Texans Discover Oil Grows on Olive Trees as Crude Drops

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As crude prices tumble, landowners across Texas are accelerating production of a different kind of oil — olive oil.

“I love the trees, and I love watching them grow,” Steve Coffman Jr. said of his 40 acres (16 hectares) of budding olive trees, which he planted two years ago on his red dirt ranch just outside Cotulla, Texas, the epicenter of the state’s Eagle Ford shale-oil boom.

Nowadays he doesn’t have the same affection for his oil wells, which sit just down the road from his olive trees.

“I can’t look, it’s depressing,” Coffman said as he pulled out his smartphone to check the latest energy prices. He shook his head. West Texas Intermediate crude had fallen again.

Five years after one of the biggest oil booms in decades boosted royalty checks, a steep decline in oil prices has Texans seeking new ways to stay ahead. About 70 farmers across the state — up from 24 in 2008 — are hoping to cash in on America’s growing appetite for olive oil, a small part of the latest effort to diversify the economy of the second most-populous U.S. state.

In 2013 Texas farmers planted about 500,000 olive trees, up from 80,000 trees in 2008, according to figures from the Texas Olive Oil Council. The council expects around two million trees to be planted by the end of next year.

“There are now lots of sectors in Texas that just were not here in the 80’s,” said Michael Plante, a senior research economist at the Federal Reserve Bank of Dallas. San Antonio has a thriving health-care industry, while Austin has technology. “These are non-trivial portions of the Texas economy now.”

Texas isn’t traditionally olive country, and two decades ago the state had virtually no olives to speak of. In the late 1990s a handful of farmers became intrigued by the prospect of growing olives in the state. As it turned out, the climate in parts of central and southern Texas was well suited to the Mediterranean specimen.

The U.S. is among the world’s largest consumers of olive oil, yet it produces just a fraction of its own consumption. About 97 percent of the olive oil used in the U.S. is imported from overseas, primarily Italy and Spain, according to the American Olive Oil Producers Association.

Net Importer

Last year the U.S. imported $1.1 billion worth of olive oil, up from around $400 million in 2000, according to import figures from the U.S. Department of Agriculture.

The olive arrived in California in the late 1700s in the hands of Franciscan monks who acquired it from Spanish missionaries. California remains the dominant producer of American olive oil, accounting for almost all of the nation’s domestic production. Last year the state produced approximately 3.5 million gallons, according to the association.

Texas, which produces less than 15,000 gallons a year, is a mere drizzle.

Texans know all too well that relying too heavily on the oil industry can lead to trouble. In the 1980s, the bottom fell out of the oil market, leading to a wave of bank failures and, eventually, a regional recession.

Thomas Tunstall, research director at the Institute for Economic Development at the University of Texas at San Antonio, preaches economic diversification. He’s lived in Texas all his life and is familiar with the pattern of boom and bust that has plagued Texas.

Sustainable Economies

As the oil boom gathered steam over the past few years, he urged communities to build diverse, sustainable local economies.

“I’m working with them to try to figure out how not to become the next ghost town,” Tunstall said.

He is pushing everything from spinach to geothermal energy to wildlife photography. And olives.

“Olive farming isn’t going to provide huge numbers of jobs,” Tunstall said. “But it offers some specialization.”

On a recent day bobwhite quail flitted through the rows of young olive trees on Coffman’s ranch. For years the 32-year old rancher barely eked out a living here. He made money by selling deer hunts, raising cattle and flirting with day jobs. Then, about five years ago, landmen swooped in and brought surprising news: There was oil under that red dirt. Lots of it.

“We suddenly came upon a rather large inflow of funds and it had to go somewhere,” he said, as he puffed on a Marlboro.

Oil Dependent

To be sure, olives aren’t a panacea.

“You have to be very careful about thinking olives are the salvation to counties that are dependent on the oil industry,” said Jim Henry, one of the state’s first olive growers and founder of the Texas Olive Ranch, which markets 100% Pure Texas Extra Virgin Olive Oil. Henry sells various flavors of oil, such as a peppery “Rattlesnake” or a smoky “Mesquite.”

Henry says that growing olives isn’t easy and that weather in Texas can be fickle. He believes the best regions to grow olives lie outside the Eagle Ford region and closer to the more temperate expanses near the Gulf of Mexico.

Coffman isn’t daunted, and says he has nothing to lose, especially as oil prices continue their downward march. “Nobody knows what these Eagle Ford wells are going to do,” he said, noting that estimates put the life of his wells in the range of 15 to 50 years.

Olive orchards, he says, can fruit for up to 25 years. And when they’re no longer productive they can be planted anew.

“No one’s going to go out and plant an oil well,” he said. “It would be cool if you could.”

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