Eagle Ford Shale activity bottomed in 2016 and since has turned the corner, as more rigs are raised and activity is escalating, a South Texas economic study is indicating.
After several years of unprecedented growth, the Eagle Ford, a trend that stretches from South Texas to north of Houston, did not escape the sharp decline in commodity prices that negatively impacted the energy sector beginning in late 2014. However, the current scenario offers more job opportunities in South Texas region when compared to past decades of declining population and jobs in several counties in the area.
To determine the revival in activity, The University of Texas at San Antonio’s (UTSA) Center for Community and Business Research (CCBR) completed an analysis for the South Texas Energy and Economic Roundtable (STEER). "Economic Impact of the Eagle Ford Shale, Business Opportunities and the New Normal” updated the play’s economic impact analysis across 2014, 2015 and 2016.
“Our report indicates that the decrease in economic impact bottomed out in 2016 and appears to have turned the corner,” said CCBR Senior Research Director Thomas Tunstall, who led the study. “Oil prices in 2017 are higher and rig counts have risen from their lows last year.”
As of last Friday, the rig count in the Eagle Ford overall was at 84. Since rigs began going up again across the U.S. onshore, most of the job revival has been in Texas.
According to the CCBR research, gross output from Eagle Ford activity across the 21-county area of South Texas jumped from $87 billion in 2013 to $123 billion in 2014.
Following the peak in 2014, gross output from Eagle Ford activity fell to $80 billion in 2015 and to $50 billion in 2016.
Jobs supported by the Eagle Ford also peaked in 2014 at 191,153 from 154,984 in 2013. By 2016, the number of jobs had fallen to 108,213.
"Although we experienced a decrease in jobs and economic impact in 2015 and 2016, we continue to see that the oil and gas industry is essential to the livelihood of South Texas,” said STEER CEO Omar Garcia.
“With more than 100,000 jobs and $55 billion in economic output last year, the results of the UTSA study further illustrates the importance of the oil and gas industry to South Texans. The industry in South Texas brought much needed infrastructure along with a sustainable source of income to the area.
“Sustained growth will further benefit the region through an increased tax base along with increased job and educational opportunities.”
Since August 2014, the West Texas Intermediate (WTI) oil price fell from more than $100/bbl to $43.40 by March 2015. By February 2016 WTI was close to $26.20/.
“Since then however, the price has recovered and by January 2017 it had reached $53.00/bbl, signaling important opportunities for future growth as the price more than doubled in less than one year,” researchers said.
Additionally, other industry sectors also have grown in the Eagle Ford, with many, but not all, directly or indirectly associated with oil and gas activity.
The study analyzed a 21-county area, including counties considered core to the South Texas Eagle Ford -- Atascosa, Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Lavaca, Live Oak, McMullen, Maverick, Webb, Wilson and Zavala -- and six adjacent counties -- Bexar, Jim Wells, Nueces, San Patricio, Victoria and Uvalde.
The second phase of the study provides breakouts for all 21 counties individually and compares inter-industry relationships from 2010-2015. The comparison of different multipliers demonstrates how employment and production have been affected in the area.
"The Eagle Ford Shale play became a boon to the South Texas economy and provided an opportunity to boost local infrastructure,” said Port Corpus Christi Executive Director John LaRue. “Our region is well positioned for a successful future as local area production picks back up.”