Eagle Ford's benefits, costs examined

Valero Energy Corp.'s refinery in Three Rivers was headed for mothballs a few years ago.

The refinery had to purchase foreign crude on the Gulf Coast and move it inland for processing ? an inefficient and expensive process.

?Three years ago, Three Rivers was a marginal refinery,? said Harry Wright Jr., the plant's manager, who spoke Thursday at the Eagle Ford Consortium's annual conference at the Grand Hyatt. ?It was likely to be shut down.?

Now that the plant sits in the middle of the Eagle Ford Shale, the enormous South Texas oil and gas field opened up by shale drilling, Wright called it a ?crown jewel.?

Capable of processing 100,000 barrels of crude per day, the refinery is 70 miles south of San Antonio.

Instead of purchasing 90 percent of its crude oil from foreign sources, the Three Rivers refinery gets 90 percent of its crude from the Eagle Ford.

That gives the plant a secure future stretching at least 10 to 20 years, Wright said, even as it confronts some of the headaches that come with an oil boom: no place to house its summer interns and turnover as some of its own employees leave for jobs with the companies that are drilling for oil.

The plant has 140 operators, and Wright said 60 new ones have been hired in the past few years. Many of the remaining workers are approaching retirement age.

Restaurants and gas stations advertise positions that start at $12 an hour. Even the local Dairy Queen offers a signing bonus, Wright said, calling the hiring environment ?very, very challenging.?

Residents also are dealing with increased traffic wrecks. ?There's people dying about every three days on the roads,? Wright said.

Along with abundant jobs and a historic level of corporate investment, the region is coping with roads torn apart by heavy truck traffic, a housing shortage and infrastructure strained in every imaginable way.

Marathon Oil Co. CEO Clarence Cazalot Jr., who gave the keynote presentation at the conference, said 911 calls have doubled in many South Texas communities.

And the issues are likely to be around for a while as oil field activity continues ramping up.

Cazalot said he considers the Eagle Ford the best unconventional oil field in North America, and probably the entire world.

?The fact that I stand here today and say that is really amazing,? Cazalot said.

Marathon alone plans to invest at least $1.8 billion per year for the next five years in the Eagle Ford, and this year will dedicate about one-third of its global spending to South Texas.

Cazalot said the Eagle Ford is part of a broader trend, as the crude oil produced from shale fields displaces foreign imports. He noted that China now is the world's biggest importer of oil ? not the U.S.

?On a global stage, this is a game changer,? Cazalot said.

He said more pipelines have been built across South Texas, helping eliminate some truck traffic.

Marathon now can transport about 60 percent of its product by pipe, while a little more than a year ago everything had to move by truck.

It's also reduced its water use by 45 percent per well, which means fewer water trucks on the road.

Stephen McNair, midstream manager for Pioneer Natural Resources, said it's been a ?frontier expansion? in the Eagle Ford for Pioneer and other operators, who have had to quickly build pipelines and gas processing plants to handle the increase in production.

Danny Brown, general manager of Anadarko Petroleum's Maverick Basin, which includes its Eagle Ford operations, said the company has about 500 producing wells in the field ? but about 2,500 wells left to drill.

?This is one of Anadarko's cornerstone assets,? he said.

County Judge Nelson Wolff was among several elected officials who said the industry's intense focus on the region may be the best chance for oil field communities to secure state funding for damaged roads and other problems.

?It's our one great chance to demand the state pay greater attention to South Texas,? Wolff said.

About 800 people are attending the Eagle Ford Consortium's conference, which runs through Friday.

jhiller@express-news.net

Twitter: @Jennifer_Hiller

Source: http://www.mysanantonio.com/news/energy/article/Eagle-Ford-s-benefits-costs-examined-4337691.php

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