South Texas sees struggles, opportunities amid oil boom

CORPUS CHRISTI — Along a bay front dotted with sailboats and shrimp boats, the movement of crude oil has long been part of the background scenery.

Only now, most of the ships sit lower in the water when they leave — heavier and filled with Eagle Ford Shale crude oil bound for other U.S. ports and Canada — than when they arrive at the port.

Starting in July for the first time ever, more domestic oil left the Port of Corpus Christi than foreign oil arrived. It’s a startling trend, but just one of several effects of the Eagle Ford boom, which has created jobs and wealth in spades, but also turned South Texas upside down in many ways.

“No one really foresaw the massive changes in this industry,” said NuStar Energy LP CEO Curt Anastasio, who spoke Tuesday at the fall conference of the Eagle Ford Consortium, a group of officials from several counties impacted by drilling and production.

The Eagle Ford boom started five years ago this month with the announcement of a successful shale well in La Salle County.

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But communities and companies continue grappling with the growth and change that’s come with an influx of oil and gas activity.

San Antonio-based NuStar is one company that used to receive African crude oil in Corpus Christi and ship it north. It already had pipelines in South Texas — which it reversed — and was the first to ship Eagle Ford crude a few years ago.

Anastasio told the audience during a keynote talk that shale drilling is here to stay, and that the Eagle Ford and North Dakota’s Bakken Shale remain economic for drilling even if oil prices drop to around $60 to $70 a barrel.

“You’re near the Gulf. You’re near refineries. You’re near this very extensive infrastructure,” Anastasio said.

NuStar has invested around $185 million in the Eagle Ford region so far, and expects to spend around that much in the next year.

Many South Texas operators, service companies and communities also have their eyes on Mexico, which is considering constitutional changes that would open its vast oil and gas fields to more foreign investment, allowing outside companies to share in profits.

The Eagle Ford in Texas arcs from East Texas to the border, but doesn’t stop there.

“What you’ve got in the shale play down there (in Mexico) is as extensive if not greater than what we’ve got here,” said Phil Wilson, executive director of the Texas Department of Transportation. “Geology does not respect borders.”

Eagle Ford operators and oil-field service companies are monitoring the Mexican policies with the thought that they would be among the best positioned to make the cross-border leap. Some operators, such as the privately held Lewis Energy Group, have been working in Mexico for years already.

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And while the Mexican side of the shale field will bring business opportunity to Texas, it also means that the state’s transportation infrastructure — from roads to ports, rail and pipeline — will see more traffic, Wilson said.

Already in South Texas, heavy trucks carrying everything from crude oil to drilling rigs have torn apart infrastructure — one of the most visible problems for communities.

The roads in South Texas were largely built in the 1950s and 1960s, intended for 50 to 100 vehicles per day with maximum weights of 25,000 to 40,000 pounds.

“Today, every time you drill a well — one well — you have 1,300, 80,000-plus-pound trucks. That’s equivalent to 8 million cars,” Wilson said. “These roads start breaking. It is what it is. You start to have shearing on the side. You have concrete breaking, asphalt tearing up.”

The state lacks the money to fix the roads, and plans to turn 83 miles of South and West Texas roads to gravel. The agency says that safety is its priority, and graveling would slow trucks and save money.

But the gravel plans have created an outcry. Local officials have been scrambling to figure out a way to avoid downgrading key infrastructure.

Wilson said the state simply does not have the money to do all of the work needed.

“It’s a math problem,” Wilson said.

While county tax receipts are up, they don’t cover the hundreds of millions of dollars needed for repairs. And TxDOT gets funding from gas taxes, not the state’s severance taxes on oil and gas production. A constitutional amendment in 2014 would send a slice of money, if approved by voters, from the state’s severance taxes to road repairs, but that’s a year away.

Still, many in the region see the challenges as part of a historic opportunity.

“For those of us south of I-10, it seems we’ve always been left behind,” said John LaRueÖ, executive director at the Port of Corpus Christi, which has seen billions of dollars in recent investment. “This gives us a chance to rise to the top.”