An updated study estimates that the oil and gas industry in a slice of West Texas could have a $20 billion economic impact and support more than 30,000 jobs by 2022.
The Permian Basin in West Texas has a multitude of overlapping oil fields, but the emerging Cline Shale on the northeastern edge has created a stir.
The University of Texas at San Antonio report considers the Cline Shale region as well as other counties nearby where the more established Wolfberry/Spraberry and Wolfcamp reservoirs are present.
UTSA estimates the economic impact of the industry could be anywhere from $7.5 billion on the low end to $34 billion under intense development. UTSA’s Institute for Economic Development considers $20 billion to be a moderate projection.
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The study focuses on 10 of the Permian Basin’s 39 counties: Fisher, Glasscock, Howard, Irion, Martin, Mitchell, Nolan, Reagan, Scurry and Sterling counties. It also includes a secondary study of five Permian Basin counties that surround those 10 —Brown, Coke, Coleman, Runnels, Taylor and Tom Green.
“The economic impact is more modest than if we had looked at the whole Permian Basin,” said UTSA Institute for Economic Development Research Director Thomas Tunstall.
The study is an update of one released last year that estimated that the oil and gas industry had a $14.5 billion impact in 2012 on the region, supporting 21,450 jobs.
By 2020, moderately-paced development should create 30,540 jobs, along with $664 million in local government revenue and $701 million for the state government.
“Although industry development may be still considered recent, the scope and breadth of these impacts are very large, and tangible effects on the region will be felt for years to come,” the study says.
The study was paid for by the West Texas Energy Consortium, a group of stakeholders and community members that are looking at everything from the immediate shortage of worker housing to longer-term impacts.
“Water is going to be an issue,” Tunstall said. “They’re going to have to have enough water to sustain and maintain the communities. They’re looking at opportunities to diversify the economy where they can.”
Although the region has been dealing with a housing crunch and price shocks that come with a boom, the Permian Basin is in many ways prepared for the activity. It’s a historic area for drilling, and there are several different producing rock formations.
Some of the biggest economic impacts are expected in Irion and Reagan counties, where the Cline, Wolfcamp and Wolfberry/Spraberry overlap, giving companies the potential for thousands of feet of payzone.
Early estimated recoverable reserves from the Cline were put at 30 billion barrels of oil, but analysts have since tamped down the grandiose expectations.
Instead, most of the rigs in the Permian Basin are focused on the Spraberry trend.
“The rigs are moving to the Permian, but they’re clearly not moving in big numbers to the Cline area,” Tunstall said.
The Institute for Economic Development has been tracking the economic impact of the Eagle Ford Shale in South Texas as well. While the Permian likely holds more recoverable oil, the Eagle Ford development has happened faster.
“People in West Texas have been watching with various emotions the activity in South Texas,” Tunstall said. “It’s the new Friday Night Lights, the Eagle Ford versus the Permian. Texans are naturally competitive.”
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Tunstall said his message for South and West Texas is this: Stick together at the Legislature in 2015. “All of you are in the same boat,” he said.
In 2012, UTSA estimates the Eagle Ford had a $61 billion impact and supported 116,000 jobs across a 20-county swath of South Texas.
America’s Natural Gas Alliance, an industry trade group, paid for that study. It calculates the direct economic impacts of oil and gas exploration, as well as the so-called indirect and “induced” economic activity created from things such as service companies building warehouses and offices or workers spending their paychecks.
The direct impact alone was enormous: the study counted more than 46,000 people directly employed.
UTSA is updating its Eagle Ford study and expects to release new numbers in September.
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