In Oil Country, One Town Peers Beyond the Boom

Check out an audio slideshow of Karnes City, part of our Shale Life project. 

KARNES CITY — Circling this small South Texas city in his black Cadillac, Ray Kroll surveys empty streets, faded storefronts and a century-old mercantile building with fresh blue paint and a teetering veranda.

His eyes light up as he describes what could be: Over there, a new, two-story, $30 million high school. There, a park, with as many as five baseball diamonds. There, a new corner store.

His vision is no pipe dream. Sitting on a sweet slice of the Eagle Ford Shale, Karnes City, about 50 miles southeast of San Antonio, is flush with cash in year four of an oil drilling bonanza that economists predict will last another two decades.

“It affords us the opportunity to do a lot of things we never would have dreamed of years earlier,” said Kroll, the city’s new development manager, who has lived here for eight years.

But the energy world’s sudden interest in Karnes City has brought its own challenges, like cracked roads and a housing crunch. And it is prompting deep questions. How can the community nourish itself from the boom, and build landmarks that will sustain it when the drilling rigs are gone and the flow of oil money dries up?

Its answer, so far, has been to keep rough-and-tumble oil workers and the boom’s opportunists — some here call them “carpetbaggers” — at arm’s length, even if that means losing out on short-term bonanzas. That means no liquor stores, strip clubs, bars or “man camps” — temporary oil field housing. The city is also limiting new hotels, which are popping up elsewhere like weeds after rain.

“We want families to move here,” Kroll said. “We want them to join our churches, send their kids to school here, become productive members of the community.

“As far as the guys blowing off steam after they’ve worked 16, 18 hours by going into a bar? We really don’t want that here.”

Some neighboring towns have been less stringent, allowing most developers to come in no matter how long they plan to stay. Officials in Karnes City, population 3,200, say they have learned from past booms and busts, and are embracing a slower pace. They are using the influx of oil money to invest in education, parks, walking spaces and other amenities. They are welcoming businesses like restaurants and stores that improve the quality of life.

“If you want traction in this city and you’re a developer, you should be asking one of two things: ‘What do you need, and what can I do to help?’” said Don Tymrak, the city manager and a former longtime mayor.

The Institute for Economic Development at the University of Texas at San Antonio has identified Karnes City as one of four Eagle Ford communities — along with Gonzales, Cotulla and Pleasanton — that are plotting a post-boom future.

“They’re trying to take an organized approach to development,” said Thomas Tunstall, the institute's research director.

This is not Karnes City’s first go-round with a volatile industry. At various times during the 20th century, it depended on cotton farming, uranium mining and some oil production. By the 1990s, all those industries had tanked, taking the economy down.

“Right before this happened, I would say this place was oppressed," said Lance Rhodes, who owns a funeral home here. “People were about to lose businesses, lose property.”

Tymrak talks of a time when Karnes County was considered a “severe economic dislocation" community, meaning more than half its population had died or moved away.

“We were losing our future,” he said. “Now we have a reason for them to come back.”

The oil fields have pumped millions of dollars into the community. Karnes City had nearly $1 million in sales taxes in 2013, more than four times as much as it collected in 2010. The city is also banking big royalty checks.

Dozens of people with rights to minerals under the city became millionaires almost overnight. So far, signs of that newfound wealth are subtle: new pickup trucks, remodeled houses, and churches with new roofs and electronic welcome signs.

Karnes City’s broader vision will take shape in the coming years. A crucial piece is a proposed civic plaza including a hotel, a convention center and a new city hall. With officials’ input, architects at the University of Texas at San Antonio drafted a concept for the project last spring.

“We have to have a reason to get people to come to town,” Kroll said, even if it is just what would be the largest convention center between San Antonio and Corpus Christi. “Maybe it’s just people are going to come into town to have a wedding.”

The city has rolled out a branding campaign to persuade visitors that it is more than just a boomtown. It bills itself as “The Real Texas,” a nod to the area’s longhorns, horny toads and oil wells.

The look is much different four miles down the road in Kenedy, a city of similar size. A tangle of gas stations, fast-food joints, hotels and oil field services has sprouted along the main drag, where eighteen-wheelers rumble to and fro. Amid a drought, the city’s rapid growth threatens to outpace its water resources, developers say.

“It’s just the Wild West in a lot of ways,” Tunstall said. “There’s a lot more growth in Kenedy, but it’s not yet clear if there’s any plan associated with it.”

Kenedy has not created the equivalent of Kroll’s position in Karnes City, leaving most of the planning to Ford Patton, its city manager of five years. Patton said Kenedy has its own ambitions, including building a civic center and financing long-neglected infrastructure projects, but is mostly reacting to growth.

“Everybody is trying to keep up,” Patton said. “The impact is so sudden that everyone is trying to keep up with the day-to-day necessities.”

In Karnes City, some residents have grumbled about the city’s slow pace, saying officials are passing up easy money. Kirby Hons, who owns an antique store where shoppers can peer under the floorboards at fat catfish swimming in an ever-flooded basement, said that Kenedy-style development might bring him more business.

But Arlene Matthews, who has lived all 76 of her years here, said she did not want what Kenedy has.

“They’re growing. That’s fine,” she said after finishing lunch at the Pastime Cafe, a new downtown restaurant. “Karnes City, we hope, will stay small.” 

Disclosure: The University of Texas at San Antonio is a corporate sponsor of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.