Oil Prosperity Comes to Eagle Ford Texas
From the Dallas Federal Reserve report "Oil Boom in Eagle Ford Shale Brings New Wealth to South Texas":
"Oil and natural gas activity is booming again in South Texas. The 2008 discovery of the Eagle Ford Shale play has breathed new life into industry in the region, where many mature and declining fields have operated for more than 40 years. Perhaps the largest discovery of new oil reserves in the United States since Prudhoe Bay, Alaska, in 1968, the Eagle Ford Shale extends over 23 South Texas counties (see map above).
Its southern edge begins near Laredo and trends northeast toward Austin, producing large quantities of natural gas. The northern edge—the formation is about 50 miles wide—follows a similar trend but produces oil. A central zone is rich in condensates, also called natural gas liquids, valuable to the refining and petrochemical industry on the Texas Gulf Coast.
The race to exploit these new South Texas reserves began in late 2008 and is primarily the result of recent advances that unlocked the secret of extracting natural gas and oil from shale. This new technology—along with favorable prices, existing infrastructure and ready access to the Gulf Coast refining and petrochemical complex—created the Eagle Ford Shale boom. Rapid oilfield development has brought new jobs, rising income and growing wealth to this historically low-wage, low-income area.
The Eagle Ford’s scale and speed of development proved so robust that they quickly overwhelmed previous efforts to comprehensively measure the economic impact. Recent data suggest that the oil boom’s impact on jobs, income and spending in the region has been profound.
Surging drilling activity has brought strong employment and wage growth to most of the counties in the Eagle Ford. Counties located above oil and condensate deposits, such as Dimmit, La Salle and McMullen, have experienced the greatest increase in employment and average weekly wages. Job growth was strong from 2005 to 2008, likely fueled by rising natural gas prices even before the Eagle Ford Shale play began (see bottom chart above).
Jobs in the region sank with the recession amid sharply dropping energy prices in 2009. From a low during first quarter 2010 to third quarter 2011, jobs grew at an annual rate of 5.9 percent, reaching 2.9 percent above the previous peak value. By comparison, during the same period, jobs statewide increased 2.4 percent and remained 0.01 percent below the previous high.
Generally, Eagle Ford counties represent about 2 percent of all Texas jobs. Since the beginning of 2010, the 15,773 net new jobs account for 6.9 percent of the state’s net gain during the period. While recent activity is impressive, more growth may lie ahead to meet demand. The scale of development has surpassed the capacity of local industry. Hotels, restaurants and gasoline stations are jammed with outside managers, crews and technicians. As the Eagle Ford matures and the local service industry expands, many outside workers may become local residents and employees.
Average weekly wages have grown markedly in most Eagle Ford counties. For the 23 counties, the average annualized growth rate in the weekly wage during this period was 14.6%. By comparison, average weekly wages rose 6.8% in Texas, from $875 to $966, and 6.3% in the U.S., from $870 to $953. Given the strong growth in employment and average weekly wages in the Eagle Ford, seasonally adjusted total wages paid in its top five counties increased at an annual rate of 63.4% during this period, while the entire 23-county area saw a 25% increase."