Development of oil and natural gas in the Eagle Ford Shale contributed $25 billion in total economic output to the South Texas region last year, according to a study released last Wednesday by the Center for Community and Business Research at The University of Texas at San Antonio Institute for Economic Development.

“The Eagle Ford Shale has proven to be one of the most important economic engines in the state,” said Thomas Tunstall, director of the center and the study’s principal investigator. “In 2011 alone, the play generated over $25 billion in revenue, supported 47,000 full-time jobs in the area and provided $257 million in local government revenue.”

The research report was released in San Antonio at an event that featured several energy industry and economic development officials. Also launched last Wednesday as the new website Texas Natural Gas Now, which is intended to be a source of information for anyone interested in development of the state’s natural gas reserves.

The study used 2011 as the baseline case for information on production, drilling and related activities to help interpret the rapid changes occurring in the region. The study focused specifically on the impacts of 14 producing counties that are of particular interest in the Eagle Ford Shale development area: Atascosa, Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Live Oak, Maverick, McMullen, Webb, Wilson and Zavala. In addition, significant nonproduction activity is occurring in six peripheral counties and is included in the analysis. These counties are Bexar, Jim Wells, Nueces, San Patricio, Uvalde and Victoria.

Production of oil, natural gas and condensate from the Eagle Ford increased dramatically from 2010 to 2011, and there’s more to come, thanks in large part to the attractive economics offered by the Eagle Ford’s oil and liquids-rich gas. From 2010 to 2011 Eagle Ford gas production more than doubled to more than 271.8 Bcf; oil production increased by more than six times to more than 28.3 million bbl; and condensate production tripled to more than 21 million bbl. The study made projections for future Eagle Ford production using three price assumption scenarios: low, medium and high for each of the years 2012 through 2021.

In all three scenarios the 2012 assumption for gas is $2.96/Mcf at the Henry Hub and $100.64/bbl for West Texas Intermediate (WTI) crude. In the low-price scenario prices trend upward to $3.07/Mcf for gas and drop to $63.24/bbl by 2021. In the moderate-price scenario prices trend upward to $4.11/Mcf for gas and $130.45/bbl for WTI. And in the high-price scenario, gas prices climb to $5.76/Mcf and oil prices rise to $169.21/bbl by 2021.

In 2021, using the moderate price estimate (Henry Hub gas at $4.11/Mcf and WTI crude oil at $130.45/bbl), Eagle Ford production is projected to be more than 864.9 Bcf of natural gas; nearly 121.4 Bcf of casinghead gas; nearly 169 million bbl of crude oil; and nearly 126 million bbl of condensate. A total of 25,104 new oil and gas wells are projected to be drilled over the years 2012 to 2021 in the moderate scenario, with a low estimate of 13,537 and a high estimate of 34,039.

“Indeed, activity in the Eagle Ford Shale has expanded at an unprecedented rate, and the increase in production from 2010 to 2011 has been accompanied by equally significant increases in permitting, well drilling and completion, residential and commercial construction, pipeline construction, and numerous other support activities,” the study said.

According to the study, development of shale last year paid $3.1 billion in salaries and benefits to workers; provided more than $12.6 billion in gross regional product; added more than $358 million in state revenues, including $120.4 million in severance taxes; and spurred triple-digit sales tax revenue increases in various local counties.

“We view the Eagle Ford activity as an economic opportunity of a lifetime,” said Mario Hernandez, president of the San Antonio Economic Development Foundation. “The key goal is the increase in investment and jobs. And if the communities will partner with the private companies that are creating these jobs, it can be a win-win for everybody.”

In the 14-county area of the Eagle Ford the total economic output impact of the play in 2011 was just under $20 billion. In the region 38,000 full-time jobs were supported; $2.6 billion in salaries and benefits were paid to workers; and $211 million in local government revenues was generated, according to the study.

“The residents and local leadership of South Texas have taken a proactive and collaborative approach to this new economic opportunity, which we hope demonstrates how communities can embrace, invest and manage this new influx of revenues to ensure long-term regional prosperity,” said Leodoro Martinez, executive director for the Middle Rio Grande Development Council and chairman of the Eagle Ford Consortium.

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