Part 7: Karnes rides cycle of boom, bust
By Dianna Wray - DWRAY@VICAD.COM
Boom and Bust
Marathon Oil Corp. brought several Polish visitors, including Remi Urbanowski, left, a member of the financial council for the Polish embassy in Washington D.C., and Ludomir Lasocki, adviser to the Polish prime minister, center, to Karnes County in April. They toured the area and learned about oil drilling that could be coming to their country. Marathon Oil representative Kirk Spillman, right, said the company brought the Polish representatives because Karnes County is an exemplary model of what shale drilling could look like in Poland. They ended their visit with a stop at Polak's Sawsage Farm Restaurant in Kenedy.
The prosperity Eagle Ford Shale drilling has brought to Karnes County is recognized by a sign in front of the Kenedy Church of Christ.
A scrapbook photo album that former Karnes County Judge Alfred Pawelek's wife made for him shows a photo from 1954 of the drive-in theater he used to own in Karnes County. An economic downturn in the area forced him to close the Midway Drive-In in 1975.
The small farming community of Panna Maria has seen a surge of activity since drilling began in its part of the Eagle Ford Shale play. Randy Pawelek, a Panna Maria resident, had three wells that could be seen from his back porch, including this one just beyond his fence on neighboring property.
Bill Jauer and his brother, Pete, reflected in his glasses, talk about growing up in Karnes City and living through the booms and busts that oil has brought to their community.
Pete Jauer, Karnes County Precinct 2 commissioner, recalls living through about six booms and busts in his lifetime in Karnes County.
Bill Jauer, left, and his brother, Pete, reminisce about collecting arrowheads by the creek on their uncle's land as children. Because of money made by leasing the land, Jauer was able to pay off the property he bought from his uncle and renovate the house. His family will have a reunion there Memorial Day weekend.
An old Texaco station on Business U.S. 181 in Kenedy has fallen into a state of disrepair. The station, once boasting the slogan "trust your car to the man who wears the star," has only a partial roof and is overgrown with weeds.
Downtown Kenedy is reflected in the window of a closed auto repair shop. Karnes County Judge Barbara Shaw recalls seeing the booms and busts reflected in the local businesses when she was a child. "When they were all painted and pretty, you knew things were good," she said. "And when they were closed, and the paint was peeling . that was when you knew it was in decline."
Karnes County: Boom and bust
1758 - First land grant is issued in Karnes County.
1770 - Spanish establish Fuerte de Santa Cruz del Cibolo to protect settlers from Comanche and other American Indian raids.
1780s - The fort and surrounding area is abandoned in the face of continued Indian attacks.
1852 - The town of Helena is established.
1853 - Settlers petition to establish Karnes County with Helena as the county seat.
1854 - Polish settlers establish Panna Maria, the first Polish colony in the United States.
Early 1860s - Karnes County population grows to 2,170 people.
Mid-1880s - Large-scale agriculture is introduced to the county with the arrival of the railroads. Improved access to markets and new settlers diversify farming community.
1886 - The San Antonio and Aransas Pass Railway fails to pass through Helena, causing the decline and death of the town.
1890 - County population reaches 3,637 residents.
1894 - Karnes City residents petition to be named the new county seat.
1900 - Population doubles to 8,681.
1910 - Population reaches 14,942.
1920 - The number of farms grows from 265 in 1900 to 2,710.
1930 - Population tops out at 23,316.
1930 - Oil is discovered in Falls City.
1930s - The Great Depression causes many of the tenant farmers working the land in Karnes County to abandon the farms.
1940 - Population shrinks to 19,248.
1950 - Population declines to 17,139.
1954 - First commercial deposits of uranium are discovered.
1960 - Chevron opens uranium mine.
1960 - U.S. Atomic Energy Commission opens a uranium-ore buying station in Karnes County.
1959-65 - The Person Field in the Edwards formation starts producing in Karnes County.
1970 - Population dips to 13,462.
1972 - Conoco opens a uranium processing mill in Falls City.
1975-81 - The Austin Chalk play booms.
1979 - Chevron opens the largest uranium mill in the state in Panna Maria.
1982 - Conoco closes Falls City uranium mill.
1980 - Population increases by 1 percent to 13,593, the first increase since 1930.
1990 - Population drops to 12,455 , an 8-percent decline.
1992 - Chevron uranium mill closes.
2000 - Population grows by 24 percent to 15,446.
2007 to present - The Eagle Ford Shale play booms.
2010 - U.S. census records a 4 percent decline in population to 14,824.
SOURCES: THE TEXAS HANDBOOK, JOHN BRAUDWAY, THE UNITED STATES CENSUS RECORDS, TEXASRADIATION.ORG
KARNES CITY - Sitting in the bank manager's office, the man turned to his wife.
"Show it to him, Mama," he said as they settled into wooden chairs across from Paul Brysch in the Karnes County National Bank.
She nodded, slid an envelope from her purse and handed it to Brysch.
A check for more than $300,000 was inside, the first royalty check from an Eagle Ford Shale well drilled on their property on the edge of Karnes County.
"Congratulations! Y'all must be thrilled!" Brysch said.
"No, no, you don't understand," the man said, furrowing his brow. "We've never had money like this before. What do we do with it?"
The question has been repeated across the Crossroads since the Eagle Ford Shale play began booming, but nowhere is it more poignant than in Karnes County. These days, the county is a lively place, the epicenter of an oil boom changing the face of South Texas and bringing wealth to people who have struggled and scraped for generations just to keep hold of their land.
But oil wealth isn't new to the people of Karnes. The rise and fall of riches that comes with an oil boom is a story they know too well - they've repeatedly ridden the boom-and-bust cycle. The Eagle Ford Shale is looked at as a blessing by some and a miracle by others, but for the people of Karnes, it is much more than that - the Eagle Ford Shale is one last chance.
The Last Picture Show
Alfred Pawelek, a former Karnes County judge, was born in 1929 and raised on a farm in Panna Maria, the oldest Polish community in the United States. One of 11 children, he worked hard on the farm to be self-sustaining during the tough times of the 1930s. He loved to attend the drive-in movie theaters in Austin, and it soon occurred to him that a man might make a good living by opening a drive-in theater in Karnes.
He opened the Midway Theater in early January 1950. The county was still on a downward slope with a steadily decreasing population, but a small oil boom had created a flurry of activity and people turned out in droves to sip beer and munch on hamburgers while Cary Grant and Myrna Loy figured out how to fall in love in "The Bachelor and the Bobbysoxer" on the theater's opening night.
Pawelek loved movies, and he loved his drive-in. He saw a slight drop in business when the drought gripped the county in the late 1950s, but an oil boom fueled another giddy spurt of activity in the early 1960s.
Meanwhile, oil company men looking for signs of petroleum in the county came across uranium buried in the earth beneath. That fueled a whole new industry in the county, as government operations and companies set up mining operations, processing plants and waste sites in the county to produce the stuff that would fuel nuclear bombs.
Uranium gave the county its first source of industry, outside of agriculture. It had become increasingly difficult for single families to make a living on their farms and ranches in the wake of the economic devastation of the 1930s, but suddenly Karnes County had something for these men and women to do - they could go to work at the plant.
But, again, it didn't last. Environmental concerns in the 1970s - it turned out dumping uranium mining waste into open pits had consequences for those who lived on the land around them - and a drop in the price of uranium caused the burgeoning uranium industry to shudder to a halt. The mines closed, the processing plants shut their doors and the waste sites were covered over with clay and sod, and the money and industry that had become a lifeline to the people was summarily cut.
At the same time, a worldwide oil crisis sent prices plummeting, and the oil industry of Karnes County disappeared overnight.
The population fell to less than half of what it had been at its height in 1930. Looking at the meager number of cars rumbling into his drive-in, Pawelek knew what he had to do.
On a drizzly night in January, he waited for the music from "The Last Picture Show" to fade away during the intermission. Taking a deep breath, he got on the microphone and addressed his audience.
"I appreciate you coming this evening and I hope you are enjoying the picture as much I'm enjoying having you with us, but this truly is the last picture show. It's our 25th anniversary, and we are closing the theater for good," he said, his voice booming across the lot.
When the film was over, he closed the theater, just as he had every night for the last 25 years. Then he stopped by the barbecue restaurant he and his wife had recently opened and picked up a six-pack and went home to sip beer and mourn his movie theater.
The ups and downs continued as Pawelek and his wife worked to keep their restaurant afloat during the bad times, while enjoying the demands of the years when things were good.
Times were hard when Pawelek was elected to become county judge in the 1990s. County officials were always fighting to cover even the most basic needs of the county on a shoestring budget.
"We were kind of living in a bust all of the time in our county," he said. "We've had our ups and downs, but it's been very severe for us during the bad times."
Rooted in the land
Karnes County was never meant to be an oil town. When the first settlers arrived here in the 1850s, they had come to the edge of modern civilization looking for land.
They found good land for farming and ranching on the gently rolling plains of South Texas, and the county grew from a few hundred people in 1852, when the first county seat was founded, to more than 23,000 people in 1930. In just a few decades, Karnes County had become a busy agricultural hub known for producing cotton and cattle. As if the richness of the land were not enough, it also turned out oil ran beneath it.
The first field was discovered in Falls City in 1930. The Great Depression was just taking hold of the rest of the country, but the people of Karnes, along with the rest of the state, believed themselves to be immune to the economic crisis. A find in Falls City brought oil field men to the county in droves and money to the fortunate few who owned the tracts with oil underneath it. For others, the crops and cattle, shipped out on the railroad, provided a good living.
But the Great Depression came to town anyway as oil prices nose-dived to as little as 2 cents a barrel, effectively ending the burgeoning promise of Karnes as a land flush with the riches of cattle, crops and oil.
From then on, Karnes was a community in decline. The small farmers and ranchers never recovered from the economic devastation of the 1930s, and the basis of their lives, the sustenance of the community, would never be something any one person could make a living at.
The ties that bind
County Commissioner Pete Jauer was brought up to love the land his family worked, but he watched his father work as a horse trader and tractor salesman when the county was in a bust and as an oil field hand during the booms to make a living for his family of 17 children. The real family passion remained the land.
"The land is what tied us. The land is what holds people here," Jauer said, while his brother nodded in agreement.
The minerals beneath kept alive the promise of Karnes' rebirth. The 1930 find had played out, but another flurry of activity in the '40s put local people like Jauer's father to work in the oil field and brought some much-needed money into the county. But the plays never lasted. When they were over, Karnes residents were left to struggle to survive until the next play arrived, or they could leave.
Bumping down the rutted pavement of Highway 181, Jauer looked out at the land around him.
"Jauer Flats, this is some of the best farmland around," he said.
Jauer's grandfather bought the land in 1906. It has been passed down and broken into pieces by his descendants ever since, but it has stayed in the family.
As boys, Jauer and his older brother, Bill, dreamed of the day they would buy all the land themselves. Now the land they grew up on has been bought and paid for with royalty money from the Eagle Ford Shale.
Out of retirement
John Braudway smiled as his gleaming Cadillac pulled up to a drill site gate, lifting his hand to wave at the guard. The man paused for a second and then hit a button to open the gate.
"That's the trick, you know. I look just enough like I might be the boss that they won't dare question me. They just let me on in," Braudway said. "In 1978, I started wearing a tie, and it's gotten me in to a lot of places I wasn't supposed to be."
A flare billowed overhead, on the edge of the pad site. He stepped out of the car, staring up at it with a speculative eye, while the heat from the flare pressed on his skin.
"They're not even separating the oil out. Must be a good well then," he said, studying the flame.
Since the Eagle Ford Shale play, Braudway has been a busy man, lured out of semi-retirement as an expert consultant to some of the biggest companies in the oil industry. He keeps a small fat notebook in his shirt pocket at all times, and it is filled with names and numbers of clients and people he checks with daily to see how things are on various rigs and what that might say about the play.
Braudway grew up in Karnes County, and the longtime oil man knows every drilling site in the county. He is always impeccably dressed with spotless button-down shirts, sharply creased pants and quietly expensive leather shoes. Braudway started out as a day driller in Karnes County and worked his way to the top over the years.
Karnes County was a busy oil town back when he started working fresh out of high school in the early 1960s.
He has watched the Eagle Ford play like a hawk since it started. His land was leased and drilled as well, and the Braudways, like so many in Karnes, were determinedly practical when the royalty checks came rolling in.
"This is a very poor county," he said. "Anybody who has come of age around here and grown up in hard times, when they get this money, they don't want to spend it. People are holding onto it this time."
He has heard all kinds of stories - the couple that tried to cash the "small" royalty check, only to find the bank couldn't do it, because it was for $180,000. The elderly woman who had been putting the checks directly into the bank without a second thought, until a bank teller asked her if she wanted to know her account balance - and she found out she had more than $1 million in the bank.
Braudway says he believes the predictions that this play will last for 10 to 20 years, but aside from gifts to their children and grandchildren, Braudway and his wife were scrupulously practical with the money that came in. They gave a donation to their church, bought a new Cadillac and paid for cemetery plots.
"This can all go away overnight. If oil drops to less than $65 a barrel, the next morning this will all be gone," he said.
Now, it's a whole other world. Karnes County's taxable value has grown from about $270 million to more than $1.5 billion in the past three years.
"Nothing in the past has been close to this, so who knows what the future holds for us with the Eagle Ford?" former judge Pawelek said. He paused, glancing out the window at the land he knows as well as his own body.
"Never in my wildest dreams did I imagine something like this."
For the first time in decades, there is money in the budget and it will tell much about the future of Karnes as to how the county chooses to spend it.
Barbara Shaw, the current county judge, wants to be sure officials choose wisely. The county has been so strapped for cash so long, many of the first things they'll be attending to will just be the necessities - taking care of the roads, repairing long-neglected public buildings and giving the sheriff more money to work with in his budget.
The Karnes County Courthouse is being restored, and there are plans to update the county jail.
The money has come and the money has gone in Karnes, leaving little to show for it in the past.
Shaw is determined this time things will be different. She and the rest of the county government officials have been working for months to craft a five-year plan to figure out exactly what needs to be done in the county and when they will set aside the money to do it.
"Instead of spending the money as fast as we can get it, we need to plan," she said. "Eventually this money will stop. It's not a matter of if it is going to stop, it's a matter of when."
Shaw grew up in Falls City. When past oil booms came to a halt, it was always glaringly obvious. The nicest hotels in town started to look faded and bedraggled, with the paint peeling off in strips. They would charge people $1 a day to go swimming and allow people to rent rooms for next to nothing - during the down times they cobbled together survival this way.
She knows it will end. They all do. But for right now, for the first time in decades, Karnes County is on the map, the center of attention, the land of milk and honey.
"Halliburton, Schlumberger, they've all been here before and the big buzzword is that they'll be here forever, but define forever. You can convert those yards back to farm land real quick," she said.
Karnes has become so well known that people are reading about it in the Wall Street Journal and the New York Times. When Marathon Oil executives were looking for a place to show Polish representatives the possibilities, what opening up their country to shale drilling could do for them, they brought government representatives to Karnes.
In late April, county officials filled the dining room of Polak's Sawsage Restaurant, their voices loud and buoyant as they waited for the Polish government representatives to arrive.
Shaw, a tiny woman even in a pair of three-inch heels, managed to get everyone's attention when the men arrived, along with a flock of Marathon oil men and Railroad Commissioner Barry Smitherman.
The smell of barbecue filled the air, but they were there to talk about oil.
Shaw, Pawelek and a handful of other officials spoke glowingly of what the Eagle Ford Shale play has done for their county. They didn't dwell on the traffic or the congestion or the certainty that this prosperity is fleeting. Right now, it was all about the promise on the horizon, what Karnes could become if the story ends differently this time. Maybe this time it'll be a different story when the oil companies pack up and leave. Maybe this time they'll be able to watch them go and not have to wonder how they'll survive until the next boom.
Shaw wants to build Karnes, to make it a place people will want to live in and raise their kids, to staunch the flow of the young people who leave and never come back.
"This is the neatest little place on Earth, so I think while we have the ability to build it, let's build it," she said. "One of these days these people are going to go away, but we'll still be here ... and I think we'll be OK."
Continue Reading: The Play: Special series examines Eagle Ford Shale oil and gas boom