The DeWitt County, TX, tax base might be bursting with Eagle Ford Shale dollars, but the South Texas county’s roads are buckling under the weight of trucks and other vehicles in the service of developing the play, a new study has found. And a county judge claims his county and others in the play are being short-changed when it comes to funds for road repair.
The study evaluated 394 miles of county roads. Based upon drilling activity expectations, indications are that the cost of providing a road system to serve both the public and oil and gas industry could be as much as $432 million.
The study was commissioned by DeWitt County Commissioners Court in January and performed by Naismith Engineering Inc. of Corpus Christi, TX.
A typical road in the county has base materials ranging four to six inches deep on top of soil and underlying an asphalt seal coat in some instances, according to David Underbrink Sr., lead engineer on the project. “All it takes is one pass of six million pounds of drilling equipment to destroy a road like that,” he said.
Current leaseholds could yield as many as 3,250 more wells at 65-acre spacing, according to estimates.
DeWitt County Judge Daryl Fowler serves on the Texas Department of Transportation’s Energy Solutions Task Force. He said the impact of energy development on roads in his county and other Eagle Ford counties is too great of an economic burden. According to DeWitt County’s budget, property tax revenue for the current fiscal year, which ends in September, is expected to be $7.24 million.
The county does receive producer money from two companies each time one of them spuds a new well. The cash is used for road maintenance and repairs, according to Fowler. Other companies assist the county on an ad hoc basis, but some do not contribute at all, he said.
“Rural counties do not have limitless income potential just because the tax base is exploding,” Fowler said. He is recommending voluntary road use agreements with oil and gas companies coupled with fees to help offset the coast of road damage as well as reallocation of the oil and gas severance tax collected by the state.
The severance tax currently goes into the state’s Permanent School Fund and Economic Stabilization Fund. While these funds benefit, the farm-to-market and county road systems suffer from the activity that makes the additional revenue possible, Fowler said.
According to Fowler’s analysis of revenue data he has collected, 24 Eagle Ford counties were responsible for more than $323 million of the state’s severance tax receipts during the last fiscal year.
Production from wells in DeWitt County yielded $57.5 million of the total, according to the county judge, who said it is hard to reconcile that amount with the $112,000 the county received from axle fees and gasoline tax remittances during the same period. Some of the severance tax dollars should stay in the producing county, he said.
“Right now, taxes and donations are the only two viable options available to fix county roads, which may require up to $80,000 per mile to repair and up to $1.9 million per mile to rebuild,” Fowler said, citing the study’s findings.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 2158-8023 |