Oil and condensate production in the Eagle Ford has grown from 581 barrels per day in 2008 to more than 1.5 million barrels per day as of August 2014. The Eagle Ford’s impact continues to exceed expectations, and the play is attracting more capital investment than other shales in the United States, according to a study released Sept. 23 by the University of Texas at San Antonio (UTSA).

The study reveals that 3,311 wells were completed and producing in 2013, and natural gas production now tops 4 billion cubic feet per day. This is UTSA’s fourth quarterly report about the Eagle Ford’s economic impact. Lead researcher Thomas Turnstall said that the economic growth spawned by the shale is making community sustainability a more achievable goal.

“The ongoing activity presents South Texas community leaders with a rare opportunity to ensure the long-term viability of their cities, towns and counties,” said Turnstall, who recently spoke at Hart Energy’s DUG Eagle Ford conference in San Antonio.

The study estimates that the oil and gas industry in 2013 generated an overall economic impact of nearly $72 billion in the Eagle Ford’s core 15-county area. The industry provided almost 115,000 full-time-equivalent jobs in the 15 counties, and it contributed $2 billion to state and local governments.

A 21-county area, which includes the 15 core counties and six surrounding counties, generated more than $87 billion in economic output last year. Nearly 155,000 people were employed, and more than $2.2 billion was provided to state and local governments.

Looking ahead to 2023, the study forecasts that the 15-county area will have an economic output of at least $106 billion, employ nearly 151,000 workers and contribute about $3.8 billion to state and local governments. Also in 2023, the 21-county area is estimated to generate more than $137 billion in economic output, provide 196,660 full-time-equivalent jobs, and supply more than $4 billion to state and local governments.

“The oil and gas activity associated with the Eagle Ford Shale presents a tremendous opportunity for South Texas. However, it’s just that─an opportunity. Texas has had over a thousand ghost towns, by some accounts, and it is clear that the state does not need any more,” according to the study. “What is needed … are theories of economic development that look beyond merely job growth. Economic development should include improving the quality of life, environmental stewardship, development of high-quality infrastructure, and development of a local workforce. It is this foundation that will enable rural communities in Texas to accomplish perhaps their most important mission: diversification of local economies beyond oil and gas exploration and production.”

Exports

The increase in shale natural gas, oil and condensate production in the Eagle Ford and elsewhere in the U.S. has uprooted some previously held assumptions, the researchers observed. Regarding natural gas, billions of dollars have been spent on import facilities because domestic production was expected to remain on a long-term declining curve. However, many of those same facilities are being converted to export natural gas. As a result, billions more will be invested.

Because crude oil cannot be exported, lighter U.S. petroleum (West Texas Intermediate, or WTI) is selling at a discount to the Brent (North Sea crude) price, the study pointed out. Prior to the increase in unconventional oil and gas production in the U.S., WTI historically sold at a slight premium to Brent.

“Lifting the ban on oil exports would likely bring WTI back to parity with Brent crude prices and enable shipment to European refiners that are better suited to process lighter crudes. Such exports of lighter crudes from the U.S. could readily be substituted with the heavier crudes from Canada that are more optimal for much of the refinery capacity along the Gulf Coast.”

Natural Gas

Unconventional technology and a corresponding abundance of low-cost natural gas are starting to have a clear impact on economic activity in the U.S., the study concluded. “We can see this effect across several key areas, including electricity production, vehicle fuel, manufacturing and exports.

Statistics from the Energy Information Administration suggest that natural gas will account for 35% of electricity generation in 2040, while coal generation will drop to 32%. “This is due in part to the low cost of natural gas relative to coal and the fact that generating electricity from natural gas is a much cleaner process.”

Today, about 40% of the electricity in the U.S. is generated from coal.

In the transportation arena, many local fleets─both public and private─are “converting to natural gas, which is a less costly fuel than gasoline or diesel at current prices.”

The study said that some important obstacles must first be overcome for passenger and freight vehicles to convert to natural gas. “For example, conversion packages for existing gas-powered vehicles to run on natural gas are expensive. In order to drive costs down, we will need to see more assembly-line vehicles developed that run on natural gas. This is starting to happen with pick-up trucks, vans and small passenger vehicles designed to run on compressed natural gas (CNG).”

GM and Chrysler have started producing pick-up trucks and vans, while Honda manufactures a sedan, according to the study. “One key drawback of running smaller vehicles, like the Civic, on CNG is that the required fuel tank is very large in comparison to gasoline tanks, so it takes up a large portion of the trunk area. Chesapeake and 3M are working to develop a smaller CNG fuel tank using advanced materials and newer technology, so we may see progress in this area in the near future.”