Eagle Ford Activity Generates over $25B in Economic Output in South Tx.

Eagle Ford Activity Generates over $25B in Economic Output in South Tx.

Rigzone Looks Back: Exploration and production activity in the Eagle Ford shale continues to create jobs and generate tax revenue for local counties. With oil and condensate production of over 1 million barrels per day as of June 2014 (Center for Community and Business Research at UTSA's Institute for Economic Development, September 2014), the Eagle Ford play set record drilling levels initially. The shale play will not only continue to significantly impact South Texas' economy, but U.S. oil production as well.

Eagle Ford shale activity in 2011 alone generated over $25 billion in economic output, supported over 47,000 full-time jobs and provided $257 million in local government revenue, according to a new study by the Center for Community and Business Research, part of the University of Texas at San Antonio's Institute for Economic Development.

The findings are the result of research into the economic impact of Eagle Ford shale activity in 2011 on a 20-county region in South Texas.

The study found that:

  • Eagle Ford development resulted in $3.1 billion in salaries and benefits to workers
  • Provided more than $12.6 billion in gross regional product
  • Added more than $358 million in state revenues, including $120.4 million in severance taxes
  • Generated a triple-digit sales tax revenue increase in local counties.

The Eagle Ford presents "an economic opportunity of a lifetime," Mario Hernandez, president of the San Antonio Economic Development Foundation, said.

"The key goal is to increase in investment and jobs. And if the communities will partner with the private companies that are creating these jobs, it can be a win-win for everybody," Hernandez said in a statement.

Eagle Ford Activity Expanding at Unprecedented Rate

According to the study, Eagle Ford shale activity has expanded at an unprecedented rate, and the increase in production from 2010 to 2011 has been accompanied by equally significant increases in permitting, well drilling and completion, residential and commercial construction, pipeline construction, and other support activities.

The new study focused on the Eagle Ford's economic impact on 14 counties directly impacted by Eagle Ford activity – Atascosa, Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Live Oak, Maverick, McMullen, Webb, Wilson, Zavala -- and six adjacent counties that are indirectly impacted – Bexar, Jim Wells, Nueces, San Patricio, Uvalde and Victoria counties.

The projections put forth in the initial study of the Eagle Ford in February 2011 were conservative based on limited information at the time. Since then, production conducted in 2010 has far exceeded the expectations outlined in the initial report due to rapidly evolving business activity.

Drilling activity in 2011 generated just under $20 billion in economic output in the 14 counties directly affected by Eagle Ford activity, supported 38,000 full-time jobs, resulted in $2.6 billion in salaries and benefits paid to workers; $10.8 billion in gross regional product; $211 million in local government revenues; and $312 million in state revenues, including $120.4 million in severance taxes.

In Bexar County alone – a county indirectly impacted by Eagle Ford activity – drilling and extraction activities generated $705 million in output impact revenues; supported 4,290 full-time jobs; resulted in $423 million in gross county product impact; and resulted in $186 million in salaries and benefits paid to workers. These revenues resulted from activities such as companies headquartering operations in the county; refining; construction and renovation.

Eagle Ford Impact in 2021

Eagle Ford activity in the 14 counties could generate $62 billion in economic output over the next decade, but could go as low as $26.1 billion and as high as $96 billion, depending upon commodity prices and other variables, said Dr. Thomas Tunstall, director of the Center for Community and Business Research.

Other impacts could include:

  • 82,645 full-time jobs supported
  • $6 billion in salaries and benefits paid to workers
  • $34.1 billion in gross regional product (value added)
  • $888 million in local government revenues
  • $1.6 billion in state revenues, including $740.9 million in severance taxes

For the 20-county area, Eagle Ford activity in 2021 could support:

  • 116,972 full-time jobs
  • $7.7 billion in salaries and benefits paid to workers
  • $42 billion in gross regional product (value added)
  • $1.09 billion in local government revenues
  • $1.76 billion in state revenues

A second analysis to be released later this summer will outline the Eagle Ford's impact on jobs and offer a more detailed study of the Eagle Ford's impact by county.

Eagle Ford Transforming San Antonio, South Texas

The results of the study were highlighted in a presentation in San Antonio on Wednesday at an event attended by members of state and local government, the oil and gas industry and local business community.

The Eagle Ford play has transformed both San Antonio and South Texas, bringing thousands of jobs, millions in tax revenue and billions in economic output to the 20-county region in South Texas, from local retailers benefiting from increased economic activity to revenue for landowners to wealth for once property-poor school districts, said Joe Straus II, speaker of the Texas House of Representatives.

San Antonio Mayor Julian Castro said the impact of the Eagle Ford shale on South Texas is far greater than the jobs that have been or will be created, but the opportunity for greater prosperity for the region in the coming decades.

The investments not only in the Eagle Ford but renewable energy will make San Antonio an energy city of the 21st century, Castro said. To achieve this goal, investment in local universities and institutions such as the South Texas Sustainable Energy Research Institute make it easy to do business in South Texas and ensure the public sector is a good partner.

The economic growth in these counties also is raising a number of challenges for policymakers in terms of planning infrastructure, such as roads, schools and housing.

"The residents and local leadership of South Texas have taken a proactive and collaborative approach to this new economic opportunity, which we hope demonstrates how communities can embrace, invest and manage this new influx of revenues to ensure long-term regional prosperity," said Leodoro Martinez, executive director for the Middle Rio Grande Development Council and chairman of the Eagle Ford Consortium.

A panel comprised of local business interests and academia spoke about the impact that the Eagle Ford has had on their businesses. One panel member, a vice president of a uniform company, said the opportunity for his business in the Eagle Ford shale could offset the decline in revenues from spending on uniforms by the Department of Defense for the military.

The owner and president of two local security companies said his business has grown significantly thanks to the Eagle Ford activity boom, but has also presented challenges in hiring workers and training.

State officials also support public transparency in the disclosure of chemicals used in hydraulic fracturing, said Straus, noting that Texas was the first to pass a law requiring states to disclose the chemicals they use in fracturing.

Texas Railroad Commissioner David Porter noted that Texas passed the bill 17 months ahead of schedule, and also increased its staffing at its San Antonio and Corpus Christi offices to handle the increased permitting activity.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com


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