The sixth annual Eagle Ford Consortium conference was held June 7–8 at The University of Texas at San Antonio Downtown Campus. Long gone are the heady days, when the first conference in 2012 sold out and then oversold, ultimately to more than 500 attendees. By the third year, it looked as if attendance would soon top 1,000. Then oil prices swooned in 2014, causing the oil and gas industry, as well as local communities throughout South Texas, to take a pause and regroup.
Activity in the Eagle Ford is once again on the upswing, with rig counts now north of 80 and still climbing gradually. More than 2 billion barrels of oil and condensate have been produced from the Eagle Ford to date, with an overall recoverable estimate of 10–12 billion barrels. Although the level of activity will continue to depend on oil prices, there is a lot of life left in the Eagle Ford.
The first day of the conference was kicked off by Leodoro Martinez Jr., Chairman of the Eagle Ford Consortium. Speakers included Chairman and Commissioner of the Texas Workforce Commission Andres Alcantar and several prominent UTSA faculty and administrators, such as Interim President Pedro Reyes, Senior Associate Vice President for Economic Development Robert McKinley and Professor Harriett Romo.
Day two started with an update on the state of energy in Mexico, in the wake of reform efforts in that country. After that, several community leaders discussed their experience with the ups and downs of the Eagle Ford over the past few years. Texas Railroad Commission Chair Christi Craddick also described how the Commission has transitioned from largely manual processes to more automated methods for activities such as permitting new wells in the state.
While the most recent conference was probably the least attended of any so far, the mood was generally upbeat. After hitting bottom last year in terms of oil prices, rig counts and overall economic activity, the recent rise in oil prices has rejuvenated the region somewhat. Community leaders clearly remain cautious with regard to budgets and spending, and infrastructure remains a key concern.
OPEC and its allies have clearly struggled with the success of shale production in the U.S., particularly with regard to the resilience of domestic producers. According to luncheon speaker Darin Turner, with Invesco Real Estate, the two lowest cost producers of crude oil in the world are Saudi Arabia and the United States. Every other producing country in the world has higher costs. Clearly the shale revolution has changed the dynamics of the energy industry for years or even decades to come.
For one thing, oil prices appear likely to have a built-in ceiling of $60 per barrel for the foreseeable future, perhaps as long as a decade or more. Each time OPEC and Russia decide to curtail production, the shale producers are at the ready to increase production and fill in the supply gaps.
Perhaps the most interesting upshot of the shale revolution? If Saudi Arabia intended to drive shale producers out of business by increasing production in 2014, that plan clearly backfired.
Going forward, the U.S. — and particularly Texas — will play an outsize role in the dynamics of the global oil and gas industry. All of these changes have been only about six years or so in the making. Who would have thought?
About the author: Thomas Tunstall, Ph.D., is the Senior Research Director at The University of Texas at San Antonio Institute for Economic Development. He was the principal investigator for numerous economic and community development studies. He has published peer-reviewed articles on shale oil and gas, and has written op-ed articles on the topic for The Wall Street Journal. Dr. Tunstall holds a Ph.D. in political economy and an M.B.A. from The University of Texas at Dallas, as well as a B.B.A. from The University of Texas at Austin.
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