Burgeoning Texas shale delivers $14B economic boost

SAN ANTONIO — A new study estimates that the oil and gas industry had a $14.5 billion impact last year on the Cline Shale region, east of the traditionally busier drilling area of the Permian Basin.

The University of Texas at San Antonio’s Institute for Economic Development looked at a 10-county area and found the industry last year supported 21,450 jobs, with $1 billion in salaries and benefits to workers.

“We expect to see that continue,” said Thomas Tunstall, research director with the Institute for Economic Development. “The ultimate question has to do with how quickly it accelerates. There’s nothing to indicate that it will see the same kind of exponential rise as the Eagle Ford or Bakken (Shale).”

The Cline: West Texas shale could dwarf Eagle Ford

The core counties for the study were Fisher, Glasscock, Howard, Irion, Martin, Mitchell, Nolan, Reagan, Scurry and Sterling, where around 854 vertical wells and 57 horizontal or directional wells were completed in 2012.

Revenue boost

The study forecasts that by 2022 — depending on a variety of factors that include oil prices and well productivity — the annual economic output could be as low as $7.6 billion or as high as $34.3 billion.

Neighboring counties, including Brown, Coke, Coleman, Runnels, Taylor and Tom Green, don’t have much drilling activity, but have had a lot of construction and new headquarters as a result of the boom.

The study was paid for by the West Texas Energy Consortium, a group of stakeholders and community members in the region.

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The oil and gas activity generated $472 million in state revenue last year, including $187.4 million in severance taxes, and $447 million in local government taxes, the study said.

And 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, many of which overlap.

“They’ve had productive oil fields out there for decades, depending on the price of oil,” Tunstall said. “I think they’ve learned to deal with the ups and downs and the cyclical nature of the business. I think they have a skilled workforce.”

South Texas economic boon

UTSA’s Institute for Economic Development has been tracking the economic impact of the Eagle Ford Shale in South Texas as well. Last year, 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 counts more than 46,000 people directly employed thanks to the South Texas oil field last year.

Tunstall said that one of the long-term challenges for both West and South Texas will be to diversify their economies. But it may be easier for South Texas.

“In South Texas, everything is not so far apart and the landscape changes,” Tunstall said. “In West Texas, it’s mostly scrub, the two interstates and it takes a long time to get out there. It makes it harder for them to diversify.”


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