Part 1 of special report: Oil and gas development pumps life into South Texas small towns
By By Dianna Wray - DWRAY@VICAD.COM
Sept. 24, 2011 at 4:24 a.m.
HISTORY OF THE EAGLE FORD SHALE
The Eagle Ford Shale formation is named after Eagle Ford, a town six miles west of Dallas where the shale formation can be seen on the surface as clay.
The Eagle Ford Shale formation is about 50 miles wide and 400 miles long. It runs from the Texas-Mexico border into East Texas.
There is drilling in 24 counties and there are currently 16 producing oil fields stretching across these counties.
The formation produces natural gas, dry gas and oil. Karnes, DeWitt and Gonzales counties have seen most of the action in the Crossroads, although the impact of the activity is felt throughout the Crossroads.
Natural gas was the big attraction that got people interested in drilling in shale about 10 years ago, and that was the prize drillers were after when this play started in 2008. Since then, natural gas prices have tanked, and every driller will say it's not worth the money to go after the gas. But it turns out the Eagle Ford Shale is also oil rich. With high oil prices, drillers have been flocking to the Eagle Ford Shale play.
In 2010, the play produced more than 3.5 million barrels of oil. This year, from January to June the Eagle Ford Shale has produced more than 3.5 million barrels of oil.
TERMS YOU NEED TO KNOW
PLAY - An area where hydrocarbons, such as oil and natural gas, are found.
SHALE - A fine-grained sedimentary rock with thin, relatively impermeable, layers. Shale can include relatively large amounts of organic material compared to other rocks and has the potential to be rich in hydrocarbons. The rock's fine grain and relative impermeability allow shale to form a good cap rock for hydrocarbons, allowing hydrocarbons to pool together beneath it.
FORMATION - A body of rock continuous enough that it can be mapped.
HYDRAULIC FRACTURING - A stimulation treatment performed on oil and gas wells with low permeability. Fluids are pumped at high pressures into the drilled area, causing vertical fractures. The fracture's wings crack along the lines of natural stresses in the formation. Grains of sand in the fluid keep the fractures open, increasing the flow of hydrocarbons. The process is also known as fracking.
SLANT DRILLING - Drilling down into a well and then executing a wide C-shaped turn and drilling horizontally.
SOURCE: THE SCHLUMBERGER OIL FIELD GLOSSARY
The Play: Eagle Ford Shale SERIES
Today: Change on the horizon
Oct. 30: Cuero, the hub
Nov. 27: Environmental worries
Dec. 25: Life in the oil field
Jan. 29: Lessons learned from the Barnett Shale
Feb. 26: Navigating the legal waters
March 25: Karnes County, cycle of boom and bust
FIRST IN A SERIES
MOULTON - Dale Fojtik stood on his back porch, staring out at the flickering orange flame of a flare light just visible above the trees at the edge of his property.
He leaned against the porch railing, turning to his wife, Michelle.
To passersby, the gleaming red steel structure peeking over the line of trees is one of hundreds of wells now dotting the South Texas skyline, but to Fojtik, it is the thing that could change his life.
Fojtik is a tall, fair-haired man with eyes that turn piercing blue against skin that has been burned and tanned from countless hours in the sun.
Michelle barely comes up to his shoulder, a pretty, delicate-faced woman who seems to be perpetually just getting off work.
"That's a beautiful sight, isn't it?" he asked.
"It sure is," she said, smiling up at him.
The pressing heat of the day has given way to sudden coolness this evening. The lights from town are far off and a blanket of stillness has settled on the Fojtik home. The quiet won't last, though. In the morning, the trucks will begin rattling by, and the new oil fields will be thrumming with activity.
For years, Moulton has been the quintessential small Texas town. A place so quiet a dog could lie in the middle of Main Street at noon without fear of being disturbed.
A town that sprang up around the railroads, Moulton was bypassed by progress and the freeways. The little community was dying - until oil came to town. Now, Moulton is booming again. Its residents are the latest potential beneficiary of what some call the blessing of drilling in the Eagle Ford Shale.
The people are growing used to it now - the big rig trucks, the flood of oil field workers, the noise and lights and rumbling coming from the fresh new drill sites at the edges of their property.
For three months, the hottest show in town was in Fojtik's backyard. That was where it started.
IN THE BEGINNING
Hundreds of thousands of years ago, all of the Crossroads was beneath the salted waters of ancient oceans. It was the Cretaceous Age, and dinosaurs inhabited the earth. The world changed, shifting and contorting, and the things that lived then were buried and compressed by earth and time, turning their carbon remains into the stuff that powers the cars we drive and the world we live in.
The Eagle Ford Shale play is a brittle formation about 50 miles wide and 400 miles long, a belt of hydrocarbon-rich formation stretching from the Texas-Mexico border in the south to East Texas. The formation lies 4,000 to 12,000 feet down, between the Austin Chalk and the Buda Lime formations.
John Braudway, an oil man born and raised in Karnes County, was working on an oil field in the 1960s when he struck what he thought was a big well. Oil gushed out of the ground, and Braudway, new to the business, was shocked when the field geologist took a look and told them to plug the hole.
"I thought it was a big one, but he told us it was just the Eagle Ford," Braudway said, shaking his head with a laugh. Eagle Ford wells would produce oil at first, but then production would nosedive, the geologist explained. The pressure was just too low to keep wells pumping. So when they happened on oil or gas in the Eagle Ford, they closed it up and moved on.
It all started in 2008. That was the year Petrohawk drilled the first successful Eagle Ford Shale well, discovering the Hawkville Field in La Salle County. The fact that there was oil and gas in the Eagle Ford formation wasn't a surprise to anyone. Drillers had been coming across it for years as they burrowed down to the Austin Chalk or the Buda Lime. They knew the oil was there, but no one had the technology or the power to get it out of the ground.
Petrohawk drillers had heard it was impossible to get a good Eagle Ford well, but they decided to try something different, an approach drillers had been using in the Barnett Shale in North Texas and the Marcellus Shale in Pennsylvania. Both of these fields were rich in natural gas when natural gas prices were sky-high. Drillers started drilling slant wells, digging thousands of feet into the earth to reach the shale formation. Then the driller would turn, kicking off to cut a wide C-shaped arc and piloting the drill so it plowed a direct horizontal line through the formation.
Once that was done, they began fracking the well. Deep below the ground, tools were used to divide the shale into segments. Each segment is dynamited, shattering the brittle rock into fragments. The team forces slurry, a gelatinous mixture of water and chemicals with the consistency and feel of Silly Putty, into the cracks in the shale. The slurry dissolves, but some of the sand and chemicals in the mix remains stuck in the fissures, holding them open. Then the oil and gas trapped in the formation pools in the newly created space. Suddenly, there's enough pressure below ground to get a well drilled and keep it producing.
Charles Cusack, vice president of exploration for Petrohawk, was at the annual OU-UT football game in Dallas when the call came in that they had a well in the Eagle Ford, and it looked to be a good one, a big producer.
Cusack told the story when he was speaking at the I-10 Corridor meeting held in Cuero in April. More than 100 people crammed into the meeting room at the Chisholm Heritage Trail Museum that morning to hear what he had to say.
He was smiling and benevolent, the perfect representative as he assured them that the Eagle Ford Shale was real, that the prospect of wealth and change shimmering before them would not turn out to be a mirage.
"This is here to stay. We're going to be drilling here for years and years," Cusack said.
The executives celebrated the news in the middle of the football game, toasting their success.
From then on, Petrohawk and other major producers began flocking to the formation, following it up from the border.
Now, oil companies are chasing the formation like a pack of hound dogs, and drilling is moving steadily up from South Texas cutting a broad swath through the Crossroads area. Karnes, DeWitt and Gonzales counties are seeing most of the action.
Braudway has been in the Texas oil business for decades. He explained the wells are expensive to drill - between $6 million and $7 million on average - but the companies that can risk putting the money in get their money back within months.
A good Texas oil well produces about 200 barrels a day. In the Eagle Ford, once a well is up and running it will produce anywhere between 600 and 3,000 barrels a day, Braudway said. After a well has been in production for three months, it's pure profit for the oil companies, he said.
"Of course, all of this depends on the price of oil," Braudway said. "If oil prices dropped below $50 a barrel, all of this would come to a stop overnight."
Lawyer Michael Sheppard grew up in Cuero, and he's been overseeing contracts to lease mineral rights for years.
These wells are a sure thing, and as oil companies follow the play up from the south, they are creating an oil boom most of the towns with shale snaking beneath them have never seen before, Sheppard said.
"There are no dry holes. That's unheard of, but their success rate is 100 percent. "If they don't screw up the frack job, they are going to produce," Sheppard said.
Every night, Fojtik, his family and neighbors dragged lawn chairs and ice chests of beer and soda to the corners where their property lines met to watch the transformation. An oil company was turning a wild, tangled patch of mesquite and cactus-covered land into a possible gold mine. If the workers found oil, the Gonzo-Hunter No. 1 would be the first Eagle Ford Shale well drilled in Moulton. The neighbors settled into their lawn chairs, sipping cans of Busch and Miller Lite beer and watching as workers dug into the ground to haul riches out of it.
During the week, Fojtik drives a feed store delivery truck to make a living, using his farming equipment to bring in a little extra money.
He and Michelle have been married for more than 20 years. Michelle is the one-woman cleaning crew at the Moulton Retirement Home and a janitor at the high school. The pair have worked two jobs to support themselves and their four children since they were married.
The Fojtiks live on 30 acres just outside of Moulton. Fojtik fell in love with the place when he saw it up for sale 10 years ago. He and Michelle had been trying to scrape together the money to put down on the acres when the owner offered to loan them the money to buy it, 30 acres of gently rolling turf and the mineral rights beneath.
"People sold their mineral rights back then. Nobody thought anything about it. They don't do that now," he said, laughing. "I guess people won't be doing that ever again down here."
The family of six spent more than a year crammed into a one-bedroom, one-bathroom camp house while they saved up to buy a home. They bought the house partially done and did the extra work themselves to save money. The red brick house Michelle had in her mind's eye was too expensive, but she painted her new home brick red, with soft cream-colored trim.
"That was good enough," Michelle said, glancing at her home with a smile.
People have been drilling for oil all over Texas since the first oil booms thundered across the state at the beginning of 20th century.
The black gold comes and goes, swelling fortunes and deflating them with regularity, but oil had never really been found in Moulton. The Fojtiks bought the land because they're a land-loving people. They had no idea they were sitting on a gold mine.
"It was exciting for everyone around here. They've drilled wells before, but we've never really had any real production going on in this part of the country. I couldn't believe it," Fojtik said.
Head tipped back, Fojtik spent countless hours gazing up at the oil derrick jutting into the sky.
They leased their mineral rights to an oil company for $250 an acre and got a check for about $7,500. They didn't expect much from it. No one did. The Texas Railroad Commission requires oil companies to lease the mineral rights for a minimum of 600 acres when a company plans to drill. The land leased from the Fojtiks is a relatively small piece of the pie. The acres are pooled together, and if an oil company finds oil anywhere on those 600 acres, each person leased gets a portion of the royalties. There are about 12 owners pooled in their lease. The Fojtiks have one of the smallest portions of land leased.
The Fojtiks and the rest of their neighbors sat every night at the edge of the brightly lit drill pad, watching intently to learn how it worked, waiting to see whether they might actually strike oil.
As the days passed, they got to know the workers on the site. Fojtik hung out in the office RVs, making friends with the field supervisors. Neither Fojtik or his neighbors knew much about shale, or the hydraulic fracturing freeing up the oil and gas thousands of feet below, but while asking questions, they learned fast.
When Michelle heard the well had come in, she rushed over, a quart-sized glass mason jar in her hands. She asked the men to fill it up with slick black liquid.
"I wanted a quart of oil," Michelle said, laughing. The family keeps the jar on their kitchen counter, a reminder of the good fortune that seems to have found them.
Still, there are questions about what the drilling will mean for the town. People have fought hard to stay here, to preserve an intimate, friendly life that can't be found in larger towns or cities. And there are bigger questions about the possible environmental impacts of the drilling. It's hard to know what is coming.
People who owned land in the Barnett Shale in North Texas have come to the Crossroads speaking about water contamination, about children with nosebleeds that wouldn't stop and water wells that had been ruined.
Still, the Fojtiks remain optimistic.
"I really don't know what everyone is saying that it's going to do. Nobody ever told anybody it would contaminate our well or anything like that. Besides, if I had to go buy my kids bottled water they'd be happy. They hate the tap water," Michelle said, shrugging her shoulders.
They're getting used to all the traffic as oil companies continue poking holes looking for new wells in the area around them.
One night, a rig manager let Fojtik and his family onto the rig erected on his neighbor's property. He and Michelle and their youngest daughter Christina, 10, clattered up the metal stairs of the brightly lit derrick. The engines roared, a steady rumble moving through the metal grating beneath their feet.
The lights from the derrick obliterated the dim lights from town. Standing on the metal platform, Christina turned, her blue eyes peering out into the darkness. She couldn't see anything past the lights.
The night the leasing check came they went out to dinner at Roberts, their favorite local restaurant.
"We didn't do anything special," Michelle said.
"Remember, Mom, we went to Roberts," Julie, 12, exclaimed.
"That's right. I ordered a steak. That was my celebration," Michelle said, laughing.
On a Saturday morning in July, the first royalty check showed up in the mail.
Fojtik came home with an envelope in his hand.
"Momma, we've got something in the mail," he said.
He and his wife sat down at the dining room table and opened the check together. That first check went to help pay their house note.
"It felt nice, because we still have a lot to go on the house. If we didn't have this to help, it would be harder," Fojtik's wife said.
WHAT HAS CHANGED?
The Fojtiks bought new farm equipment and paid their taxes. In June, Michelle's car gave out and they went car shopping. They replaced it with a brand new car, a silver Kia Sportage, their first in 20 years.
Michelle can't keep a grin from crossing her face every time she slides behind the wheel.
"It's amazing. You know, every time I drive this thing, I find another new gadget. Look at this, it even has voice activation," she said, flexing her fingers on the steering wheel.
When the rest of the money starts coming in, Michelle said she wants to quit one of her jobs. Fojtik just wants to pay off the house. They have been paying for the house for about six years of a 20-year mortgage, but with royalty checks coming in they're hoping to pay the house off within a year.
"It's nice not to have to worry about how I'm going to pay the taxes. This year, I just went down and wrote a check for the money. That was a good feeling," Fojtik said.
Standing on the porch as the sun rolled down, the burnt orange colors fading to black, Fojtik leaned back in the porch swing, rocking it gently.
They don't know what's coming, what the future will hold. The Fojtiks hold only a sliver of the wealth rolling into the area as oil companies begin spreading out money to explore the depths. Suddenly for the Fojtiks and many other people like them, there are possibilities. But it could all vanish tomorrow, and Fojtik knows that.
"I don't know how long this is going to last," he said, staring out into the darkness creeping over the edge of the horizon. "I hope it'll be long enough to pay off the house. If it ends, that'll be fine. I'll go back to living the way I was."