By JOHN MACCORMACK
April 7, 2011, 8:02PM
KARNES CITY — It was almost a half-century ago that John Braudaway had his first encounter with the hydrocarbon-soaked, deep shale formation that is turning a large swath of South Texas into one crazy boomtown.
“In 1962, I was roughnecking on a crew north of town. And when we drilled through the Eagle Ford shale, it kicked back on us with a lot of pressure. It took us three days to choke it off,” he recalled.
“I told the geologist, ‘You’ve got a good well here. Let’s run ‘er out.’ But he said, ‘Naw, it’s that old Eagle Ford shale. It will produce for four or five days and then seal off,’ ” said Braudaway, 71, who’s still in the oil business.
But about a year ago, an extraction technology called hydraulic fracturing began unlocking the mineral riches held in the deep shale vault that runs from the Mexican border northeast for hundreds of miles.
These days, the Eagle Ford is the hottest play in the country, with some South Texas oil wells producing several thousand barrels a day as well as abundant flows of natural gas.
The play is creating jobs and sudden wealth in a chronically depressed region that long survived on cattle and agriculture, between periodic oil and gas booms.
In some areas, mineral leases that a few years ago went for a few hundred dollars an acre now are commanding $10,000 and up. For a fortunate few, monthly royalty checks can run to six figures and lease bonus checks are even larger.
“This place went from desolate to booming. There are quite a few millionaires now in Karnes County. They are being made every day,” Braudaway said during a recent tour of the county.
Trip Ruckman, 66, president of the Karnes County National Bank, said deposits rose by $2 million a month last year, and now may be double what they were five years ago.
“What’s good is that a lot of mineral interest around here is owned by small landowners and farmers,” he said. “The wealth is getting spread around pretty well.”
Ruckman said that after decades of lean times, no one is throwing the money around.
Fun to be flush
“It’s fun. We’re enjoying it, but a lot of people are not used to being flush. It’s kind of unbelievable for most of them, and they are sitting on it to a large extent,” he said.
Drilling figures at the Texas Railroad Commission tell the production story.
In 2008, the state issued 33 drilling permits for the Eagle Ford shale. In 2009, it jumped to 94, and last year it exploded, to 1,229 permits.
Correspondingly, sales tax collections are climbing by double digits in areas most affected by the play.
According to a recently published economic impact study by the University of Texas at San Antonio, the long-term regional implications of the boom are staggering.
“Under modest assumptions, by 2020 the Eagle Ford shale is expected to account for close to $11.6 billion in gross state product, $21.6 billion in total economic output impact and support close to 67,971 full-time jobs in the area,” according to the executive summary.
At ground level, the first fruits of the boom are everywhere.
In Kenedy, the State Motel has been booked solid for two years to oil company workers, and it likely will keep the “No Vacancy” sign up awhile longer. “We’re gonna be full for the next five years,” said manager Maria Munoz.
Just down the road is the Pecan Grove RV Park, one of many cropping up around the play.
Owner David Brodsky, 48, of Kenedy, one of the new Eagle Ford millionaires, financed it with oil and gas leases and bonuses. “The bonus money built this park. I’ve got a little over 100 acres leased, and they have nine months left to drill,” he said.
With the Pecan Grove already full, Brodsky is building two more RV parks.
In Cuero, officials are planning a new 300-home subdivision to house oil field workers.
Lee’s Steakhouse in Carrizo Springs – like most restaurants in the play – is regularly jammed with free-spending newcomers.
“These people work 16 to 18 hours a day in the field, and they are hungry. They’ve got money and they pretty much order whatever they want. We’re packed every night,” said owner Lee Vallejo, who has expanded his menu and business hours.
Because hydraulic fracturing requires tremendous amounts of water, cities including Carrizo Springs are trying to figure out how to turn treatment plant effluent into cash.
“The oil industry is paying about 50 cents a barrel right now for gray water, and we generate about a half-million gallons a day,” City Manager Mario Martinez said.
The competition for mineral rights among the “lease hounds” who now are swarming over land records in county courthouses across South Texas has driven lease prices sky-high and caused some to take unusual risks.
“We’re getting a lot of ‘top-leasing,’ where one company leases on top of another, betting that the first one won’t be able to perform before the lease expires,” said David Phillip, 61, a veteran Karnes County oil and land man.
Strain on the system
And because most leases lapse if drilling doesn’t occur within three years, the landowners are hoping to cash in twice by signing a second lease with a company that’s willing to gamble.
But the sudden influx of thousands of new workers and fleets of heavy oil field equipment also is taking a toll in lightly populated rural South Texas, causing traffic jams and ruined roads.
“We have constant traffic, day and night, big trucks and oil tankers. At the H-E-B and Wal-Mart, it’s hard to find parking, and by 4 p.m., practically everything is gone from the shelves,” said Carrizo Springs Mayor Ralph Salinas, who quickly noted that he isn’t complaining.
Other problems are more serious and expensive.
“We have a lot of road damage, and while some of these oil companies are very good about working with us, others are not,” said La Salle County Judge Joel Rodriguez. “We have a lawsuit with some of these oil companies over damage for $5 (million) to $7 million.”
In Karnes County, traffic problems caused by 18-wheelers prompted county officials to call in a state police task force this year. “We weren’t prepared for this,” said County Judge Barbara Shaw, adding that the increased tax revenues needed to hire more deputies are a year or two away.
Alfred Pawelek, 81, a former Karnes County judge and businessman, said the Eagle Ford play is lifting a region that seemed on a relentless slide.
“When I went into the drive-in movie business here in 1950, we had 25,000 people in the county. When I got out in 1975, we were down to 12,000,” he said. About 16,000 now live in Karnes County.
Good times always end
Many were just getting by before the boom, and as anyone who has spent a lifetime in South Texas knows, the good times always end.
“They keep talking about this being a 20-year shot for us, but the economy could crater or we could run into environmental problems,” said Fowler, the DeWitt County judge. “Right now we’re in the glory days, and as long as we watch our budget, we’ll be safe.”
( Original Article )