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EAGLE FORD SHALE FINAL REPORT MAY 2012

WORKFORCE ANALYSIS FOR THE EAGLE FORD SHALE – FINAL (FULL REPORT)

The 20 counties within Texas directly and indirectly involved in the development of the hydrocarbon producing formation known as the Eagle Ford Shale (EFS) have witnessed an increased supply of EFS-related jobs within certain industries and requiring specific job training. These education and workforce impacts vary based on the phase of EFS development occurring in different parts of the region, and affect the demand for certain occupations and training in each county.

For this comprehensive study of the EFS workforce impacts, the short-term effects are first analyzed by evaluating the 2010-2011 one-year occupational and educational impacts upon each county. Next, the long-term effects are assessed by comparing the 2011-2021 ten-year Eagle Ford Shale impacts upon each county’s occupational and educational composition. The 14 producing counties examined in this report are Atascosa, Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Live Oak, Maverick, McMullen, Webb, Wilson, and Zavala. The 6 non-producing counties are Bexar, Jim Wells, Nueces, San Patricio, Uvalde, and Victoria.

In order to derive each county’s workforce impact by county, we examined the direct, indirect, and induced economic impacts by county in the 20-county region. Direct impacts primarily consist of the actual production and employment by firms operating directly in the EFS. Indirect impacts include the operational and personnel expenditure made by suppliers, or inter-industry transactions spurred by the direct economic activity. Induced impacts include income flows created when workers spend money on various goods such as food, housing, and other products or services in the counties the counties under analysis.

The development of the Eagle Ford Shale has distinct phases, during which individual industries will experience varying levels of labor demand and evolving types of labor demanded. Thus, education and training requirements for workers will need to remain flexible enough to accommodate the vacillating needs of industry. For example, during the exploration phase counties will see a rise in the need for occupations dealing with mineral leasing, site construction/management, drilling rig support, and material transport. As companies shift into the production and processing phase of operations, they require a workforce composed of business management, administrative support and the processing of gas, oil and condensates occupations.

LCBI REPORT

Economic Impact of the Eagle Ford Shale

In less than three years of development, the Eagle Ford Shale already accounts for over six percent of the Gross Regional Product for the 24-countySouth Texas area it encompasses, according to a study released today by the Center for Community and Business Research at the University of Texas at San Antonio Institute for Economic Development.
“The Eagle Ford Shale may be one of the largest onshore natural gas and oil discoveries in the past half century,” said Dominique Halaby, the center’s director. “In 2010 alone, this newest of the Texas shale plays generated close to $2.9 billion in revenue, supported approximately 12,600 full-time jobs in the area, and provided nearly $47.6 million in local government revenue.”

WTXEC REGION: TEN COUNTY-LEVEL IMPACTS OF OIL AND GAS – PHASE 2

The West Texas Energy Consortium (“Consortium” or WTxEC) is an open forum for coordination and information sharing, organized by the Workforce Solutions Boards in Concho Valley, West Central Texas, and Permian Basin Regions. The WTxEC has contracted with the Center for Community and Business Research at The University of Texas at San Antonio’s Institute for Economic Development to estimate the economic impacts of the oil and gas industry on certain counties in the Consortium in the year 2012, and to create a forecast for the year 2022.

After a drop in production in the early half of the 2000s, the annual oil production in the United States has dramatically increased, from 3.1 billion barrels in 2008 to 4.1 billion barrels in 2012, ranking it second in the world in oil production behind only Saudi Arabia (4.2 billion barrels). The surge in U.S. domestic oil production is a factor in the recent decrease of the U.S. trade deficit.

Within the United States, the state of Texas has emerged as a leader in domestic oil production. Texas is the home to 858 active rigs, more rigs than any other state in the country. Texas’s rig count represents nearly 25 percent of rigs worldwide.* Texas has access to the Barnett, Eagle Ford, Granite Wash, Haynesville, Mississippian, and Permian basins: six of the 14 major petroleum basins in the United States.* The Energy Information Administration in March 2014 recently conducted a study that focuses on the six shale basins that account for 90 percent of the growth in oil and natural gas production in the United States.* Half of these key oil and shale gas regions are located
within the state of Texas.

* – Please reference report for footnotes.

EXECUTIVE SUMMARY: ECONOMIC IMPACT OF OIL AND GAS ACTIVITIES IN THE WTXEC REGION

The West Texas Energy Consortium (“Consortium” or WTxEC) is an open forum for coordination and information sharing, organized by the Workforce Solutions Boards in Concho Valley, West Central Texas, and Permian Basin Regions. The WTxEC has contracted with the Center for Community and Business Research at The University of Texas at San Antonio’s Institute for Economic Development to estimate the economic impacts of the oil and gas industry on certain counties in the Consortium in the year 2012, and to create a forecast for the year 2022.

After a drop in production in the early half of the 2000s, the annual oil production in the United States has dramatically increased, from 3.1 billion barrels in 2008 to 4.1 billion barrels in 2012, ranking it second in the world in oil production behind only Saudi Arabia (4.2 billion barrels). The surge in U.S. domestic oil production is a factor in the recent decrease of the U.S. trade deficit.

Within the United States, the state of Texas has emerged as a leader in domestic oil production. Texas is the home to 858 active rigs, more rigs than any other state in the country. Texas’s rig count represents nearly 25 percent of rigs worldwide.* Texas has access to the Barnett, Eagle Ford, Granite Wash, Haynesville, Mississippian, and Permian basins: six of the 14 major petroleum basins in the United States.* The Energy Information Administration in March 2014 recently conducted a study that focuses on the six shale basins that account for 90 percent of the growth in oil and natural gas production in the United States.* Half of these key oil and shale gas regions are located
within the state of Texas.

* – Please reference report for footnotes.

EFS ECONOMIC IMPACT APPENDIX 2013

Ongoing research at The University of Texas at San Antonio Institute for Economic Development is serving as the preeminent resource to state and local officials in forecasting the evolving economic impact of the Eagle Ford Shale. The Eagle Ford Shale is a 50 mile-wide by 400 mile-long formation that runs from South Texas to the east. The formation produces natural gas, condensate, oil, and natural gas liquids, with margins more favorable than other shale plays.

In its most recent study, released this week, UTSA forecasted that development of oil and natural gas in the Eagle Ford Shale added more than $61 billion in total economic impact across a 20-county region in Central and South Texas during 2012. Additionally, it supported 116,000 jobs. In 2011, UTSA reported the region generated $25 billion in economic impact and supported 117,000 jobs. The study projects that the region will support 127,000 jobs and produce an economic impact of $89 billion for Texas in 2022.

ECONOMIC IMPACT OF OIL AND GAS ACTIVITIES IN THE WEST TEXAS ENERGY CONSORTIUM STUDY REGION

The West Texas Energy Consortium (“Consortium” or WTxEC) is an open forum for coordination and information-sharing, organized by the Workforce Solutions Boards in the Concho Valley, West Central Texas, and Permian Basin regions. The WTxEC has contracted with the Center for Community and Business Research at The University of Texas at San Antonio’s Institute for Economic Development to estimate the economic impacts of the oil and gas industry on certain counties in the Consortium in the year 2012, and to create a forecast for the year 2022.

This study focuses on a core 10-county area within the WTxEC, and explores drilling information as well as economic impacts for them. These counties are Fisher, Glasscock, Howard, Irion, Martin, Mitchell, Nolan, Reagan, Scurry, and Sterling.

In addition, this study will also look at the indirect economic impacts of oil and gas activities from the core 10-county area into the neighboring 6-county area that consists of Brown, Coke, Coleman, Runnels, Taylor, and Tom Green. These indirect impacts do not include the direct drilling, completion, or production activities for oil and gas in the neighboring 6-county area.

This region has a long history of oil and gas activity and in recent years has been affected not only by renewed attention in vertical wells but also new techniques, such as horizontal drilling coupled with hydraulic fracture stimulation. The study estimates that close to 854 vertical wells and 57 horizontal wells (including 12 directional wells) were completed in 2012. Most of the activity is related to oil production in the core 10-county area.

The oil and gas industry in the core 10-county area of the WTxEC in 2012 had an impact close to $14.5 billion, supported nearly 21,450 full-time jobs, paid $1 billion in wages and salaries, generated almost $472 million in state revenues — including $187 million in severance taxes — added approximately $6.2 billion in gross regional product, and contributed nearly $447 million in local governments revenues.

By 2022, those impacts will grow to $20.5 billion in output, supporting 30,500 full-time jobs, paying $1.8 billion in wages and salaries, generating $701 million in state revenues — including $334 million in severance taxes — creating close to $9.4 billion in gross regional product, and contributing about $664 million in local government revenues.

The estimated growth in full-time jobs supported by the oil and gas industries, from 21,450 in 2012 to 30,500 in 2022 in the core 10-county area, represents an increase of 42.2 percent. This rate of growth almost doubles the estimated 21.7 percent growth in total employment in the area for the same period.

Taking into consideration low- and high-price scenarios, the impacts in 2022 could vary widely. This study estimates a scenario where low prices of oil in the future could produce an output as low as $7.6 billion, and where high prices of oil could see enormous growth, as high as $34.3 billion. The ranges of these figures are broad due to high variability in the prices of oil and gas, the challenges of forecasting future oil and gas activities, changes in the number of wells per rig, and changes in productivity per well.

In 2012 production of natural gas, casinghead gas, oil, and condensate for the core 10-county area were:

– Natural gas and casinghead gas: 211.5 billion cubic feet (Bcf)
– Oil: 76.4 million barrels (MMbo)
– Condensate: 109,351 barrels

EFS ECONOMIC IMPACT 2013

Ongoing research at The University of Texas at San Antonio Institute for Economic Development is serving as the preeminent resource to state and local officials in forecasting the evolving economic impact of the Eagle Ford Shale. The Eagle Ford Shale is a 50 mile-wide by 400 mile-long formation that runs from South Texas to the east. The formation produces natural gas, condensate, oil, and natural gas liquids, with margins more favorable than other shale plays.

In its most recent study, released this week, UTSA forecasted that development of oil and natural gas in the Eagle Ford Shale added more than $61 billion in total economic impact across a 20-county region in Central and South Texas during 2012. Additionally, it supported 116,000 jobs. In 2011, UTSA reported the region generated $25 billion in economic impact and supported 117,000 jobs. The study projects that the region will support 127,000 jobs and produce an economic impact of $89 billion for Texas in 2022.

EAGLE FORD SHALE – ESPANOL – IMPACTO ECONOMICO – DECEMBER 2012

La formación geológica conocida como Eagle Ford Shale, es un yacimiento de hidrocarburos que tiene una profundidad de 4,000 a 14,000 pies. Sus actividades principales son la excavación y perforación, las cuales se llevan a cabo entre los 10,000 y 12,000 pies debajo de la superficie. Este descubrimiento es de gran importancia ya que dicha formación contiene gas natural y yacimientos de petróleo. Las proyecciones hechas en el primer estudio realizado en Febrero del 2011 fueron conservadoras ya que estas fueron basadas en la información limitada disponible en ese tiempo. Desde el año 2010, la producción de petróleo y gas ha superado por mucho las expectativas descritas en el primer informe debido al rápido desarrollo de la actividad industrial.

En efecto, las actividades realizadas en el Eagle Ford Shale se han expandido a un ritmo sin precedentes. El crecimiento de la producción del 2010 al 2011 ha sido también acompañado por aumentos igualmente significativos en distintas actividades como en la perforación de pozos y acabados, en la construcción de nuevas áreas residenciales y comerciales, en la construcción de tuberías y en otras numerosas actividades que se desarrollan paralelamente. Este informe sirve para proveer una visión general de todas las actividades relacionadas con el Eagle Ford Shale y su impacto económico.

Este estudio utilizará el año 2011 como el caso de referencia para obtener información sobre la producción, la perforación y otras actividades relacionadas que ayudarán a interpretar los rápidos cambios que están ocurriendo en esta región. El estudio también ha sido ajustado para concentrarse específicamente en los impactos causados en los 14 condados productores, los cuales son de mayor interés para el área de desarrollo del Eagle Ford Shale: Atacosa, Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Live Oak, Maverick, McMullen, Webb, Wilson y Zavala. Adicionalmente, el estudio incluye una última actividad económica que no depende de la explotación de algún recurso natural, es decir, la actividad no productiva. Este impacto económico fue evaluado en 6 condados periféricos: Bexar, Jim Wells, Nueces, San Patricio, Uvalde y Victoria.