Eagle Ford Shale discovery upended South Texas 10 years ago
When Petrohawk Energy Corp. announced a decade ago that it had made two big shale gas wells in South Texas, everything changed.
Companies poured into the region. They deployed hordes of landmen to tiny county courthouses to comb through mineral records. They spent billions to lease acreage and develop what would become the Eagle Ford Shale, which stretches 400 miles from the Bryan-College Station area to Laredo, and is now the second largest oil producing and fifth largest natural gas producing region in the U.S.
The field ultimately helped reshape the global energy market and upend world geopolitics— but first, it upended South Texas.
For Floyd Wilson, then-president and CEO of Petrowhawk, the Oct. 21, 2008 announcement was a coup accomplished through stealthy buying of acreage under pseudonyms and keeping reports to the state under wraps until the last moment.
“We didn’t tell anybody,” Wilson said. “So we started leasing land, we started with maybe 30,000, 40,000 acres and pretty soon we had probably 300,000 acres. By that time word was out, we made some announcements in 2008 and the land rush started in the Eagle Ford.”
Oil and gas drilling permits skyrocketed from 26 in 2008 to 1,010 in 2010, hitting a peak of 5,613 in 2014, according to the Texas Railroad Commission, which regulates the oil and gas industry in Texas.
Oil production in the Eagle Ford grew from less than 60,000 barrels a day in October 2008 to a peak of 1.72 million barrels a day in March 2015. Natural gas production expanded from 1.68 billion cubic feet a day to 7.42 billion cubic feet, according to data from the Department of Energy.
It wasn’t the first shale rush Wilson had started. Petrohawk drilled previously in the Haynesville, a natural gas field in East Texas, Louisiana and Arkansas. It was there that the company got a feel for combining horizontal drilling with hydraulic fracturing, the process of pumping high volumes of water, chemicals and sand underground to crack shale rock and extract oil and natural gas.
Shale became “almost an obsession of mine,” said Wilson, now president and CEO of Permian Basin-focused Halcón Resources Corp In 2007, Wilson told Petrohawk’s exploration group to find him another shale play. That’s when they went out and started purchasing acreage in the Eagle Ford and West Texas’ Permian Basin.
As a shale pioneer, Petrohawk became a target — and Wilson one of the biggest winners to emerge from the Eagle Ford boom. Australian mining company BHP Billiton snapped up Petrohawk in a deal worth $15.1 billion, including debt. Wilson now heads the Permian-focused, Houston-based Halcón Resource Corp.
In Karnes County, it was “out of control chaos” said county commissioner Shelby Dupnik.
“All of a sudden we started to see welding trucks coming in, travel trailers,” Dupnik said. “What we saw was an explosion but we had no housing for anybody here.”
The county had to upgrade its road maintenance crews and equipment, create a full-time EMS service, and increase pay for its employees to try to keep them for leaving for oil field jobs.
In neighboring DeWitt County, the sleepy county seat of Cuero exploded from 6,800 people in 2010 to an estimate of nearly 8,300 in 2017. New hotels sprung up. Cuero voters approved a $76 million school bond package for new buildings including a performing arts center. H-E-B built a new and larger store that opened in 2015.
The growth was dizzying. County Judge Daryl Fowler compared it to “big city life.”
“It was just a constant stream and it was day and night, a constant stream of folks,” Fowler said. “When you’re used to seeing the sidewalks roll up at 6 o’clock in the evening, it’s a stark contrast when that comes in and takes over.”
The industry paid nearly $1.6 billion in local government taxes across the 15-county Eagle Ford region and employed an estimated 130,000 people in 2014, according to a June 2017 study by the University of Texas at San Antonio. The impact on the region was estimated to be a staggering $98 billion in that year alone.
The investment and growth “transformed” South Texas said Omar Garcia, former president and CEO of the South Texas Energy & Economic Roundtable, an industry group.
“South Texas was a sleepy, dormant area that was relying on tourism, hunting, and agriculture,” Garcia said. “Now the region has high paying jobs, highly skilled jobs, that are going to be around for the foreseeable future.”
The growth had another side to it. Rural roads and infrastructure struggled and sometimes crumbled under the strain of overloaded semi trucks on farm-to-market roads intended for light traffic.
Since 2011, Fowler said the county government has spent $139 million on county road repair.
There’s been an environmental footprint as well.
“Oftentimes you find out much later about the problems than you do initially — all the hazardous contaminants that are being injected underground, do they stay in that zone or do they migrate?” asked Cyrus Reed, conservation director of the Sierra Club’s Lone Star Chapter. “Infrastructure placed to move gas around, does it stay in the lines or escape? Some of those things we may not know 10 years from now.”
Activism in the region has been “muted” with pockets of resistance over specific issues like oilfield solid waste disposal sites and injection wells, Reed said. One reason may be because the region is so spread out and many of communities have never seen anything like the Eagle Ford, Reed added.
For Fowler, the boom of the Eagle Ford was a “rebirth” for Cuero and the wider region.
“Before the Eagle Ford Shale came here this was an aging community that was becoming more and more of a bedroom community for Victoria,” he said. “But the Eagle Ford changed all that — a lot more businesses, a lot more homes.”
The region has learned to ride the roller coaster of oil price swings, too. Oil prices fell from $107 a barrel in June 2014 to $26 a barrel in Feb. 2016, leading to drastic cuts in the number of active drilling rigs and mass layoffs. In June 2014 the number of active drilling was in the 260s, but fell to a low of 28 by the end of May 2016.
Drilling rig counts have since recovered to the mid-90s, according to data from S&P Global Platts. Oil prices have also recovered, spending most of 2018 above $60 a barrel.
Even at today’s less frenzied pace, Dupnik, the Karnes County commissioner, said the Eagle Ford has left an indelible mark.
“You could go around town and see everybody you knew, you’d walk into a store and you’d see most of your friends,” Dupnik said. “Now you walk in and you don’t know who they are, it’s changed that much.”
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