Thomas Tunstall, Ph.D. Research Director Institute for Economic Development The University of Texas at San Antonio

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1 Principal Investigator: Thomas Tunstall, Ph.D. Lead Investigator: Javier Oyakawa, M.A., M.Sc. Researchers: Sheryllynn Roberts, Ph.D., Hisham Eid, Ricardo Abalos, Ting Wang, Emiliano Calderon and Karla Melara. The authors would like to thank research assistants Karina Juarez, Shayne Calhoun, Sylvana Bortol, Rayza Perales, Storm Wald, Emmanuel Tomes, Feihua Teng, Paola Conti and Angélique De Oliveira. Thomas Tunstall, Ph.D. Research Director Institute for Economic Development The University of Texas at San Antonio

2 Eagle Ford Initiatives Across UTSA Civil and Environmental Engineering, and Geology Water Institute of Texas Interactive Technology Experience Center (K-12 STEM) Texas Sustainable Energy Research Institute (Energy-Water Nexus) Mechanical Engineering Computational Hydraulic Fracturing Simulation Modeling Oil and Gas Certificate Program for Engineers College of Public Policy Municipal Capacity Building Workshops State of Texas Demographer s Office College of Architecture Center for Urban and Regional Planning Institute for Economic Development Small Business Development Centers Rural Business Program Eagle Ford Shale Community Development Program Center for Community and Business Research

3 University of Texas at San Antonio Institute for Economic Development Eagle Ford Shale Community Development Program (14 Counties in South Texas) Small Business Development Centers - SBDC (79 Counties in South Texas) Rural Business Program (79 Counties in South Texas) Procurement Technical Assistance Center (Texas) Veteran s Assistance Center (Texas) Southwest Trade Adjustment Assistance Center (TX, OK, LA) SBDC National Information Clearinghouse (National) Minority Business Center (National) Community and Business Research (National, Int l) International Trade Center (Mexico, Central/South America, Caribbean, North Africa)

4 UTSA Institute for Economic Development Research at the Institute focuses on research projects that help business and policymakers plan for a dynamic future: Economic Impact Studies Community Development Studies (I-35, SH 130) EB-5 Immigrant Investor Regional Center Impact Studies Analysis on Various Topics: Eagle Ford Shale San Antonio Missions South Texas Medical Center University of Texas System Targeted Industry Recruitment / Workforce Analysis Repurposing of Military Bases for Commercial Use

5 UTSA Institute for Economic Development As the Research Arm of UTSA s Institute for Economic Development we are dedicated to serving: Economic development corporations (e.g., SA EDF) City, state and federal governments Workforce development boards Businesses Associations Other community stakeholders

6 In theory, there is no difference between theory and practice; in practice, there is. - Yogi Berra

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9 Counties Included in Study Area Primary Counties Adjacent Counties Atascosa La Salle Bexar Bee Live Oak Jim Wells DeWitt Maverick Nueces Dimmit McMullen San Patricio Frio Webb Uvalde Gonzales Wilson Victoria Karnes Zavala Counties not included in the analysis are Leon, Milam, Brazos, Burleson, Lee, Fayette, Lavaca, Edwards, Houston, and Wood

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11 UTSA Eagle Ford Shale Reports Preliminary Economic Impact (Feb 2011) Economic Impact Baseline Report (May 2012) Workforce Analysis (October 2012) Updated Economic Impact - March 26, 2013 Release at the State Capitol

12 Reasons for Significant Increases in Economic Impact from 2011 to 2012 $19B spent on capital expenditures in 2012 (Perhaps $28B by 2013) Operational support facilities came online in 2012 Pipeline construction across the 14-county area and beyond has ramped up in earnest New manufacturing, refining and processing facilities in Eagle Ford and along the Gulf Coast under construction New and upgrade rail infrastructure projects underway

13 Drilling Permits and Completions Permits Completions

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15 Forecast: 214 Bcf 515 Bcf Full Year

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20 Texas Oil Production Surpassed 1988 Levels in September 2012

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22 Peak Oil?

23 U.S. Crude Oil Production

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25 Crude Oil U.S. Imports from OPEC Countries (000 Barrels)

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31 Implications of Mexican Energy Reform New exploration, drilling and operational economic impact Related midstream development (pipeline and storage) impact Results of rulemaking process Infrastructure issues Security issues Workforce needs Doing business with PEMEX

32 Over $1 billion in local government revenues (up from $257 million in 2011) Total Economic Output Impact in County Study Region Over $61 billion in economic output (up from $25B in 2011) Over 116,000 full-time jobs supported (up from 47,097 in 2011) Nearly $4.7 billion in salaries and benefits paid to workers (up from $3.1B in 2011) Over $28 billion in gross regional product (up from $12.63B in 2011) Over $1.2 billion in state revenues (up from $358 million in 2011)

33 Moderate Scenario Estimated Combined Impacts for 2022 (20-County Area) More than $89 billion in total economic output 127,919 full-time jobs supported $6.5 billion in salaries and benefits paid $42.0 billion in gross regional product $2.2 billion in state revenues $2.1 billion in local government revenues

34 18,000,000 County Sales Taxes Receipts 16,000,000 14,000, ,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0

35 New and Expanded Rail Projects in the Eagle Ford Rail can move one ton 500 miles on one gallon of fuel

36 Gardendale Rail Spur near Cotulla

37 Gulf Coast Impacts

38 Billion of Dollars of Investment Driven by Eagle Ford (and other Shale Plays) Nearly $100 Billion in Planned Investments Along the Gulf Coast Crude Oil, Natural Gas and NGL Pipeline Projects (Gathering and Transmission) Natural Gas Processing Plants Fractional Capacity Projects Ethane, Propane and Related Projects Rubber, Fertilizer and Export Projects Crude/Condensate Terminal/Storage Projects

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40 Pipelines in Texas

41 Natural Gas Spot Prices (Henry Hub)

42 EIA Natural Gas Price Forecast (2007)

43 Natural Gas Price Forecast (what actually happened) 2012

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45 Factors That Are Driving Natural Gas Demand Input to Electric Generation Power Plants Feedstock for Manufacturers Facilities (Chemicals, Plastics, Fertilizers, Steel, etc.) Conversion of Local Fleets to CNG Vehicles Possible LNG Export

46 Why Do We Have a Global Oil Market?

47 The Shape of Things to Come

48 LNG Export Studies to-date estimate net benefit to US economy Supply will react to demand across markets Analysis suggests long-term range between $4-7 per mcf (and possibly $5-6 mcf)

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51 2021 Occupational Impacts Occupation Code Eagle Ford Shale Direct and Indirect Impacts 10-Occupational Categories, 2021 Occupational Impact Percentage Office and administrative support occupations 9, % Construction and extraction occupations 8, % Management, business, and financial occupations 8, % Professional and related occupations 7, % Transportation and material moving occupations 7, % Production occupations 4, % Installation, maintenance, and repair occupations 3, % Sales and related occupations 2, % Service occupations 2, % Farming, fishing, and forestry occupations % Total 54, %

52 2021 Education/Training Impacts Eagle Ford Shale Direct and Indirect Impacts 14-County, Educational Structure 2021 Number of jobs Educational Attainment Percentage 15,209 Moderate-term on-the-job training 27.8% 12,215 Short-term on-the-job training 22.3% 8,211 Bachelor's degree 15.0% 5,934 Work experience in a related occupation 10.8% 4,891 Long-term on-the-job training 8.9% 3,423 Bachelor's or higher degree, plus work experience 6.3% 1,990 Associate degree 3.6% 1,318 Postsecondary vocational award 2.4% 921 Master's degree 1.7% 563 First professional degree 1.0% 21 Doctoral degree 0.0% 54,694 Total 100.0%

53 Robert Metcalfe, inventor of Ethernet, in InfoWorld magazine, December 1995.

54 Microsoft CEO Steve Ballmer, 2007.

55 Source: U.S. Dept. of Energy, April 2009

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58 Actual 2011 EFS 2011 Forecast Year

59 Actual 2011 Revised Forecast EFS 2011 Forecast Year Assumes 25,000 Total Wells Over the Life of the Eagle Ford Play Bass Diffusion Model Parameters - p = 0.02, q = 0.38

60 Updated Natural Gas Annual Production Forecast , , , , , , , , , , , , Million Cubic Feet , , ,000 2,

61 Updated Eagle Ford Shale Oil/Condensate Annual Production Forecast (bbls) Scenarios 800,000, ,000,000 Bass.003,.38, assumes 7.5 billion barrels recoverable Box Jenkins 600,000,000 Time-Series Regression 500,000, ,000, ,000, ,000, ,000,000 Barrels

62 Medium-Long Term Strategies for Success Look for Opportunities to Diversify the Local Economy (Destination Locations) Rediscover Your Community s History and Architecture as a Tool for Economic Development (Why was the City Founded in the First Place?) Seize the Opportunity to Implement Form-Based Zoning That Emphasizes Mixed-Use, Flexibility, Livability and Sustainability Forge Linkages, Alliances and Engage Other EFS Communities, Higher Education Institutions Identify Best Practices from Other Shale Plays Work with Elected Representatives at the Municipal, County, State and National Levels on Infrastructure Planning

63 Selected Central Texas Counties (1890)

64 Selected Central Texas Counties (2010)

65 Critical Immediate Needs: Improved Local Governance and Capacity Medium and Long-Term Planning, Particularly Land-Use and Capital Outlays Revenue and Investment Strategies: Dedicating Funds for Public Use Early (see Public Amenities, Quality of Life) Community Involvement and Engaged Citizens Strong Institutional Management and Fiscal Discipline Development of a Skilled Workforce Commitment to Ongoing Education, Working Smarter, Learning from Past Mistakes

66 Looking Beyond Eagle Ford: Examples of Sustainable Infrastructure (Key to Attracting New Residents, Visitors and Industry) Better Roadways Improved Medical Facilities Broadband Networks More Housing Options Adequate Water and Power Supply, Improved Waste Management Better Quality K-12 and Vocational Education Improved Aesthetics, Elimination of Blight, Land Recycling (Bulldozing Derelict Houses, Cleaning Up Junkyards; Renovation and/or Repurposing of Historical Buildings) Branding: Identity, Gateways Livability: Public Amenities that Improve the Desirability of the Community and Quality of Life (Lakes, Parks, Hike/Bike Trails, Walkable Neighborhoods) Why would someone want to live in or visit your community?

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71 Thank you! Economic Impact of the Eagle Ford Shale 2013 Update Thomas Tunstall, Ph.D., Javier Oyakawa, M.A., M.Sc., Sheryllynn Roberts, Ph.D., Hisham Eid, Ricardo Abalos, Ting Wang, Emiliano Calderon and Karla Melara. Research Assistants Karina Juarez, Shayne Calhoun, Sylvana Bortol, Rayza Perales, Storm Wald, Emmanuel Tomes, Feihua Teng, Paola Conti and Angélique De Oliveira. Special assistance was also provided by Carter Keairns and Alan Dutton. Thomas Tunstall, Ph.D. Research Director UTSA Institute for Economic Development