The Eagle Ford Shale has served up an $87.8 billion economic impact since 2010 and supported nearly 155,000 jobs, possibly the largest economic development story in state history. It has returned over $2.2 billion in state revenues and the same amount in local government revenues.
Analyst Thomas Tunstall presented those figures at the sixth annual Eagle Ford Consortium Conference, wrapping up the two-day meeting Thursday with a talk on Eagle Ford and oil prices on a day when the ever-volatile oil price was at only $45 a barrel, down by more than half since 2014.
But the conference was as much about what’s above ground than what lies deep below.
Tunstall is senior research director at the UTSA Institute for Economic Development. He reminded the audience of about 75 industry and community leaders at the conference that it would take about 20 years to extract all of the recoverable oil from Eagle Ford, based on current technologies, but that depends on oil prices.
“If oil prices drop, it can curtail the activity,” he said.
The year 1970 remains the nation’s highest-production year, at nearly 10 million barrels a day. Domestic production in 2015 approached that number.
“There are suggestions that by 2018 the U.S. may exceed that number,” Tunstall said. “What’s always interesting about forecasts, and I sympathize because we try to make them also, is the wide range. You just never know what’s going to happen.”
It’s been eight years since the last recession, he added, and the longest the country has gone without one is 10 years.
“What’s fun about Eagle Ford Shale is that forecasters have had to continue to revise their [production] forecasts upward,” Tunstall said.
But forecasts are just that, he cautioned. In 1885, John Archbold, who was John D. Rockefeller’s partner at Standard Oil, famously declared, “I will drink every gallon [of oil] produced west of the Mississippi.”
So Tunstall urged community leaders to be ready for the unforeseeable ups and down. They should be leveraging Eagle Ford’s “black gold rush” with medium-to-long term strategies, he said, that include looking for opportunities to diversify the local economy, rediscovering a community’s history and architecture for economic development and implementing zoning that emphasizes multi-use and sustainability.
“Prior to the Eagle Ford activity, tax revenues were relatively flat, but of course, they jumped up during the peak of activity,” he said. “But even where they settled out, it’s interesting to note they are still above where they were at before this all started. What we’ve been encouraging communities to do, and a lot have done, is to steward resources wisely, be prepared for the possibility of a slowdown, and invest the money in something tangible, such as key infrastructure.”
He mentioned the cities of Gonzales, Karnes City, Pleasanton, and Cotulla (soon to be a free-trade zone) as municipalities that have planned and developed well, and pointed to the increasing number of olive tree groves and tourism opportunities, like wildlife photography, that have expanded in the region.
County judges from DeWitt, Live Oak, and McMullen counties also presented lessons learned from the surge in population, industry, and tax revenues. The mayor of Cuero, Sara Post Meyer, as well as the city administrator of Cotulla and city manager of Jourdanton discussed economic sustainability in the “new shale.”
To date, Eagle Ford has produced over 2 billion barrels of oil and condensate. Although drilling permits are down closer to 2010 levels, Eagle Ford remains one of the hottest shale plays in the country, according to U.S. Energy Information Administration data. There were 660 permits issued since January 2017, after a high of 5,613 in 2014, when oil prices topped $100 per barrel. Eagle Ford drillers have added 36,000 barrels per day to total output in April.
Total natural gas production remains high at 4,450 million cubic feet per day, and oil production is on track to exceed last year’s 927,006 barrels per day.
These days, the “crown jewel” of the oil and gas industry is the Permian Basin in West Texas and New Mexico. Although almost 4,000 drilling permits were issued there last year, reflecting a downward trend since the high of almost 11,000 in 2014, oil production continues to increase, yielding 1,526,760 barrels per day in 2016.
And forecasts call for healthy production to continue, both here and abroad.
“Eventually, shale drilling will be happening all over the world,” Tunstall said. “Now, the U.S. is the only significant player. But Argentina is next. And we continue to keep our eye on China.”
Most countries, however, do not count as many oil and gas companies as the U.S. Here, there are 77 companies producing 75% of U.S. oil, while in Russia, the largest producer in the world, has only four to get the same amount. The competition is one reason oil and gas technology has advanced much faster in the U.S., Tunstall explained.
And, when it comes to energy, at least for Texas, it’s not all about oil and gas and the revenues that the industry generates. Developments in wind power technology have also made the state the No. 1 producer of wind energy in the U.S. by far.
The Eagle Ford Consortium is a nonprofit organization that works to help communities in the Eagle Ford region “explore, produce and benefit from the area’s natural gas and oil resources.” Leodoro Martinez, of Martinez Consulting LLC, currently serves as president of a board of directors that includes county judges, representatives from the San Antonio Area Foundation and Alamo Colleges, and executives of major enterprises in the state — AT&T, H-E-B, Marathon Oil.
In addition to the annual conference, the consortium also organizes quarterly meetings throughout the area to provide a forum for public discussion on regional topics or current events that impact the entire region.
“Our mission since our inception in 2010 is to provide information to all the region’s stakeholders on the opportunities and challenges that come with an oil/gas shale play,” stated Jeff Labenz-Hough, consortium vice president, chair of its infrastructure and natural resources committee, and a business developer for the Alpha Building Corporation.
“As the activity has subsided and reached a state of equilibrium, we have begun focusing our information on building sustainable communities, where oil and gas are just ‘another industry’ in the mix.”