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Eagle Ford Shale – A Key Driver in the South Texas Economy

Discovered in 2008, the Eagle Ford Shale play is one of the largest discoveries of new oil reserves in the United States since Prudhoe Bay, Alaska in 1968, and extends over 23 South Texas counties. Its southern edge begins at Laredo and trends northeast toward Austin producing natural gas. The northern edge, a formation 50 miles wide, produces oil and the central zone is rich in natural gas liquids.

New Trends are Pushing South Texas Forward

The Eagle Ford’s scale and speed of development based on new technologies that allow for extraction of natural gas and oil from shale has created the ‘Eagle Ford Shale Boom’.  This has attracted exploration and production companies from the Super-majors to the Independents, based on several favorable factors including:

  • High Reservoir Quality
  • Favorable Business Climate
  • Diversity of Play: Contains both natural gas and oil deposits
  • Accesses to Talent – Jobs brought to the area as a result of the shale play have wages considerably higher than the average for the region.
  • Lower breakeven point – Although the Eagle Ford is not a blanket reservoir, and production capabilities differ from point-to-point, there are ‘sweet spots’ where wells are extremely economic.
  • Existing infrastructure to support oil and gas operations
  • Ready access to Gulf Coast refineries

The high quality and diversity of the shale play has been an important factor in this growth:  while natural gas was inexpensive, oil and gas producers shifted focus to more profitable oil.  Technology was transferred from shale gas to liquids made from shale, and by 2011, the number of drilling permits in the area more than doubled.

Since 2007, Eagle Ford counties have increased production of natural gas by 24%, oil by 80% and condensate by 541%.

Effects on the South Texas Economy

The Eagle Ford Shale Play has created revenue for local economies through lease payments (made to reserve mineral rights for a specific location), drilling, pipeline and other infrastructure construction, royalties, and the purchase of local goods and services. There has been an estimated $7.5 billion in lease payments since 2007.  Even if only 5% of this compensation is spent in the Eagle Ford counties, it brings $375 million into the local economy. In 2011, the shale play generated an expenditure of approximately $14.6 billion by oil and gas producers. Additionally, the jobs brought to the area as a result of the shale play have considerably higher wages than the average for the region, with wages increasing 14.6% in the 23 Eagle Ford counties, as compared to 6.8% for all of Texas.

The Shale Boom is Expected to Continue 

The discovery of the Eagle Ford Shale Play has sparked enormous oil and gas growth in South Texas. The Shale Boom has also been good for Texas as a whole, as companies drilling in the region often spend money on services in other cities.  Although it’s difficult to say how long the Shale Boom will continue, large companies are committing billions of dollars to build up the infrastructure of the region, so it is expected that economic growth will continue for years to come.

Clover specializes in placing professionals in the oil and gas industry. If you are an Operator seeking to augment Project Teams, contact Jeff.W@clovergs.com

If you are an experienced professional looking for opportunities in the Upstream Industry (Alaska, Eagle Ford Shale Play, Bakken Formation, Deepwater Gulf of Mexico), send your resume in complete confidence to Chris.S@clovergs.com 

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