday at a meeting at the Capitol of the House Energy Caucus and Eagle Ford Shale Caucus, a group of South Texas lawmakers hoping to bring attention to the road, water, health, housing and other infrastructure needs brought on by the influx of workers and truck traffic into the region.

America’s Natural Gas Alliance, an industry trade group, paid for the study.

It calculates 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 and offices or workers spending their paychecks.

The direct impact alone is enormous: the study counts more than 46,000 people directly employed thanks to the oil field last year.

The study paints a picture of a future South Texas that in many ways revolves around the oil and gas industry.

So far, more than 5,400 Eagle Ford wells have been permitted by the Texas Railroad Commission, but the study expects more than 24,000 wells in the region by 2022.

Even as the field matures and fewer people work on drilling sites, there still will be thousands processing, transporting and refining that oil and gas, and everyone from attorneys to restaurant employees working along the way.

In a decade the study’s authors figure that a “new normal” will mean that oil and gas will remain the region’s economic behemoth, employing more than 36,000 people directly and with an economic output of more than $50 billion.

“These are not just jobs. These are good, high-paying jobs,” Railroad Commissioner David Porter said, noting that many oil field positions pay upward of $100,000 a year.

In 2022, more than 4,600 will work in the “food services and drinking industry” in the shale region, largely to cater to the oil patch.

“Not everyone can work in the oil and gas industry — people have to eat,” the report says.

The study breaks down the economic impact by looking at the 14 most productive counties, as well as six surrounding counties, including the San Antonio, Corpus Christi and Victoria areas, that have morphed into service providers, administrative centers and staging areas for the oil field.

The study estimates a 2012 economic impact of $46 billion supporting 86,000 jobs in Atascosa, Bee, DeWitt, Dimmit, Frio Gonzales, Karnes, La Salle, Live Oak, Maverick, McMullen, Webb, Wilson and Zavala counties.

By 2022, that 14-county area is expected to generate approximately $61 billion in economic impact and support over 89,000 jobs.

The study focused on South Texas and did not include counties on the eastern edge of the Eagle Ford Shale, where development has been ramping up as well, albeit at a less-frenzied pace.

It is from the larger 20-county area, which includes Bexar, Jim Wells, Uvalde, Victoria, San Patricio and Nueces counties, that Eagle Ford Shale activity generated $61 billion in economic impact and supported 116,000 jobs in 2012, according to the study.

In the 20-county area, the study puts the economic impact in 2022 at $89 billion and 127,000 jobs.

Thomas Tunstall, a professor at UTSA, said that as the activity levels off over the next decade and becomes less frenzied, communities need to figure out how to create a sustainable local economy.

“We’re encouraging them a little longer term to diversify their economies,” Tunstall said.

For now, the oil and gas field is sending money to state and local coffers.

Oil and gas producers in the 14 counties sent an estimated $374 million in severance taxes, taken as oil and gas are extracted, to the state last year.

Under a “moderate” projection, the study estimates that in 2022, the field will generate $1.8 million a year in local taxes and over $1.9 billion in state taxes, including severance taxes approaching $1 billion.

And even though they don’t have oil and gas production, the surrounding counties are seeing a boost.

The study says that Bexar County saw $161 million in construction activity last year for oil field service corporations such as Halliburton and Platinum Energy Services and close to $24 million from regional pipeline construction.

The study also sees Corpus Christi continuing to emerge as a shipping and refining center. It already receives much of the oil coming from the western part of the field, and by 2022, the study forecasts that Valero Energy Corp.’s Corpus Christi plant will refine 150,000 barrels of oil per day, Flint Hills will refine 200,000 barrels per day and CITGO will refine 30,000 barrels.

Valero’s Three Rivers refinery already processes nearly 100,000 barrels a day of Eagle Ford crude, and the Nixon refinery in Gonzales County processes 15,000 barrels.

“We thought it would be good news,” said state Sen. Leticia Van de Putte, D-San Antonio. “This is like knock-you-down good news.”


Original Article on mysa.com

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