Austin Puts Its Stamp on the Oil & Gas Map
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October 24, 2012
Houston. Dallas and Fort Worth. Midland. These fine locales have long been the Texas meccas for the international oil and gas industry.
While the race is on to conquer the Eagle Ford resource play from growing offices in San Antonio and points south, there’s a quiet, yet fast-growing oil and gas sector emerging in Austin—and it’s being driven by UT PGE graduates and research conducted within CPGE.
Austin? Sure, our beautiful capital is located here, and recently Forbes Magazine rated Austin the #9 place for businesses and careers among the 200 largest cities in the US as well as the “Best Big City” for jobs. It’s a good place for live music, and there are more gourmet food trucks than you can shake a stick at in the city. That little state agency called the Texas Railroad Commission happens to be here as well. But oil and gas companies?
The Greater Austin Chamber of Commerce, working with Texas Workforce Commission data, has identified nearly 300 companies employing over 2,900 engineers and staff in upstream functions in the Austin MSA—firms with activities related to exploration and production to geophysical surveying and drilling technology development. While the oil and gas sector won’t compete with Austin’s software or semiconductor sectors in terms of headcount, the combined economic impact on the region has become more significant than it’s been in decades.
Many veterans of the industry know that this hasn’t always been the case. Before the emergence of companies like Brigham Exploration, Texas American Resources, Jones Energy, Three Rivers Operating and countless others, Austin has always historically hosted operators, but was primarily known as the home of the Texas Railroad Commission. And while most companies working Texas oilfields had some sort of business in Austin – be it legal and lobbying firms – it was never known as a place companies preferred to locate their headquarters. It was just too far away from the field.
Idea Shops
The sale of Brigham Exploration to Statoil in late 2011 was a remarkable transaction not just because of its size--$4.4 billion—but because Brigham Exploration was based in Austin.
Composed of a team of outstanding Longhorns, Brigham Exploration was originally founded in 1997 in the Dallas-Fort Worth area, explained Gene Shepherd (BSPE ’81; MBA ’86), Brigham Exploration’s Chief Financial Officer. “At the time, it was an out-of-the-box thought process that led to Brigham’s relocation. It was a tight real estate market in Dallas back then. We were mostly an ‘idea shop’ trying out new technology, not deep into production and operations, so we didn’t need to be in the middle of downtown Dallas. So we looked farther and farther outside of downtown for suitable office space. Bud (Brigham) loved Austin, and given that we were an idea shop we could move to Austin and it wouldn’t set us back.”
The decision to locate in Austin continues to have impacts on the Brigham team. After the sale of Brigham Exploration to Statoil last year, Bud Brigham, Gene Shepherd, and other Brigham folks formed Anthem Ventures, LLC. Based in Austin, Anthem will focus on investment opportunities in emerging resource plays, as well as oil service and infrastructure. Further, plans are afoot to launch Brigham Resources, which will build on the achievements of Brigham Exploration.
Another company that falls into the “idea shop” model is Three Rivers Operation Company LLC. Formed in 2009 from a group of seasoned Austin-based oil and gas executives, Three Rivers began pursuing mature assets in the Permian Basin just as the price of oil was coming off of historic lows. According to Engineer Wes Gibbons (BSPE ’09), Three Rivers employed leading-edge technology to gain an advantage at just the right time. The combination of technology and the opportunity to get in on the ground floor led Gibbons to leave a business management consulting job in Houston behind to relocate to Austin.
“I knew that they were growth-focused and small. That was what I was looking for,” said Gibbons, who began with a wide array of responsibilities including operations, regulatory filings, tubing and casing procurement and the like, and is now heading into reservoir engineering and business development. “In Houston I was ‘in the industry’ but I wasn’t using my degree like I wanted to. Here in Austin, I have the freedom to use my degree in a lot of different ways.”
One aspect of being located in Austin was the workforce situation. Shepherd admitted that the market isn’t as deep for petroleum engineers locally, but that didn’t pose a problem for Brigham. “Rarely did we lose somebody to another company,” he said.
Gibbons sees the workforce issue changing rapidly. “Coming back to Austin? It was a huge motivation for me.” And even though Three Rivers has just completed its sale to Concho Resources for $1B, Gibbons feels confident this is just the start. “There are a lot of opportunities here—especially for petroleum engineers who are looking for more than just a technical career.”
Quality of Business, Quality of Life
Shepherd doesn’t discount the Texas meccas for oil and gas production. “I’m sure there are benefits to being in Dallas or Houston that we’d like to see, but the quality of life is very high in Austin. It’s a great environment for raising a family, and it’s such a healthy city with so many great things to do—all the biking, parks and festivals.”
When asked why he and Sparks decided to headquarter Platt, Sparks in Austin, Platt points to the unique intersection of legal and regulatory business that often defines the character of a capital city. “For a lot of our earliest clients, we came into contact with them through the law firms” handling the regulatory filings with the Texas Railroad Commission. “What we realized was that there were plenty of petroleum consulting firms but very little real engineering expertise. It was a market we thought we could serve—doing real engineering studies that small, independent, and private oil companies could trust.”
According to Shepherd, another benefit from Brigham’s point of view was UT Austin itself. “There is a lot of benefit to being here because of the opportunity to work with the university—it’s huge.”
Bradley Sparks, Chief Financial Officer of Laredo Oil, said that his company relocated from Tucson, Ariz. in 2010 for not only the quality of life opportunities in Austin, but also because of the promise of working with UT PGE—both on technology and on its workforce. “What we do with gravity drainage is technically very complex, “ says Sparks, “so it was important to have access to the best talent coming from a university like UT Austin. Plus, we get to be close to the best petroleum engineering program in the country, and have already partnered with UT PGE faculty on some of our most challenging technology issues.”
“What’s really cool about being in Austin,” says Shepherd, “is that you get an opportunity to build something from the ground up. To start at the ground floor—ordering pencils and signing office leases—and see the enterprise through all the way to the successful sale of the company, that’s tremendous.”
In fact, Shepherd would tell today’s UT PGE students to consider seriously the options for great careers they might find in Austin. “I used to tell petroleum engineering students to go get a job in a big company. I don’t know that I would give the same advice today, given my experience here in Austin.”
Just three years after graduating, Gibbons offers a similar observation: “this isn’t the place for hardcore reservoir engineering careers, but if you’re entrepreneurial and want something different, you can find it in Austin.”
