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Texas shale boom has familiar tone

Thinkstock Photo An oil well pumps in an east Texas field in this undated image.

CUERO, Texas — Robert Stoddard says the problems are interconnected.

Area businesses are having a hard time filling open positions. First, the oil boom brought workers from all over, which ate up the housing stock. Now rental prices are becoming much less affordable.

So, anyone recruited from outside the area may not find a place to live or may be unable to afford it. This is especially hard for schools and hospitals. And the oil companies offer so many high-paying positions that other businesses end up trying to suck gristle off the bones of the labor pool.

“They can make so much money out in the oilfield,” Stoddard said.

This sounds like someone talking about North Dakota, but Stoddard is nowhere near Tioga or Ray.

He is the building official for Cuero, Texas.

Texas is in the midst of an oil boom, just like North Dakota. Several years ago, the oil-rich state was producing an average of a million barrels a day. North Dakota celebrated a million barrel- per-day production as a major boom milestone this past spring.

For Texas, that was a bust-level production. The state was producing three times that amount back in the early 1980s.

Then in 2010, the oil started to flow. True to its reputation for size, the boom in Texas is now pumping 3 million barrels a day, and few believe that number will fall any time soon. Where North Dakota has one shale formation, Texas has three major formations: the Barnett, Permian and Eagle Ford. This spreads the oil-impacted areas out all over the state and over much larger areas.

The Eagle Ford stretches all the way across 400 miles of southern Texas.

Cuero is a town of about 7,000 people at the eastern side of the Eagle Ford shale formation. Like the Bakken, the area has become a hotspot for the oil and gas industry. The city is experiencing unemployment rates under 4 percent, rising incomes, traffic congestion over deteriorating roads, and a growing population.

Carrizo Springs, Texas, lies at the western side of the play, and its story is much of the same.

“Definitely, the newspaper has seen an increase in business,” said Claudia McDaniel, owner of the Carrizo Springs Javelin.

The paper is seeing a large increase in legal notices for permits like disposal wells, classifieds and rental ads for things like RV parks.

“We were a dying town,” McDaniel said. “People are definitely better financially.”

But surrounding this prosperity are problems and challenges whose parallels to life in the Bakken are eerily similar.

Rental pain

Single-family housing has become very scarce in Cuero, and when a home goes up for sale, it’s gone within a day. And the town isn’t seeing a whole lot of developer interest in building new apartments.

“Even if you got a project, you can’t find a plumber,” said Pat Kennedy, director of the Cuero Development Corp.

Stoddard said the town permitted a 48-unit apartment building, but the project is funded by the Housing and Urban Development Section 8 program for low-income public housing. The project is badly needed, but these kinds of developments are hard to come by since area incomes exceed HUD limits. The bulk of developments are temporary housing for the oilfield workers.

Like much of Texas, the local government of Cuero takes a “hands off” approach to regulating business. Stoddard said the city’s building department hasn’t denied a lot of permits.

The town restricts RV parks from setting up within its limits, and has some regulations to maintain safe building practices. Stoddard said no one has tried to set up a new park since the boom started.

The town even adopted a master plan to help guide the growth. Industrial projects are located at the edge of town, and the city government worked with companies on this zoning.

“I think we deal with it all the best we can,” said Cuero Mayor Sara Post Meyer.

But otherwise, they let developers proceed with their projects. In two years, eight hotels went up. There are also several man camps in the area. Unlike the massive lodges in Williams County, most of the Cuero-area camps are 50 to 100 beds.

The rapid development of temporary housing has taken a lot of pressure off the rental market. Rents for a one-bedroom go for about $800 a month. It’s high for a small rural town in Texas, but not nearly the $1,500 to $1,800 rates for the same size apartment in Tioga.

“The only thing we can do is encourage people not to be greedy,” Meyer said.

The town has a few other advantages to keeping rents down. Cuero has a year-round building season. Summers can be quite hot, with temperatures in the triple digits for weeks. This restricts construction work in the afternoons, but projects can start during any month.

The town is also less rural than the Bakken. Just 30 minutes away is Victoria, a city of about 60,000 people. And they are within 90 minutes of three major metropolitan areas — Houston, Austin and San Antonio. The region is home to more than 10 million people, 14 times the population of the entire state of North Dakota.

Out west

On the other side of the Eagle Ford shale play, 180 miles from Cuero, is Carrizo Springs. It’s much more remote than Cuero.

The town is two hours from San Antonio and an hour-and-a-half from Laredo. Rents there have increased three-fold over the period before the latest boom, with one-bedroom apartments now going for $1,500.

It’s not just apartments. Prices at grocery stores and restaurants are climbing.

Mario Chavez, assistant city manager for Carizzo Springs, has a word for it that’s similar to North Dakota’s often-used “Bakken Premium.” He calls it the “Eagle Ford Price.”

Despite a longer history with oil, the current boom caught them off guard.

“We didn’t know we’d be affected this much,” Chavez said.

Single-family housing, as in Cuero, is hard to come by. The town has about 20 man camps outside its limits, Chavez said, and there are some RV parks around the area. An RV spot goes for about $400 a month.

With the housing problems in town, local businesses are busing people in sometimes 50 miles away to work in Carizzo Springs. Some of the workers come from Mexico to work in restaurants and other smaller businesses, where unskilled jobs can pay $10 to $13 an hour. It’s an opportunity that makes the commute worth it.

The city is also trying to get a grip on businesses that try to skirt the permitting process. Some places set up without the proper licenses, which deprives the town of sales tax. And then there are the sewer and trash disposal challenges. It’s a familiar to-do list to those in the Bakken.

Like North Dakota, Texas is reaping enormous benefits while trying to surmount rapidly escalating problems.

The price of addressing the needs is often steep, and looming over every budget decision are the questions about how long it will last.

As much confidence lies with the industry, Texans remember in the 1980s when there was a similar amount of optimism.

“Seems like all these oil booms go in cycles,” Stoddard said.