Recent Economic and Community Impact of Unconventional Oil and Gas Exploration and Production on South Texas Counties in the Eagle Ford Shale Area (original) (raw)

How Shale Gas Extraction Affects Drilling Localities: Lessons for regional and city policy makers

In countries around the world, the public debate over the prospect of high volume hydraulic fracturing for shale gas has revolved around its environmental impacts, while taking as a given that exploitation of this newly available natural gas asset will produce significant economic benefits for local and regional economies. In this paper the authors use multiple methods, including a case study of the Marcellus Shale gas ‘play’ in the USA, to examine how the economic costs and benefits of high volume hydraulic fracturing have been assessed. They argue that the economic impact models, which have been used to project potential benefits and job creation, provide only a fraction of the information needed to understand the consequences of drilling for the regions in which it occurs. The paper also examines some of the challenges local communities face in responding to the costs posed by shale gas extraction. The authors’ analysis indicates that, while shale gas development may increase jobs and tax revenues in the predominantly rural regions where drilling occurs, it can also impose significant short- and long-term costs. To fully assess the economic effects of hydraulic fracturing, local and regional policy makers need to understand the boom-bust cycle that characterises natural gas development. This cycle has implications for local costs and benefits short term, and for the longer-term economic development prospects of localities in drilling regions.

Confronting An Uncertain Future How US Communities are Responding to Shale Gas and Oil Development

"Fracking" (horizontal drilling / high volume hydraulic fracturing) for shale gas and oil is a widespread, industrializing endeavor that will affect a variety of regions in the majority of US states. This chapter assays what we know historically about natural resource development cycles in general, the particular social and economic impacts and local government responses associated with unconventional fossil fuel development in the US, and what our existing knowledge implies for planning and the design of policies that will address the risks of shale development and sustain affected communities through the boom-bust cycle and for the long term.

Fracking Fortunes: Economic Well-being and Oil and Gas Development along the Urban-Rural Continuum

Oil and gas extraction, especially via unconventional means like hydraulic fracturing, is hailed as an economic boon by many commentators and political leaders. However, empirical evidence is limited. In this article, we consider the socioeconomic effects (particularly, related to poverty, employment, income, and wages) of unconventional oil and gas extraction using a national data set of U.S. counties. We use a novel between-and within-county random effects modeling strategy to capture both resource curse and boomtown dynamics. Further, we allow the effect of oil and gas development to be conditioned by county rurality. Broadly, our findings suggest that oil and gas development has very complex effects at the county level. Within-county growth in oil and gas production slightly improves most economic outcomes, but counties that specialize in oil and gas development tend to perform worse than other counties. We find that, in general, the effect of within-county oil and gas production is not significantly moderated by county rurality.

Long-term effects of income specialization in oil and gas extraction: The U.S. West, 1980–2011

Energy Economics, 2014

The purpose of the study is to evaluate the relationships between oil and natural gas specialization and socioeconomic well-being during the period 1980 to 2011 in a large sample of counties within the six major oil-and gas-producing states in the interior U.S. West: Colorado, Montana, New Mexico, North Dakota, Utah, and Wyoming. The effects of participation in the early 1980s oil and gas boom and long-term specialization were considered as possible drivers of socioeconomic outcomes. Generalized estimating equations were used to regress 11 measures of economic growth and quality of life on oil and gas specialization while accounting for various confounding factors including degree of access to markets, initial socioeconomic conditions in 1980, and dependence on other economic sectors. Long-term oil and gas specialization is observed to have negative effects on change in per capita income, crime rate, and education rate. Participation in the early 1980s boom was positively associated with change in per capita income; however the positive effect decreases the longer counties 2 remain specialized in oil and gas. Our findings contribute to a broader public dialogue about the consequences of resource specialization involving oil and natural gas and call into question the assumption that long-term oil and gas development confers economic advantages upon host communities.

The Eagle Ford and Bakken shale regions of the United States: A comparative case study

The Extractive Industries and Society, 2018

The Eagle Ford and Bakken shale oil plays in the United States (US) have experienced dramatic production increases since 2010, with implications for their communities in Texas and North Dakota (and to a lesser extent, Montana). In both cases, production increased from insignificant or low levels to about a quarter of US production each over five years, largely due to prices and the availability of modern horizontal drilling and hydraulic fracturing techniques. This comparative case study of the Eagle Ford and Bakken regions focuses on the effects of these rapid changes on communities. Overall, this work finds that dynamics associated with strained infrastructure followed patterns similar to those seen in other modern US boom regions. Bakken participants perceived impacts as more severe than Eagle Ford participants, potentially due to greater isolation and limitations associated with extreme winter conditions. In both regions, anticipation of a bust affected behavior in a manner not commonly observed in regions where prior boom/bust cycles do not exist in living memory. Both Bakken and Eagle Ford participants described an idealized future where long-term shale-related prosperity could stabilize their communities, despite an understanding that this was an unlikely outcome.

Economic Impact of the Eagle Ford Shale Business Opportunities and the New Normal

In contrast to earlier reports, this latest study covers three years of activities, from 2014 to 2016, and includes an assessment on business opportunities in the Eagle Ford Shale during the “boom” period, from 2009 to 2014. Since 2010, the region has experienced not only important positive growth but also the effects of declining oil prices since late 2014. Most recently, it is experiencing a renewed activity due to the increase in prices since early 2016. The number of rigs in the area grew from a low of 36 by June 2016 to 80 by March 2017, more than double in less than a year. With prices around $50 per barrel, it is expected that the Eagle Ford Shale (EFS) will continue its growth in the near future. The study assesses the economic impacts of the shale including direct, indirect, and induced impacts in the 21 counties directly and indirectly involved in production. The study also looked for businesses opportunities in the area during the period 2009-2014 and highlights important growth in non-oil industries such as poultry and egg production, seasoning and dressing manufacturing, breweries, and grain farming, among others.

Regional economic impacts of the shale gas and tight oil boom: A synthetic control analysis

Regional Science and Urban Economics, 2015

The dramatic increase in oil and gas production from shale formations has led to intense interest in its impact on local area economies. Exploration, drilling and extraction are associated with direct increases in employment and income in the energy industry, but little is known about the impacts on other parts of local economies. Increased energy sector employment and income can have positive spillover effects through increased purchases of intermediate goods and induced local spending. Negative spillover effects can occur through rising local factor and goods prices and adverse effects on the local area quality of life. Therefore, this paper examines the net economic impacts of oil and gas production from shale formations for key shale oil and gas producing areas in Arkansas, North Dakota and Pennsylvania. The synthetic control method (Abadie and Gardeazabal 2003; Abadie et al., 2010) is used to establish a baseline projection for the local economies in the absence of increased energy development, allowing for estimation of the net regional economic effects of increased shale oil and gas production.

Do Localities Benefit from Natural Resource Extraction?

The Energy Journal, 2020

With the advances in oil and gas drilling and recovery techniques that have occurred in the last decade, the State of Texas recently experienced another oil and gas boom. While annual crude oil production had been in long term decline in Texas for decades prior to 2010, it nearly tripled between 2009 and 2015, increasing from just below 400 million barrels in 2009 to 1.155 million barrels in 2015. This recent explosion in oil and gas production that occurred in Texas is, of course, attributable to the application of horizontal drilling and hydraulic fracturing technologies that have enabled extraction of oil and gas from shale deposits. Economic research in the 1990s consistently found evidence that resource dependent economies exhibit slower long-term growth than more diversified economies. This phenomenon came to be called the Natural Resource Curse. While various reasons have been proposed for this resource curse, most researchers conclude that natural resource driven economic booms draw resources from non-booming export activities, lead to higher prices of non-tradables, and contribute to greater regional specialization. Most of the research in this area has focused on crosscountry comparisons, but similar results have been found at both the state and county levels in the United States. Using statistical modeling methods, we investigate the localized economic effects of this recent oil and gas boom among non-Metropolitan Statistical Area (MSA) counties in Texas. Our analysis extends the previous research on the question of the economics of resource endowments in several ways. Unlike most of the previous research that considers total regional employment, we investigate employment changes in terms of regional industrial composition and the likely inter-industry spillovers that a resource boom might engender. This is important since one explanation for the resource curse is regional specialization and the reallocation of labor toward the booming industry. Unlike earlier research on the effects of resource booms at small geographical scale, which has focused on natural gas production, this paper also examines possible effects from the rapid increase in petroleum production that occurred more or less concurrently in many counties in Texas. We further estimate effects on both median and per capita county income for comparative and interpretive purposes. Lastly, our paper undertakes an analysis of the effects of the boom on property tax bases and public school finance at the school district level. Using only the State of Texas as the region for analysis, we are able to exploit the controlled comparison presented by the uneven distribution of oil and gas resources at the county level to identify the localized impacts of oil and gas production on our variables of interest, i.e., employment, personal income, and public school finance. This provides an important control in the case of public finance that is not present in cross-state analyses. By using a single state for analysis, we have a consistent means by which to consider changes in property tax bases, rates, and public school finance. We consider the question of changes in levels of per-student public education expenditures

Managing Unconventional Oil and Gas Development as if Communities Mattered

2016

The advent of horizontal oil and gas drilling into relatively impermeable shale rock, and the companion technological breakthrough of high-pressure, multi-stage fracking that frees hydrocarbons along the substantial length of these horizontal wells, has fundamentally altered the oil and gas industry. The Energy Information Administration has gone so far as to predict that North America could become a net energy exporter as early as 2019, largely as a result of the explosive growth of this “unconventional” oil and gas development.2 Despite its promise, managing unconventional oil and gas development has proved challenging, and many of the communities that find themselves hosting this development have begun to push back in the face of serious public health and community impact concerns. Some communities have gone so far as to enact complete bans on “fracking,” the shorthand way that unconventional development is often described. Yet notwithstanding many legitimate concerns, the flexib...