Employment Growth Continues In The South Texas Eagle Ford - Dallas Fed

Federal Reserve Districts
Federal Reserve Districts

The Federal Reserve Bank of Dallas released its most recent beige book and Eagle Ford job growth was noted as part of the steady labor market.

The report states "Financial firms added employees to comply with regulatory stress testing and wealth management, and noted employment growth in Austin and the Eagle Ford Shale area. Several contacts reported difficulty finding qualified people to fill vacancies.... A construction-related manufacturer noted truck drivers were in short supply."

Notes on the energy sector included:

Energy activity improved since the last report. The Texas rig count increased, and contacts noted strong global demand. Respondents expect further improvement in the second half of the year, especially due to anticipated increases in rig activity and production from the Gulf of Mexico.

Other highlights include:

  • Manufacturing activity increased overall, and many contacts were more optimistic in their outlooks.
  • Drought conditions worsened across the Eleventh District.
  • Refiners said operating rates and margins were up over the reporting period.
  • Automobile sales were steady over the reporting period, and demand remains above year-ago levels.
  • Transportation service firms said overall cargo and container volumes increased over the reporting period. Railroad contacts reported notable increases in motor vehicles, petroleum, lumber......
  • ..commercial real estate sector said leasing activity for office and industrial warehouse space continued at a steady pace.

The Dallas Beige Book summarizes recent economic conditions in the Eleventh District. Read the full report at dallasfed.com

Drought = Fires in Texas

Texas Fire Map
Texas Fire Map

The Texas drought is wreaking havoc on the state. South Texas is blanketed with smoke and fires near Bastrop have taken lives and hundreds of homes. Wildfires have spread throughout Texas and destroyed millions of acres. If you live in affected areas, please use any and all precautions. Weather reports indicate we'll get a reprieve from the wind over the next few days. Firefighters should have a better chance of controlling the fires if that proves correct.

To our knowledge, the fires have not directly impacted any oil & gas operators, but that can change if we don't get rain sooner or later. We don't have any areas of the state that are immune to the risk of fires.

This map will give you an idea of just how bad it is:

Texas Drought Map
Texas Drought Map

We'll keep the families impacted by the fires in our prayers.

Drought Gets Worse as the Eagle For Picks Up

The drought and the renewed call on water resources from the Eagle Ford Shale has been a concern since the beginning of the year when South Texas fell below normal rainfall levels. Water needed for hydraulic fracturing or fracking is now a pull on resources in what is officially the second worst drought on record. Operators are working to limit the impact on South Texas and are beginning to recycle, as well as drill deep water wells. The problem is, in today's world of enormous frack jobs, oil & gas companies use millions of gallons of water to complete each well. Water wells, that are often drilled on the well pad itself, can cost as much as $500,000. That can make completions cost prohibitive in areas with lower economic returns. What was bad a few months ago has only gotten worse, but you can bet the industry is already tackling how to best handle the drought. This isn't the first place water has been an issue. The town of Big Spring is already treating recycled wastewater and you can bet more local towns in South Texas will begin doing the same.

In the midst of the second-worst drought in Texas history, towns across the state are going to extreme measures to cope, capping residential water use, and limiting the number of days households can water their lawns. Earlier this week, the West Texas town of Kemp ran out of water. In Big Spring, the local water district is building a plant to recycle treated wastewater back into the drinking supply.