By Mark Lum on|
Admittedly, I am not a fortune-teller, but I do honestly believe that Cline Shale has the potential to create a boom-town atmosphere in the Midland region. It may be easy for just about anyone to say such a thing of an oil play, however, the Cline Shale area truly holds something special.
It sits more than 9,000 feet under Cline Shale, which is, for the most part, along the eastern border of Texas’ Midland Basin. It stretches nearly 150 miles from the north end to the south, spanning around 70 miles wide in four counties.
Cline Shale Potential
With a number of wells showing significant promise in testing, the Cline Shale area has the potential to experience a drastic influx in drilling activity similar to that of oil plays in North Dakota and other parts of Texas. In fact, some believe the area could hold somewhere around 30 billion barrels of oil based on the nearly 10,000 sq. miles Cline Shale encompasses. What’s more, companies such as Laredo, Apache, Devon, Fire-wheel, and a number of others have already invested in Cline Shale with varying degrees of initial development. In fact, Laredo has over 140,000 prime Cline Shale acres. Apache has over half a million acres with six wells in the planning phase, and Devon has almost 390,000 acres in the area as well. As you can see, companies are buying up land and quickly planning the next phase of their operations, which lucky for us, will most certainly include the need for natural gas generators and engines.
Real Estate Boom
With potential for years to come in Cline Shale, it is expected that the area will turn into somewhat of a boom-town. I suspect this means a dramatic increase in real estate developments all over Reagan, Glasscock, Howard, and other outlying Texas counties.
This sounds familiar to the current housing situation in the North Dakota, where oil plays such as Bakken Shale have created a deficiency of housing, but wealth of jobs. In my opinion, the same could hold true for Cline Shale, although hopefully the local real estate developments will learn from the mistakes of other oil plays. In fact, many communities around the area are already concerned that the current housing developments will not be built in time for the boom, due in part to the fact that an increase in activity is currently underway. Real estate companies in the Cline Shale region have already been feeling the pressure to provide housing for people moving to the area for work, with one local realtor mentioning he gets frequent calls from people desperate for housing.
In addition to the housing boom in the Midland Basin and surrounding areas, I also suspect there will be a dramatic increase in commercial business. After all, where there are people and jobs there will need to be restaurants, along with grocery and retail stores. With the increase in drilling activity, it is almost certain that a wide range of new businesses will begin to sprout up in counties like Howard and Sterling. For our industry, it means the area will need more engines and generator sets.
Perhaps an even better determinate of the potential for community development in the Cline Shale play is longevity. In other words, the longer the area is consistently producing oil, the more established and developed the community can become. Development is key to the community, because as we have seen in the past, a major oil play that goes broke can quickly turn from a boom-town to a ghost town.
To better illustrate the potential Cline Shale has to increase housing and business development, I like to compare it to the current Bakken play. The United States Geological Survey reports that Bakken Shale will likely produce over four billion barrels of oil, which still yields in comparison to what is expected of Cline Shale. If the amount of oil produced in an area is any indication of the additional community development, then this leads me to believe that Cline Shale will likely need more real estate and business development than Bakken. What’s more, Cline Shale is projected to produce more barrels than the seemingly endless oil supply of Eagle Ford, which is estimated to produce up to 10 billion barrels.
Cline Shale is undoubtedly another boom-town in the making, which is an exciting time for a community, especially one so isolated. Like Bakken, and many other oil plays throughout the country, a lot still remains to be seen about its production, and the subsequent real estate and businesses that develop in the region. Personally, I always enjoy watching an oil play develop, because as someone that works with generators, I find the unpredictability exciting — oil plays adds a sense of intrigue to any related industry.
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