On Wednesday, May 9, The Institute for Economic Development’s Center for Community and Business Research at The University of Texas at San Antonio released its Economic Impact of the Eagle Ford Shale at a luncheon in San Antonio.
Director for the Center for Community and Business Research, Thomas Tunstall, Ph.D. presented a slide show made up of information extracted from the newly released study that gave specific examples of increases from 2010 to 2011.
“Oil production increased by more than six times from 2010 to 2011, with 2011 production at 28,315,540 bbls (barrels),” he read aloud from the screen.
“The production of oil and condensate is almost 50 million barrels, and expect it to double in 2012,” he said.
The slide also showed that gas production had doubled and condensate production had tripled, all from 2010 to 2011.
Production can’t increase without the workforce increasing.
In 2011, the 14 counties (Atascosa, Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, LaSalle, Live Oak, Maverick, McMullen, Webb, Wilson and Zavala) that saw the most activity and production supported 38,000 full-time jobs and had a total economic impact of just under $20 billion, according to the study.
The study breaks down much of the information into a 14-county regional area that is directly impacted with the most activity and a 20-county area (that includes the 14) that is seeing activity.
The study also has breakouts of information on impacted counties not part of the Eagle Ford production area. Those counties include Uvalde, Bexar, Victoria, San Patricio, Jim Wells and Nueces.
The 20-county area supported 47,097 full-time jobs in 2011.
It further breaks down what field those jobs are in: drilling and completion, extraction, pipeline construction, refinery operations, land lease payments, royalty payments, right of way payments or contraction impacts.
The numbers are projected to increase with every passing year. According to the study, by the year 2021, the 14-county area will support 82,645 jobs, and the 20-county area will support 116,972 jobs.
Tunstall pointed out that part of what has made this play so popular is that, unlike other shales like the Barnett or Haynesville, the Eagle Ford has oil and gas.
In February 2011, a year and a few months ago, UTSA released an earlier version of the same study which looked at a larger 24-county area instead of the condensed 14-county area. The original study stated that, by “2020 (in 2010 dollars), the Eagle Ford Shale is expected to account for close to $11.6 billion in gross state product, $21.6 billion in total economic output (or revenues) impact and support close to 67,971 full-time jobs in the area.”
The new study stated: “the total economic output impact of the Eagle Ford Shale in 2011 in the 20-county study region was over $25 billion.”
The original numbers were understated all the way through the report. Since the last study came out, the university has been able to view a full year of production data, as well as talk to companies, counties and other sources and update their numbers, not only in jobs and revenues, but also project forecasts to what is more accurate.
“A total of 25,104 new oil and gas wells are projected to be built over the years 2012-2021 in the moderate scenario, with a low estimate of 13,537 and a high estimate of 34,039,” according to the new study.
Drilling permits issued, like the numbers in the study, have increased. In 2009, there were 129 permits issued; in 2010, there were 1,266 permits issued; and, by the end of 2011, there were 3,823 permits issued. An important thing to take into consideration is that, while 3,823 drilling permits were issued, only 1,649 of those were completed within 2011, and of those, only 616 were actively producing in the same calendar year. The other ones will be completed and come online as active wells in the upcoming months and years, and, in the meantime, new drilling permits will continue to be issued.
Tunstall said a leading indicator for continued activity is an increase in the number of drilling permits issued.
But, on a side note of caution: “A lot of the forecasts are based on current commodity prices,” he said.
The price of oil has been hovering around $100 a barrel, but, according to him, if it were to drop below $60 a barrel, there could be a decrease in Eagle Ford activity. Things that affect the oil price include “global supply, global demand, oil inventory and speculation.”
Tunstall gave no indication of productivity in the Eagle Ford going down any time soon, and he, like all of the speakers of the conference, addressed its positive impact.
“We have a clear picture of what exploration of the Eagle Ford Shale means to Texas – thousands of jobs, hundreds of millions of dollars in tax revenue and billions of dollars in total economic output,” Speaker of the House Joe Straus said to the crowd.
“In the 20-county region directly impacted, development of the Eagle Ford has had a transformative impact, from supporting local retail businesses that benefit from increased economic activity to generating revenue for land owners, including turning some property poor school districts into property rich school districts.”
Half a dozen other speakers, including Texas Railroad Commissioner David Porter, spoke at the luncheon about the positive impact of the Eagle Ford Shale and its possibilities.
The study along with the previous study was funded by America’s Natural Gas Alliance (ANGA).