The Eagle Ford Shale story has been fun to watch over the past few years. While there are many shale plays struggling at with low natural gas prices, the Eagle Ford’s liquids yields are supporting economics.
There are over 280 rigs active in the South Texas Region as of May 2012. Almost 210 of those are drilling for oil. Add in the rigs that are supported by condensate and NGL production and around 90% of drilling targets liquids. It’s easy to see why operators have shifted capital from dry gas to plays like the Eagle Ford. Chesapeake, a leading natural gas producer, plans to spend 30% of its 2012 budget in the play. That will swell to 40% in 2013.
The activity is followed by production and new expectations. The EIA estimated the play produced 500,000 b/d of liquids in April 2012 and Valero’s CEO expects the play will produce 500,000 b/d of crude by year-end 2012. In reality, we’re probably between both numbers. New analyst projections peg total production potential of the play between 1.1 and 1.8 Million barrels per day. That’s in a total US market that produced a little more than 5 million b/d a few years ago. The Eagle Ford alone might grow US supply by 25% or more!
The Best is Yet To Come
John Walker of Enervest spoke at a conference earlier in the week and he believes we’re still very early in understanding the shale plays. He said a recent well was completed and then shut-in for 45 days. The well produced at initial rates of almost 100% more than an adjacent well. 100% more! As the play truly hits its stride. Expect to see more announcements related to operational efficiencies, improved well results, and increases in recovery of hydrocarbons. That’s all good for mineral owners and operators alike.