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Eagle Ford Shale boom-to-bust, researcher says

By BY DIANNA WRAY - DWRAY@VICAD.COM
June 27, 2012 at 1:27 a.m.
Updated June 28, 2012 at 1:28 a.m.

Thomas Tunstall, director of Center for Community and Business Research at University of Texas at San Antonio, talks about the economics of the Eagle Ford Shale. Tunstall was one of the speakers at the Eagle Ford Shale small business forum Wednesday at University of Houston-Victoria.

NOTE: To learn more about the Eagle Ford Shale, click here.

Thomas Tunstall, the director of the Center for Community and Business Research at University of Texas at San Antonio, has been studying the economics of oil for years, and the one thing he knows for sure is that for every boom comes a bust.

The Eagle Ford Shale play is booming now, Tunstall told his audience on Wednesday, but the boom will end.

"I'm sure that you are students of the oil and gas industry," Tunstall said. "The oil and gas industry is replete with booms and busts."

Tunstall was the keynote speaker at the University of Houston-Victoria forum on the Eagle Ford Shale. The forum Wednesday was aimed at small business owners looking at the impacts and opportunities created by the Eagle Ford Shale.

Tunstall has been following the Eagle Ford Shale for the past few years. The boom has been bigger than he or any of the other analysts who put together the UTSA economic impact studies on the Eagle Ford anticipated, he said.

Predictions say there will be 2,500 new wells drilled each year and that this year's oil production in the Eagle Ford will double to 100 million barrels, Tunstall said. That should keep the Eagle Ford Shale booming, but he noted that forecasts don't come with guarantees - things can change overnight.

"There is a caveat," Tunstall warned his audience. "Forecasting is a treacherous business."

But as oil prices continue to slide, Tunstall told the audience of about 90 that they need to remember every boom ends and to prepare for that. Eagle Ford Shale wells are more expensive to drill, he said.

In addition, Eagle Ford wells do not produce a great deal of oil, so drilling has to continue for the play to continue to boom.

If the price of oil continues to drop, the boom could slow or even come to an end.

Tunstall said communities need to be aware of this and plan.

"The reality is the future comes to us in all sorts of different ways," he said, noting that exponential growth cannot continue forever.

The University of Houston-Victoria Small Business Development Center hosted the free seminar to give business owners living on top of the Eagle Ford Shale a chance to hear about the impacts and opportunities that come with the oil boom, said Director Joe Humphreys.

"It's important to know what you don't know, but it's even more important to know that there are things you don't know," Humphreys said.

He said the seminar was a chance for people to learn about how this play can benefit them, and to take in the most important lesson - that the play will end.

Danny Long, of the Golden Crescent Regional Planning Commission, was excited about the forum because of Tunstall's presentation.

Long has been working to learn everything he can about the Eagle Ford. He said Tunstall's presentation was the best he has seen on the subject.

"It hit every major subject concerning the needs and potential development the Eagle Ford Shale could represent," Long said.

Tunstall advised communities to diversify so they aren't dependent on oil and natural gas business to keep their local economies going. Communities should try to build on tourism, highlighting history and architecture unique to the area.

Tunstall said the Eagle Ford Shale play could continue for years, but communities should take this opportunity to improve where they live.

"The oil appears to be there to keep us busy for a long time," he said. "But I'm always surprised by the people who look at how things are and say, 'This is the new normal.' No it's not. Since Spindletop, it's been up and down and up and down."

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