by: John Mangalonzo for Abilene Reporter-News, Texas
Perhaps the most pressing question in this region in 2013 was: When will the Cline Shale boom?
The latest series of oil and natural gas booms began just a few years ago with the rapid expansion of hydraulic fracturing, or “fracking,” opening reserves of fossil fuels trapped in rock shales deep underground. The Barnett Shale in Fort Worth, Haynesville Shale in East Texas and Eagle Ford Shale in South Texas saw an influx of drillers going after oil and gas.
The biggest buzz around in 2013 is the Cline Shale, sometimes called the Lower Wolfcamp. The formation is on the eastern flank of the Midland Basin, roughly 140 miles north to south and 70 miles wide, running through portions of Mitchell, Coke, Fisher, Glasscock, Howard, Irion, Nolan, Reagan, Scurry and Sterling counties. Some maps include Upton, Tom Green, Crockett and Schleicher counties.
Although Taylor County is not listed on the Cline Shale map, Abilene will be a major player should the oil boom live up to its potential, said Kirk Edwards, president of Las Colinas Energy Partners and ex-chairman of the El Paso branch of the Federal Reserve Bank of Dallas.
Thomas Tunstall, director of research at the Institute of Economic Development with the University of Texas at San Antonio, said “that’s a great question” when asked when will the boom happen.
“We don’t have a perfect insight into the future but we watch the trends and base some of it in our experience in other shale places, particularly the Eagle Ford,” Tunstall said during a recent conference of the West Texas Energy Consortium.
Tunstall conducted an economic-impact study of communities in and around the Cline Shale formation — including Taylor, Brown, Coke, Coleman, Runnels and Tom Green counties.
Another study is focusing on the 10 primary counties where most of the drilling will occur — Fisher, Glasscock, Howard, Irion, Martin, Mitchell, Nolan, Reagan, Scurry and Sterling counties.
A preliminary copy of that study estimates nearly 854 vertical wells and 57 horizontal wells, including 12 directional wells, were completed in those counties in 2012. Data for 2013 are unavailable.
According to Baker Hughes, a leading supplier of oil field services, products and technology, the Cline has 219 active rigs as of Dec. 16. Its count included the counties of Crockett, Midland, Schleicher and Upton.
With the Cline being a deeper, more-mature geologic layer, its mix of hydrocarbons has a higher share of natural gas than many shallower plays, oil and gas experts said.
The Cline is believed to be 200 to 550 feet deep, the equivalent of 10 Eagle Ford shales stacked atop each other. The Cline contains 85 percent oil and liquids-rich gas.
Economic development entities in the regions said that if estimations are true about the 30 billion barrels of recoverable oil under the Cline Shale, then the faces of what have been quiet towns and counties within the Cline will dramatically change.
As counties within the Cline are mostly rural and lacking infrastructure, the prospect of what’s to come has been discussed in several community meetings. There’s the potential shortage of housing for new residents making one of the counties home, and the potential problems of having enough skilled labor or perhaps small businesses losing employees to higher-paying oil field jobs.
Several cities have been brainstorming on how to benefit from the boom. Preparations are underway in some places for a possible onslaught of new residents, part-time dwellers and extra traffic.
Housing developments, temporary and permanent, have sprouted this year in several counties and cities, and many more are planned. Economic development corporations are reporting increased inquiries about commercial property and vacant land.
Water also will be a major issue. To hydraulically fracture a well, 1 million to 8 million gallons of water may be used. A well may be fracked up to 18 times, according industry experts.
State legislators continue to encourage the oil and gas industry not to use fresh water and instead drill down to brackish water, use that for fracking, clean up the frack water and then reuse it.
Centurion Pipeline, a subsidiary of Occidental Petroleum Corp. is proceeding with the construction/reactivation of the Cline Shale pipeline, a system that will transport crude oil from Irion, Tom Green, Sterling, Coke and Mitchell counties to Centurion’s terminal in Colorado City.
From there, shippers could transport oil to Cushing, Okla., via the Centurion pipeline and to Gulf Coast refiners via the BridgeTex pipeline, expected to be in service in July 2014.
The crude oil pipeline will have the capacity to transport as much as 75,000 barrels per day and can be expanded, according to information from Centurion. Originating near Barnhart in Irion County, the 100-mile Cline Shale pipeline system will include several origination stations designed to receive crude oil via truck and pipeline.
During a Cline Shale meeting a few months ago, Jeff Labenz-Hough, who works for HDR Inc., an Omaha, Neb.-based architecture, engineering, consulting and construction company, spoke about his travel to North Dakota to see the effects of the Bakken Shale.
One town involved in the Bakken Shale went from 1,500 residents in 2009 to more than 7,500 this year. An average motel stay is $250 or more a night (and good luck getting a room); ambulance services that usually average two to three calls a month now respond to 12 to 15 a day, he said.
Labenz-Hough, who also is part of the Eagle Ford (Shale) Consortium in South Texas, said he saw a sign at a hamburger franchise offering $500 signing bonuses for new employees.
Competing with the “big boys” in wages may be out of the question for many small businesses, and some are hanging by the proverbial thread, contemplating whether to shut down or weather the oil storm.
To accurately facilitate the flow of information about the Cline, two groups have been formed.
One is the Cline Shale Alliance, a group that brings together regional leaders, industry experts, businesses, learning institutions and others involved in oil and natural gas to address issues that may arise dealing with an oil boom. It serves as an information exchange and business networking marketplace.
The West Texas Energy Consortium, formerly known as the Cline Shale Consortium is supported by Workforce Solutions boards in the Concho Valley, West Central and the Permian Basin regions. The consortium is a cross-section of community members, stakeholders, schools and representatives from economic development organizations, cities, counties, and possibly local and state elected officials.
Like the Cline Shale Alliance, the consortium also will address issues that will affect communities directly or indirectly affected by the increased exploration and potential production in the Cline, according to consortium Chairman Victor G. Carrillo.
Five committees within the consortium have been formed: Business and Industry, Education and Workforce Development, Infrastructure and Natural Resources, Health and Public Safety, and Community and Economic Development.
The consortium is taking notes from the Eagle Ford Shale, a gas and oil formation below Bexar County that’s 400 miles long and 50 miles wide, affecting 20 counties that touch the Mexican border and extend to East Texas, Carrillo said.
The Eagle Ford now produces roughly 500,000 barrels of oil a day, according Tunstall of the Institute for Economic Development, adding that the Cline is projected to exceed Eagle Ford in production by nearly 50 percent.
The economic effect in 2012 in the 10 primary counties being studied was $14.5 billion, supported nearly 21,450 full-time jobs, paid $1 billion in wages, generated nearly $472 million in state revenues, and contributed nearly $447 million in local government taxes, the study indicated.
By 2022, that impact is estimated to grow to $20.5 billion. The study has not completed the year-by-year economic impact analysis, so 2013 information is unavailable.
In Taylor County, the ripple effect of the Cline equated to a $56.4 million economic impact in 2012, supporting 378 full-time jobs. Tunstall estimates that by 2022, Taylor County would benefit directly from the Cline to the tune of $80.7 million, supporting about 528 full-time jobs.
Only time will tell how the boom will affect the areas concerned. Bernard Weinstein, associate director of Southern Methodist University’s Maguire Energy Institute, told the consortium conference he doesn’t know what’s going to happen, but preparing for the projected boom is not a bad idea.
Weinstein tagged the Cline as “the big unknown.” ___