Friendly Energy Exploration (fka FEGR)

[TPX]

Corpus Christi economic boom could be here to stay

Coupled with the rest of the state’s oil production, oil and gas from the Eagle Ford Shale play has put Texas in league with OPEC nations. Texas is expected to produce more oil and gas in 2014 than any member of the Organization of Petroleum Exporting Countries except for Saudi Arabia. So far, 2014 is on track to outproduce 2013, the state’s biggest year since 1986, and most of it comes from Eagle Ford.

What the 20,000-square-mile formation has done for the Corpus Christi economy — which is not even over the play, but within its 20-county area of influence — is unprecedented, said Dr. Jim Lee, professor of economics at Texas A&M University-Corpus Christi. In an as-yet unreleased study Lee conducted for Work Force Solutions, he shows both the good and bad of this economic boom in South Texas.

First the bad news: The Eagle Ford Shale play will eventually play out. Lee expects this to happen sooner than most other studies predict. He gives the formation about 10 years before its reserves dry up. Other experts have predicted 20-40 years.

“The Eagle Ford Shale is not a permanent thing,” Lee said. “Where there’s a boom, there’s a bust, although it’s too early to talk about the bust yet.”

Which is where the good news comes in. The energy boom has led to an increase in industrial investment in the area that Lee said will last beyond the 10 years of fuel extraction. Several industries, including steel and plastic manufacturers, are currently investing billions of dollars in facilities near the city and its port.

“No one is going to invest $1 billion in something that is only for 10 years,” Lee said. “These plants — the steel plants, the plastic plants, those energy plants — they are going to stay.”

Perhaps the biggest impact the energy boom has had in the area can be found in activity at the Port of Corpus Christi, the fifth-largest port in terms of tonnage in the nation. Once a mostly import facility, the port now sends more product out than it takes in, which is a good thing.

Most of that product is liquid natural gas, which, for now, can be only shipped to refinery plants in the United States. A federal law restricting petroleum shipments to other countries currently restrains another possible growth explosion at the port. The chair of the port’s board of directors, Judy Hawley, recently testified before a congressional committee asking legislators to relax those restrictions. Lee expects that to happen — in about five to 10 years.

JOBS, JOBS, JOBS

In another good news/bad news scenario, jobs are plentiful, but the people to fill them are not. In his newest report, Lee said job growth tied to the Eagle Ford Shale has grown 50 percent compared to the 30 percent growth recorded in his 2012 report.

“Almost half of the new jobs created in the past two to three years are tied to oil and gas,” Lee said. “This is a lot. Compared to the rest of the country, which is in a jobless recovery, and even to the rest of the state, this is very uncommon.”

That job growth drives Corpus Christi’s new status as the 10th-fastest growing metro area in the nation.

“For the first time in reported history, we are the leaders and not the laggards,” Lee said.

But, the area does not have the trained personnel to fill all the jobs, especially construction jobs.

“That noise you hear is a big job-sucking sound,” Lee said. “Construction is sucking up all the workforce skills in the area.”

Construction jobs won’t last, however, and many are being filled by people moving in from out of area, consequently causing a housing crunch. That crunch is leading to a residential construction boom. According to Lee’s report, Corpus Christi’s construction boom, both residential and industrial, is bigger than anywhere else in the country, according to his report.

All of this is why Workforce Solutions commissioned the study in the first place. Workforce Solutions is a human resources company that serves the Gulf Coast region. The organization works with communities across the state to meet their labor needs.

“By all standards, there’s no way to satisfy all the construction needs in this area right now,” Lee said. “We are in the middle of a workforce crisis, mostly in construction. We can’t train people fast enough.”

Corpus Christi is currently in phase 2 of a three-phase economic growth cycle, Lee said, which includes:

PHASE 1 — No construction, mellow economy
PHASE 2 — Boom economy driven by construction
PHASE 3 — Construction gives way to new industry with permanent jobs.
Lee expects phase 3 to begin in earnest in 2018 when thousands of new jobs will be open for people with the right skills. Area schools, colleges and universities need to begin training for those skills now, he said.

The final bit of good news comes from those industries partnering with area education facilities to boost the programs they already have and add new ones. From TPCO to voelstepine, these international companies have moved to South Texas for the port, cheap energy, low taxes, available land and quality of life. The Eagle Ford Shale is but one part of the engine driving this industrial push, Lee said.

“During the operation phase of these new industries being built, there will be hundreds, actually thousands of jobs available,” Lee concluded. “Those jobs will be what will drive the future here. Those are permanent jobs. And these companies can’t bring everyone in. They will need to hire locally.”

EAGLE FORD SHALE FACTS

Most active shale play in the world
First discovered in 2008
Named after the town of Eagle Ford, six miles west of Dallas
400 miles long and 50 miles wide, from Mexican border to East Texas
Expected to produce for another 20-40 years (maybe*)
Estimated to contain 20 trillion cubic feet of natural gas and 3 billion barrels of oil
Produces both oil and gas, which is unique
Gas comes both wet and dry, also unique
(* Local expert says 10 years more likely)

http://www.101corpuschristi.com/1327197/

FRIENDLY ENERGY SERVICES is an oil operator located in CORPUS CHRSTI, Texas.

http://www.eliteexploration.com/friendly-energy-services/