Study says Eagle Ford boom to continue, urges preparation for the future

Dianna Wray

March 27, 2013 at 6:01 p.m.
Updated March 27, 2013 at 10:28 p.m.

The Eagle Ford Shale boom continues, and a report issued this week predicts the oil-rich play will keep being an economic cash cow for much of South Texas for the next decade.

Last Sunday, Mayor Will Armstrong watched oil field trucks speed down the road and took in the sight of countless rigs jutting into the skyline as he drove to Austin.

He took in all the activity, knowing that Victoria is one of many cities benefiting from the continuing boom of the Eagle Ford Shale.

"These are exciting times," Armstrong said.

Development of oil and natural gas in the Eagle Ford Shale added more than $61 billion in revenue in South Texas in 2012 and supported 116,000 full-time jobs, according to a study released by the Center for Community and Business Research in the University of Texas at San Antonio.

The study examined 14 oil and natural gas-producing counties, including DeWitt, Karnes and Gonzales counties, and six surrounding counties that are also being impacted by the Eagle Ford Shale play, including Victoria.

In 2012, Victoria County saw a direct economic impact of more than $18 million and an indirect impact of more than $130 million, according to the report.

Thomas Tunstall, director of the UTSA Center for Business and Community Research, said the counties on and around the Eagle Ford Shale experienced an economic boost in 2012 as the investments in development and infrastructure that energy companies started in 2011 started becoming reality in 2012. Regional headquarters were completed, pipelines, rail, supply, services, housing and logistical infrastructure were put into place, while investors moved to make refining and manufacturing investments along the Gulf Coast, Tunstall said.

Still, he noted, some counties are enjoying the benefits of the shale oil boom, while still struggling to plan for the future. Counties like DeWitt are seeing an increase in property tax revenue, but county officials are also having to find ways to pay for the repair of county roads, Tunstall noted.

"They are seeing more tax money coming in, but the one sticking point is the roads," he said.

DeWitt County Judge Daryl Fowler echoed Tunstall's point.

"It's generating a generous amount of local economic impact, but we're still seeing a considerable strain on our roads," Fowler said.

The state legislature is reviewing various bills that have been filed this session requesting that some of the money that goes from oil and natural gas production to the Rainy Day Fund be redirected to go to the counties of origin. This is a move that Fowler and other Eagle Ford county officials support, he said.

Fowler said he and other county officials are thrilled with the oil boom but are concerned about what will happen when the boom ends.

The study projected continued growth for the next decade, but Tunstall acknowledged that there are a variety of factors that could change those predictions.

Still, the report says the boom will continue to give counties on top of and around the Eagle Ford an economic boost for the next decade.

Armstrong said he is optimistic about Eagle Ford Shale's continued impact in Victoria.

"I don't think anybody is too good at predicting the oil business. Back when oil was $10 a barrel, things were pretty bleak, but who could have predicted then the advances in technology that would come along to allow them to recover hydrocarbons the way they're doing it now, but they did," Armstrong said.

Tunstall agreed.

"If the price of oil were to shoot up, we could see a large increase in activity. If it dropped significantly, then we see a change the other way," he said. "The big variable is the price of commodities, and those are very hard to predict."

Tunstall has advised communities to take advantage of the boom now, investing in building infrastructure and diversification so that they'll have other things to offer if the boom should end, he said.

"You need to be thinking more medium and long term, because, like it or not, the decisions you make now will determine what you've got to show for all of this 10 years from now," he said.



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