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| Eagle Ford Shale Jobs. The Economic Impact
On South Texas
The article The Eagle Ford Shale discussed the new shale gas discovery in that is beginning to boom in McMullen, LaSalle, Dimmitt and Maverick Counties. Petrohawk Energy now has a handful of horizontal wells in the Tilden area that are exceeding expectations in both amount of gas and condensate produced and quality of gas in terms of hydrocarbon components. Not Like Past Oil Booms In South Texas
Petrohawk has now leased almost 200,000 acres in LaSalle and McMullen counties and now other oil and gas companies are following suit, paying up to $400 an acre or more. Only because the price of natural gas has been below $4.00 per MCF has the lid on drilling stayed put. Once the Henry Hub price of natural gas (the measure by which it is traded on U.S. futures exchanges) gets above $6.00 we will see a dramatic increase in Eagle Ford shale drilling. One thing that makes this natural gas play different from past oil and gas booms is the fact that, like the Barnett Shale, there is a very good chance that a well will be productive anywhere in the leasehold area. While the Eagle Ford shale is not uniform and has different porosity and quality of gas depending on where it lies, it is for the most part uniform throughout much of McMullen and LaSalle county. This means that once the boundaries of the Eagle Ford shale have been determined a program of infill drilling will begin to fill in the spaces. This will mean the creation of hundreds of oil and gas industry jobs in this area of Texas. In the 1980's the small town of Tilden enjoyed a brief oil boom with the development of the Olmos sand. Production is still being made from a few wells but the impact on the area in terms of oilfield jobs has diminished greatly.
Once the full extent of the Eagle Ford shale is being explored we should see a dramatic boom in the number of service company jobs. There will be a need for wireline logging trucks, workover rigs, pipeline construction crews, water haulers, hotshot delivery services, lease construction and more. The number of oilfield jobs in South Texas that could result is very encouraging. Alice Texas and Corpus Christi Texas, currently feeling the effects of the oil and gas slump, should get a big boost from the Eagle Ford shale in the coming months. Small towns like Jourdanton, Pleasanton, Tilden, Three Rivers, Freer (already home to many service companies) and Cotulla should see a number of oilfield jobs created by the upcoming drilling activity. Owners of every type of business should benefit as royalty checks and oilfield payroll money is pumped back into the local economy. Local tax coffers should see more revenue and this is good news for small town school districts. Another Barnett Shale?
Differences Between The Eagle Ford Shale and Barnett Shale
While there are some very big differences in the Barnett Shale and the Eagle Ford shale we should see a similar rate of job creation. Barnett shale wells are much shallower, about 4000 feet shallower on average. Eagle Ford shale wells cost more to drill due to the depth and because of more complex frac jobs that are required. However, the cost of drilling wells in the Eagle Ford shale will diminish with time and cost will become less relevant as the price of natural gas rises. Another factor that makes McMullen and LaSalle counties an ideal location for a large gas field is the lack of any major city. In the case of the Barnett shale there are tremendous obstacles to drilling, including subdivisions, roads, golf courses, noise regulations, etc. Another large headache to oil companies is the incredible number of parcels, some as small as thirty by fifty feet, on which gas royalty payments must be paid to landowners holding mineral rights. Most of the land in McMullen and LaSalle county is in the form of large ranches, which simplifies a number of things. None of the obstacles seen in the Barnett shale exist in this sparsely populated part of Texas and this in itself will result in lower costs to oil companies. What will the impact on the economy of South Texas be? Perhaps we can look to the Barnett shale for an example. In the Dallas - Fort Worth area it was estimated that the job creation effect in the past five years was equivalent to one Boeing aircraft plant opening every six months. These jobs largely resulted from drilling and completion of horizontal wells, pipeline construction and the trickle down effect on other professions. In South Texas, should drilling in the Eagle Ford shale formation take off, there will be all kinds of jobs created besides oilfield jobs. As landowners get large royalty checks they often use this money for ranch improvements, bigger homes, cars and trucks and so on. For an area of the country that has seen it's share of boom and bust oil activity, the Eagle Ford shale formation could mean quite a few lasting jobs. Return to main article about the Eagle Ford Shale: The Eagle Ford Shale |
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