Shale Daily / NGI All News Access

Eagle Ford Also a Tax Money Gusher, Texas Lawmakers Told

Texas lawmakers on Wednesday gained some insight into where an increasing amount of money in the Lone Star State comes from: the Eagle Ford Shale oil and gas patch. The state is producing more oil than it has in the last 25 years, thanks in large part to the unconventional play in South Texas.

The Eagle Ford Shale Legislative Caucus (EFSLC) briefed lawmakers on the economic impact of oil and gas development in the Eagle Ford counties.

"The Eagle Ford Shale is having a tremendous impact on the Texas economy, including by enhancing economic development and spurring investment throughout the region," said presentation organizer State Sen. Judith Zaffirini (D-Dist. 21). "What's more, tax revenue generated because of shale development has helped improve the state's financial situation. As the pace of the legislative session continues to accelerate, it is critical that legislators have access to the best data regarding the shale's impact on our state and its communities."

Presenting and answering questions at the briefing were James LeBas, fiscal consultant with the Texas Oil and Gas Association, and Thomas Tunstall, director of the Institute for Economic Development at The University of Texas at San Antonio.

"It has been 25 years since Texas produced this much oil," Tunstall said. "By 2021, we expect the shale to yield more than $90 billion in total economic output and support more than 116,000 full-time jobs."

Late last month, economist Karr Ingham, who compiles the Texas Petro Index on behalf of the Texas Alliance of Energy Producers, said at a presentation in Houston that the state had returned to its crude oil roots. "Texas is at the center of a national energy renaissance...Thank goodness for the Permian [Basin] and the Eagle Ford," he said (see Shale Daily, Jan. 29).

LeBas said development of the Eagle Ford has generated $2.5 billion in direct tax revenue to state and local coffers over the last three years.

"Oil and gas activity is broadly taxed in Texas and thus the success of the industry in recent years has brought significant fiscal benefits to the state and its political subdivisions," LeBas said in his presentation to lawmakers. "Mineral reserves under the surface are subject to local property tax; active production itself is subject to a state severance tax, and most purchases of oil and gas equipment are subject to both state and local sales taxes."

Legislators who represent Eagle Ford counties founded the EFSLC last year to address issues related to oil and gas production in their districts and throughout the state. The caucus focuses on short- and long-term solutions to the impacts of the Eagle Ford development on transportation, education, public safety, housing, environment and other areas.

"As development in the shale continues, we must work with stakeholders to manage our natural resources responsibly, including not only our oil and gas reserves, but also our air and water," Zaffirini said. "We also must continue to support funding for important transportation projects that enhance commerce and safe travel in Eagle Ford counties."

Chair of the Government Organization Committee, Zaffirini represents nine Eagle Ford counties: Atascosa, Bee, Duval, Karnes, La Salle, Live Oak, McMullen, Webb and Wilson. The most active and highest-producing counties are in her district.

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