FORT WORTH, TEXAS: At the Forth Worth Chamber of Commerce, two businessmen are deep into a conversation about a national oil and gas company that just moved in across the hallway from the chamber’s downtown office.
Yet one more company specializing in hydraulic fracturing, or “fracking” technology, has leased space across from the office of Mike Berry, the chamber’s natural gas task force chairman.
“They got money,” Berry says. “Big money.”
The draw for these companies is a North Texas rock formation called the Barnett shale, which has locked within it billions of dollars in natural gas, oil and other lucrative liquids.
Now, the industry is showing an interest in Ohio, where the payoff may be even higher.
And what North Texas has experienced may offer a glimpse of the economy and landscape that lie ahead for Ohio.
From royalty checks for leasing public property to billions of dollars in business investments, natural gas production in the Barnett shale accounts for about 8 percent of the Dallas-Fort Worth area’s economy.
Natural gas has been a Fort Worth business anchor for 10 years and is responsible for nearly 40 percent of economic growth, according to business leaders and industry experts.
It has created an estimated 120,000 jobs across Texas in the last decade.
For the chamber of commerce, there are three reasons why natural gas will always be a force: the technology, the natural gas supply and the major players aren’t going anywhere.
“The sweet spot of the Barnett shale is just right here, right under the city of Fort Worth,” said Ed Ireland, president of the Barnett Shale Education Council.
The formation is big, even by Texas standards.
The Barnett shale covers 5,000 square miles in 23 counties around Dallas and Fort Worth — tiny in comparison with Ohio’s Utica and Marcellus shale formations.
It provides 8 percent of America’s natural gas and is one of the largest domestic reserves of on-shore natural gas.
The sedimentary rock, more than 323 million years old, is up to 500 feet thick. It lies 5,000 to 8,000 feet below the surface.
It is thicker and deeper to the northeast and thinner and shallower to the south and west.
History of Barnett shale
John W. Barnett homesteaded land in San Saba County in the late 1800s. That’s where geologists first discovered the thick black shale near a stream on Barnett’s property.
The methane-rich shale yields pipeline-ready natural gas that producers say needs little to no refining.
But early explorers found the shale tight and hard. Getting the gas out would take nearly a hundred years of technological advancements that started in the Barnett region.
The methods developed include horizontal drilling combined with hydraulic fracturing, widely used today in Ohio and Pennsylvania.
Drilling began in the 1980s. The first horizontal well was drilled in 1996 as natural gas prices began to surge, but the bulk of the gas production took off in the last seven years.
As of early March, 15,731 wells, both vertical and horizontal, have been drilled in 24 counties, according to the Texas Railroad Commission that oversees permitting and drilling.
In all, 237 operators have drilled. The top five, which accounted for 80 percent of total gas production last year, are energy companies including Devon Energy Production Co. LP, Chesapeake Energy Corp., XTO Energy Inc., EOG Resources and Quicksilver Resources Inc.
The drilling businesses fill high-rise office towers in downtown Fort Worth, a city that saw its population swell by 38.6 percent in the last decade.
Nearly 11,000 acres of city-owned land, including parks and one of the nation’s busiest airports, have been leased for $160 million in royalties and bonuses since 2005.
Drilling evidence is everywhere. After about two weeks of drilling and another five days of fracking, each of the more than 70 drilling rigs are on the move across the 24-county area.
The 175-foot-tall drilling rigs can be seen from universities, neighborhoods and even Cowboys Stadium in neighboring Arlington.
Along Interstate 35, three- to five-acre well pads litter the spring landscape from Fort Worth to Denton on both sides of the highway.
The Barnett shale has had Texas-sized results.
It’s been said by drillers that there are no dry holes, only money-makers.
Natural gas reserve
The Texas Railroad Commission estimates 10.8 trillion cubic feet of natural gas have been taken from the Barnett shale since 1993. Most of that was extracted since 2001. That’s enough natural gas to heat all of Ohio for nearly 14 years.
Many operators are looking to tap into the more lucrative oil reserves to capitalize on rising oil prices as natural gas prices remain historically low, but the Barnett shale has been largely a natural gas reserve. According to Ireland, geologists say the Barnett reserves are less than halfway developed.
A study conducted by The Perryman Group, an economic forecasting firm, indicates 100,268 jobs have stemmed from natural gas production in the Barnett shale in the past decade. It said an additional 20,000 Barnett shale jobs were created elsewhere in Texas.
The study estimated that the city received about $170 million in mineral taxes and taxes stemming from business gains in 2011. That represents nearly a third of the city’s annual income that year.
Neighboring Arlington averages $1.4 million each month in royalties for the city-owned land it has leased. Lana Wolff, an Arlington councilwoman, said the city was ill-prepared to deal with emergencies or accidents at well sites. That changed in 2011 after a tax led to a response plan.
Natural gas also helped Fort Worth weather the 2008 economic recession.
“That’s given us an incredible security blanket during these crazy recessionary times in the last three years,” said Fort Worth Chamber CEO Bill Thornton. Drilling in the Barnett shale hit a 20-year low in 2011 with 3,008 gas wells completed, according to the Texas Railroad Commission.
The record for Barnett drilling permits was set in 2008 with 4,145 issued, according to the commission.
But that peak drilling was followed by a four-year, 80 percent plummet in natural gas prices, according to the U.S. Energy Information Association. That has led drillers to halt, at least temporarily, additional Barnett shale drilling in Texas and also affected Marcellus shale gas-only drilling in Pennsylvania.
But there is an attraction to Ohio’s Utica shale where they can extract natural gas plus the lucrative liquids of ethane, propane and butane — and Texas companies are interested.
Berry, the chamber’s task force leader and president of Hillwood Properties, has drilling plans for 17,000 acres in Alliance, a northern suburb of Fort Worth, but also is eyeing Ohio.
“We were basically the shale-gas headquarters,” Berry said. “If I can keep my headquarters, my people and my infrastructure here in Fort Worth and put three guys on an airplane every week to go hit the Marcellus, to fly up and go stay in a hotel in Youngstown … that’s pretty efficient versus picking up half my company and moving it up there.”
Many Texas-based companies are employing this tactic, Berry said.
Every two weeks, driller Sean Nagel Mueller, his brother, Warren, and about a dozen others board a flight for Dallas-Fort Worth or Pittsburgh. Nagel Mueller works a two-week hitch of 12-hour days on a rig in Washington County in southwest Pennsylvania.
He earns about $130,000 a year and receives health benefits for his wife and 18-month-old daughter back in east Texas. With his $51 daily living allowance and a $2,600 monthly bonus, Nagel Mueller said he makes $50,000 more than a friend working an oil rig in Texas.
He dropped out of high school in 2004 and took a $13.25 an hour job as a floor hand, the lowest position on the crew. He began working in the Marcellus and Utica shales in Pennsylvania in 2009 after his Texas oil rig was idled.
Along with moving crews into the liquid-rich areas of Ohio and Pennsylvania, companies are reopening Texas oil fields and slowing the production of existing gas wells until the demand increases and prices rebound.
Project Manager Justin Bond, who works at Oklahoma-based Chesapeake’s regional office in north Texas, explained the company’s strategy concerning where it concentrates drilling efforts.
“It’s no different than a farmer who’s deciding if he’s going to plant a whole crop that year or just leave it alone,” Bond said.
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