No timetable for Tuscaloosa Marine Shale drilling
by Ted Carter
Published: May 17,2013
Always alert to the pitfalls of overstatement, economic development executives resist the term “transformative.”
They reserve the adjective for developments that have already achieved momentous economic importance or ones that are about to.
You can put the Tuscaloosa Marine Shale play into the “about to” column, according to Manning McPhillips, chief administrative officer for the Mississippi Development Authority, who said if drilling in the counties of Amite, Wilkinson and Pike follows the pattern set by the multi-county Eagle Ford shale oil trend in Southeast Texas, Southwest Mississippi could see a several billion-dollar annual impact and creation of tens of thousands of jobs in support of the drilling.
“We feel it will be really transformative for Southwest Mississippi,” McPhllips said in an interview this week. “It doesn’t appear that way in Mississippi because it is not there yet.”
Don’t look for an official time frame, says Jack Moody, a former oil field geologist and now program director of the MDA’s Office of Mineral Leasing.
“Each company is kind of conducting its own experiments,” he said.
The companies compete in the market “but are pretty good about sharing their drilling and completion techniques,” Moody added. “Everybody knows they aren’t there yet. They are after the common goal. The all want to crack this nut.”
Transformation has indeed come to the small towns and rural areas around the country where the nut has been cracked — essentially advancing to the point of profitable extraction of oil and gas through hydraulic fracturing.
“What we have seen in other plays around the United States — whether it is North Dakota, Pennsylvania, Ohio or Texas — is an enormous impact,” the MDA’s McPhillips said.
The Eagle Ford shale region takes in 14 counties near the Gulf of Mexico west of Houston. The economic transformation happening there is occurring across a vastly larger stage and some differences exist in the characteristics of the Texas and Mississippi shale regions, says Karen Bishop of the MDA’s Energy and Natural Resources Division.
Eagle Ford’s development is also much further along. Nonetheless, Bishop said many professionals familiar with both regions have noted that of active shale plays, “The Eagle Ford is probably the best comparison to what we could expect from the TMS.”
That would be enormous, according to an economic impact study of Eagle Ford completed in 2012 by the University of Texas-San Antonio’s Center for Business and Community Research. Based on a scenario that reflects only “moderate” changes in the number of oil fields and rigs and changes in productivity, the study projects that by 2021 the Eagle Ford region should see a $62 billion impact, 82,645 new jobs and revenues of $890,000 to local governments and $1.6 billion to state government.
Supply-chain in place, opportunities ahead
Like many parts of Texas, Southwest Mississippi has a history in the oil and gas businesses. Over the decades, the region has built up a supply-chain infrastructure that should serve it well as shale oil and gas production ramps up, energy sector experts say.
“One of the advantages Mississippi and Louisiana have is a fair amount of infrastructure. It’s all over the place,” said Eric Smith, associate director of the Tulane Energy Institute.
Smith calls it “a gathering system,” such as pipelines, refining capacities and people who have worked rigs — assets you would not find in shale plays in, say, New York state.
Charlotte Batson, principal of New Orleans energy sector consulting firm Batson & Co., has divided the opportunities ahead for Southwest Mississippi’s into “Upstream, Midstream and Downstream.”
Upstream takes in the supply-chain that supplies the exploration and drilling activity and includes a variety of items, from heavy equipment to instrumentation to chemicals, said Batson.
Batson detailed the three categories as part of a study of infrastructure needs and economic opportunities the TMS development could create for Amite, Wilkinson and Pike counties.
Upstream, she said, also includes “opportunities for local businesses.” For this, she listed everything from drilling equipment, mud and cement to restaurants, RV parks, grocery stores, dry cleaning services and movie theaters.
Midstream, she said, takes in the part of the supply chain used for the processing and gathering of the gas and oil and transportation network used to get the products to market. The transport is from the wellhead to downstream processing facilities and end users, according to Batson.
“Southwest Mississippi is located at the confluence of the largest pipeline networks in the country, with access to all petrochemical and refining facilities, export terminals, rail, the Mississippi River, the Port of Natchez (which recently announced an expansion to handle increasing cargoes of frac sand), and other important infrastructure,” Batson said in her 400-plus page report titled “Best Practices in Shale Oil and Gas Development.”
The abundance of natural gas in the North and Midwest has led to a flipping of pipeline directions, causing increased volumes of oil and gas to be moved south to Gulf coast terminals. “Increasingly, capacity is available in northbound pipelines, creating an opportunity for the right company,” Batson said.
The downstream part of the supply chain includes the processing of oil or gas into gasoline, chemicals, liquefied natural gas (LNG), polymers, or plastics, Batson said, predicting the United States is positioned to become a low-cost leader in chemical manufacturing, especially for products in which natural gas is a feedstock.
“Southwest Mississippi’s location in the middle of one of the largest transportation corridors in the U.S. is a critical factor for petrochemical facilities, nearly all of which are located on or very near these lines,” she said.
Waiting for the light to change
You can already see signs around McComb and other parts of Southwest Mississippi that the status quo is about to get knocked for a loop. J. Britt Herrin, director of the Pike County Economic Development District, has been watching it unfold for some time now.
“We’re already seeing pretty much our hotel rooms are full,” he said. “I had a prospect come in and I had trouble getting him a room during the week. The restaurants are slap full.
“Everyday if I go by the WalMart lot or Applebees, I see a different truck with ‘XYZ Energy’ or something like that on it.
Speaking of trucks — drivers for them are probably going to be the most in demand once the Tuscaloosa Marine Shale region goes into development, Herrin said.
“Everything has got to be moved – sometimes thousands of barrels a day,” he said.
“Studies show it takes 2,500 truck movements to get a deep ground hydraulic fracturing well up and running and 1,000 movements of trucks a week to support the operations of the well once it is going.”
New jobs across all occupations on both the Mississippi and Louisiana sides of the TMS play could number anywhere from 30,000 to 90,000, according to reports Herrin says he has received from the oil and gas companies. “One is the low number and one is the high number,” he said. “The jobs will be spread from Alexandria, La., to Tylertown, Miss.”
Herrin figures for now the energy companies are weighing their bottom lines and asking just where and how they can be sure of making money. “They are going to know the answers. And when that happens, all hell is going to break loose.”
But it will break loose in a good way, he adds.
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