Trending
MOST READ

Best Salsa Club

Best of SA 2013: 4/24/2013
Beaches Be Trippin\': Five Texas Coast Spots Worth the Drive

Beaches Be Trippin': Five Texas Coast Spots Worth the Drive

Arts & Culture: Let’s face it, most of us Lone Stars view the Texas coast as a poor man’s Waikiki. Hell, maybe just a poor man’s Panama Beach — only to be used... By Callie Enlow 7/10/2013
Texas Law Leaves Abortion Out of Reach for Many Women

Texas Law Leaves Abortion Out of Reach for Many Women

News: Texas’ sweeping abortion law has already eliminated all abortion clinics south of San Antonio, and the last clinic west of the city is expected to close... By Alexa Garcia-Ditta 8/27/2014
How Rebates Have the Texas Film Industry Playing Catch Up To its Neighbors

How Rebates Have the Texas Film Industry Playing Catch Up To its Neighbors

Screens: See if you can spot the common thread that is pulling at the seams of the Texas film industry. On NBC’s The Night Shift, a stock-written staff... By Matt Stieb 8/27/2014
Oaxaca’s Lila Downs Bends Gender, Politics and World Music

Oaxaca’s Lila Downs Bends Gender, Politics and World Music

Music: Swaying side to side with a child in his arms, Texas Rep. Mike Villarreal nodded politely in my direction before returning his captive attention to the... By Jade Esteban Estrada 8/27/2014
Calendar

Search hundreds of restaurants in our database.

Search hundreds of clubs in our database.

Follow us on Instagram @sacurrent

Print Email

News

Why the Great Shale Rush in the Eagle Ford may be over sooner than you think

Photo: , License: N/A


$$$$$$

sa_20120314_eagleford

The Eagle Ford's growing economic imprint is undeniable, as a drive through any emerging South Texas boom town will show. Ranchers and farmers who had for decades struggled to eek out a living off the land are now banking monthly royalty checks in the five figures. "I can't tell you how many people today are wealthy who three years ago were growing cattle," said Mike Pierson, chamber of commerce director in Three Rivers. "There's a gentleman in town who's now a millionaire who prior to this went to the senior center and got his lunch for two dollars a day." In the same 1,878-population town companies can't build hotels fast enough for the work force coming down to man the nearby rigs. On a recent visit, the phone in Pierson's office rang every 10 minutes with someone looking for housing. Town officials recently learned of a house that squeezed 12 people into its garage, charging each tenant $150 per week.

Local governments across the play continue to celebrate the windfall in tax revenue, and Pierson said community leaders across the region, caught in "crisis mode" managing exploding growth, are closely watching industry projections in order to draft short-term and long-term plans to update and maintain local infrastructure.

Deborah Rogers, a former member of the Federal Reserve Bank of Dallas' advisory council, recalls the boom playing out in similar fashion across the Barnett shale, particularly when gas prices hit $13 per thousand cubic feet in 2008 and drilling reached a break-neck pace. But later that year the recession hit and natural gas prices took a dramatic plunge, shaking up the entire shale-gas business model. Energy companies reneged on high-dollar lease offers by the thousands. Royalties and tax receipts fell. A former stockbroker with Merrill Lynch, Rogers attended a 2009 speech by Aubrey McClendon, CEO of Chesapeake Energy Corp, the nation's second largest natural gas producer. McClendon began throwing out production data and bragging about royalties paid out to landowners in the Barnett, she recalled, predicting massive well growth over the next six years. "That's when the red flag started flying for me," she said. She took to studying well data from Chesapeake and other shale-heavy companies and found well production was falling much faster than previously estimated. The companies, she says, were saddled with debt, with little to no cash on their balance sheets. "I've referred to this as drilling for dollars in the capital market," she said. "As long as the companies could hype it up, it was worth it. … It started in the Barnett, then Fayetteville was going to be the next greatest thing. Then the Haynesville, then the Marcellus. Then the Eagle Ford. And the money just keeps flowing in like crazy."

We welcome user discussion on our site, under the following guidelines:

To comment you must first create a profile and sign-in with a verified DISQUS account or social network ID. Sign up here.

Comments in violation of the rules will be denied, and repeat violators will be banned. Please help police the community by flagging offensive comments for our moderators to review. By posting a comment, you agree to our full terms and conditions. Click here to read terms and conditions.
comments powered by Disqus