The Eagle Ford shale play in South Texas achieved a significant milestone last month with the production of its one billionth barrel of crude and condensate.
Over 70 percent of this oil production has been produced in the past two years, according to a recent update by Wood Mackenzie. Today, the Eagle Ford accounts for approximately 16 percent of total U.S. daily oil production. In 2015, 2.8 million barrels of oil equivalent per day of production is expected from the Eagle Ford, and the largest share of U.S. Lower 48 spending next year will be in the Eagle Ford with $30.8 billion.
A couple of factors have allowed operators to reach one billion barrels in cumulative production over the past seven years, said Cody Rice, upstream analyst with Wood Mackenzie, in an interview with Rigzone. One is the geology of the Eagle Ford, which offers tremendous potential in terms of productivity per well in the play’s core. The other factor is the learning curve of experience that operators have gained in working in other shale plays such as the Barnett play in North Texas and the Bakken play in North Dakota.
The play’s proximity to the knowledge, labor and skills of Houston, the capital of the energy industry, and the legacy infrastructure of a century of oil and gas activity in Texas, have also helped speed production from the Eagle Ford.
Despite the recent decline in oil prices, the play’s economics remain extremely robust in its core for high performing operators who keep costs low and drill high productivity wells. Here, breakeven oil prices on average are as low as $49/barrel.
But in the fringe areas of the play, breakeven prices can run over $100/barrel.
“Location and geology matters, but operator performance matters as well,” said Rice.
The Eagle Ford play includes three windows – the northern section, which is more oil prone; the central portion, which is more condensate prone and is the Eagle Ford’s sweet spot; and the southern portion, where wells are deeper and more prolific from a dry natural gas perspective, said Rice.
Wood Mackenzie has broken up the play into nine subplays, due to the variation even within the three product windows. The concentration of production from the Karnes Condensate Trough and the Edwards Condensate is expected to grow to 55 percent in 2015 from 44 percent in 2014, said Rice. The Karnes Trough Condensate runs from the northeast corner of McMullen County up to the northwest corner of Lavaca County, Texas.
Based on its current estimates, Wood Mackenzie anticipates that the market share of the Eagle Ford in total U.S. production is expected to grow through 2020. Wood Mackenzie also estimates the number of well completions to hold steady at 3,000 wells per year for the next five years, Rice said.
The recent decline in crude oil prices has raised questions about the impact that low oil prices will have on U.S. shale activity. Guidance on potential changes to capital expenditures in 2015 remains unseen, but the Eagle Ford in its core is less sensitive to price fluctuations. Potential changes to CAPEX will boil down to individual operator strategies and positions in terms of debt, said Rice.
The oil and gas industry will always remain focused on addressing the challenges that the public thinks are important, such as water recycling and shale activity’s impact on the local roads, environments and communities. While water usage has not been as big of an issue in the Eagle Ford compared with other plays, operators in the Eagle Ford have taken proactive steps to address the wear and tear of shale-related truck traffic on Texas roads. Rice noted that two operators are voluntarily contributing cash to road funds.
“Every operator I’ve dealt with tends to be a good neighbor in the Eagle Ford and a good steward of the land they’ve been entrusted to handle,” Rice said.
Thanks to the Eagle Ford and tight formations in the Permian Basin, Texas recorded the second largest increase in oil reserves, approximately .9 billion barrels in 2013, the U.S. Energy Information Administration reported Thursday. Texas and North Dakota accounted for approximately 90 percent of the overall net increase in U.S. proved oil reserves in 2013.
Extensions to fields in the liquids-rich section of the Eagle Ford in Railroad Commission Districts 1 and 2 and to Permian Basin oilfields in Districts 7C and 8 provided the biggest portion of the new Texas proved oil reserves, EIA said in its 2013 U.S. Crude Oil and Natural Gas Proved Reserves Report. Texas had total crude oil discoveries of 2 billion barrels in 2013.
Texas also had the most shale gas proved reserves at year-end 2013 due to production from the Barnett, Eagle Ford and part of the Haynesville/Bossier shale gas play. The largest increase in associated-dissolved gas production last year was in Texas Railroad Commission Districts 1 and 8, coinciding with gains in Eagle Ford and Permian Basin oil production, EIA reported.
EIA said Thursday that proven crude oil and lease-condensate reserves in the United States rose 9.3 percent to 36.5 billion barrels in 2013, up from 33.4 billion barrels in 2012, Reuters reported.