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Eagle Ford Shale impact according to UTSA study

May 14, 2012

Eagle Ford Shale activity generated an economic impact of more than $25 billion in South Texas in 2011, according to a University of Texas at San Antonio study.

The 50-mile-wide, 400-mile-long formation has been a hotbed of oil and natural gas drilling since the first well was drilled in 2008.

The study examined a 20-county region including 14 counties involved in production and six surrounding counties.

The study, which is the first to measure impacts outside the drilling area, concluded that drilling and related activity paid $3.1 billion in salaries and benefits, provided more than $12.6 billion in gross regional product and supported 47,000 full-time jobs.

The results were released at a luncheon attended by industry and local and state leaders at the Grand Hyatt. The study was produced by the university’s Institute for Economic Development’s Center for Community and Business Research and was supported with funding from America’s Natural Gas Alliance.

Oil production increased sixfold from 2010 to 2011 to more than 28.3 million barrels, while natural gas production doubled to 271.8 billion cubic feet, according to the study.

Production of condensate, or other liquids which can be extracted and sold, tripled to more than 21 million barrels.

Assuming a favorable pricing environment for oil, including global demand by users such as China, production could reach about 169 million barrels in 2021.

“If the price of oil drops below, say $60 per barrel, then I think we would start to see a decline in activity in the Eagle Ford Shale,” said Thomas Tunstall, director of UTSA’s business research center and principal investigator in the study.

Natural gas production could top 864 billion cubic feet by then, the study projects, though Tunstall said strong interest in gas likely won’t ramp up until prices pass the $3 mark per thousand cubic feet.

Still, the projections — which Tunstall said are moderate to conservative — would lift Eagle Ford’s impact to $62 billion in the 14-county drilling area, though it could range from $26 billion to $96 billion by the study’s estimates.

Tunstall said the ideal future for oil patch communities is that the boom should leave them with improved infrastructure such as better roads, medical facilities and schools, more housing and adequate water and power supplies to attract new residents, visitors and industry.

Eagle Ford’s direct impacts on Nueces and San Patricio counties include the presence of refineries and oil and gas support industries.

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