Eagle Ford is helping fuel area's economy

Shale may become South Texas' leading financial generator.

By Vicki Vaughan
vvaughan@express-news.net

Updated 12:53 a.m., Thursday, March 10, 2011

• 
  A drilling site owned by Petrohawk Energy Corp. at the Eagle Ford Shale.

   Photo: HOUSTON CHRONICLE, Jake Lacey / Jake Lacey

No one's calling it another Spindletop yet, but just wait.

Development of the Eagle Ford shale, a vast oil and gas region, shows promise of being the most important economic generator South Texas ever has seen, a recently released study indicates.

Since the first well was drilled in the Eagle Ford in 2008 until 2010, oil and gas drilling has directly supported about 6,800 full-time jobs in the region, paid $311 million in salaries and benefits to workers and generated almost $2.1 billion in total economic output.

When other spin-off jobs were included in the tally — everything from oil field support to the waiters serving drillers' food — the numbers jumped to 12,600 jobs, $512 million in salaries and $2.9 billion in economic output.

Drilling jobs account for about half of the jobs so far in the Eagle Ford, and the jobs pay well, starting from about $12 to $17 an hour for roustabouts (an entry-level drilling job) and $13 to $18 an hour for truck drivers.

The Eagle Ford now accounts for 6 percent of the Gross Regional Product for the 24-county area included in the study.

The numbers come from a study by the Center for Community and Business Research at the University of Texas at San Antonio. It was funded by America's National Gas Alliance, which paid $33,000. Members of the gas alliance met with the Express-News Editorial Board on Wednesday.

The Eagle Ford “is a very early play; so these are very conservative estimates,” said Dominique Halaby, the center's director who headed the study.

A key reason for the study, Halaby said, is to learn ways that San Antonio and South Texas “can capitalize on this opportunity.”

The Eagle Ford shale underlies 24 Texas counties that stretch from a region northeast of San Antonio to Laredo and Webb County. The center's study notes a rapid increase in number of permits issued by the Railroad Commission of Texas. In 2008, the Railroad Commission issued 33 drilling permits, with 94 permits in 2009 and zooming to 1,229 permits in 2010.

The center's study also looked at the broader effect of Eagle Ford development.

By 2020, the Eagle Ford is expected to account — directly and indirectly — for almost $21.5 billion in economic output and support 68,000 full-time jobs in South Texas.

The estimated economic impact was based on price information from the Energy Information Agency, a part of the Energy Department, along with drilling costs and estimates of royalty and lease payments.

“There hasn't been this type of capital infusion (in South Texas) since the 1880s,” said Raymond Welder III, CEO of Welder Exploration & Production Inc. of San Antonio, saying it costs $5 million to $10 million to drill a well in the Eagle Ford.

Welder serves on the board of ANGA.

Not long ago, “Kenedy and Karnes City were near the end,” Welder said. “People who were used to no job and no chance for success now have a range of options,” Welder said. “For an able-bodied person, there's really no reason why you can't find a job in South Texas.”

San Antonio, too “will greatly benefit,” Welder said, by benefit of geography. Several energy companies, including Chesapeake Energy Corp. and EOG Resources, recently opened field offices in San Antonio to supervise drilling in the Eagle Ford shale.

For some parts of South Texas, “It didn't take long to see that we've never seen anything like it,” said Leodoro Martinez Jr., executive director of the Middle Rio Grande Development Council, which is responsible for workforce development in nine counties.

“It's obvious that the economist impact is tremendous and we want to have people to fill them,” Martinez said.

Martinez said his group is heading a consortium of various South Texas entities whose goal is to develop a common curriculum to educate workers for the Eagle Ford and to keep the area better informed about the shale's development. It's all in an effort to head off problems experienced by other shale plays.

The consortium consists of government agencies, colleges, school districts, training schools and elected officials.

Martinez and other industry leaders from Wednesday's meeting said such an effort is the first they know of, and they hope it will serve as a model for other parts of the country.

The counties examined in the study include Atascosa, Bee, Brazos, Burleson, Camp Wood, Dewitt, Dimmitt, Edwards, Frio, Gonzales, Grimes, Houston, Karnes, La Salle, Lavaca, Lee, Leon, Live Oak, Maverick, McMullen, Milam, Webb, Wilson and Zavala.