FOCUS: UNCONVENTIONAL OIL & GAS: Industry expects rapid gains in Eagle Ford shale output

Paula Dittrick
Senior Staff Writer

The Eagle Ford shale in South Texas is poised for rapid production growth because gathering, transportation, processing, and fractionation services already are in place or are planned, analysts and oil company executives note.

The formation, which trends across South Texas from the Mexican border and into East Texas, is 50 miles wide and 400 miles long with an average thickness of 250 ft. Located between the Austin chalk and the Buda lime at 4,000-12,000 ft, the Cretaceous Eagle Ford is the source rock for the Austin chalk and giant East Texas field.

Bentek Energy LLC believes the Eagle Ford "stands above the crowd" of multiple US unconventional oil and gas plays because of its high liquids potential and access to crude and natural gas liquids markets.

"Horizontal drilling for oil has been highly successful in the northern part of the play, with production expected to increase fivefold from current levels of 71,000 b/d to an average of 421,000 b/d by 2015," said E. Russell Braziel, managing director of Bentek, based in Evergreen, Colo.

Braziel forecasts dry gas production, mostly in the southern Eagle Ford, will increase to more than 3.5 bcfd by 2014 compared with 1.4 bcfd currently.

NGL production from the central Eagle Ford is expected to rise to nearly 260 million b/d by 2014 from current levels of 103 million b/d, Braziel said.

Eagle Ford producers have ready access to Gulf Coast refineries and the benchmark NGL market at Mont Belvieu, Tex.

The Texas Railroad Commission issued 933 drilling permits for the Eagle Ford from January through May. Last year, the agency issued 1,010 permits compared with 94 permits in 2009 and 26 permits in 2008.

TRC statistics show 72 producing oil leases in 2010 vs. 40 in 2009 along with 158 producing gas wells in 2010 vs. 67 in 2009.

For 2010, Eagle Ford oil production was 3.5 million bbl, condensate was 5 million bbl, and gas was 83 bcf. For 2009, oil production was 308,139 bbl, condensate was 517,686 bbl, and gas was 17 bcf, TRC reported.

Operators are evaluating the horizontal potential of the Cretaceous Pearsall shale in the southwest Texas Maverick basin, which is deeper than the Eagle Ford shale (OGJ, Aug. 25, 2008, p. 32).

Operators comment

Faced with costly delays in obtaining hydraulic fracturing crews, Pioneer Natural Resources Co. of Dallas assembled its own fracture stimulation fleets. Other companies are entering long-term service contracts.

Joey Hall, Pioneer's vice-president, Eagle Ford, said Pioneer had experience with an integrated services business model after its 2004 merger with Evergreen Resources Inc., which had integrated services for coalbed methane operations. Pioneer expects to save $2 million/well in the Eagle Ford by running its own frac crew.

Houston-based Petrohawk Energy Corp., which discovered the play, reported its average Eagle Ford spud-to-spud days decreased to 30 days from 38 days during the first quarter.

Well costs, however, are expected to hold steady because of rising expenses for pressure pumping and other services, Petrohawk Chairman and Chief Executive Officer Floyd C. Wilson said in a May 5 conference call.

Petrohawk's first-quarter Eagle Ford net production averaged 7,500 b/d of oil, 5,900 b/d of NGLs, and 76 MMcfd of gas.

Wilson reported continued improvement in well performance through optimizing the completion design. He attributed much of the improvement to a flow-channel frac technique developed by Schlumberger Ltd.

Petrohawk has used flow-channel fracs primarily in Hawkville field in LaSalle and McMullen counties, Tex. Wells completed this way showed higher initial production rates with higher flowing pressure on comparable choke settings than wells completed using slickwater or hybrid fracs. Flow-channel fracs were 10% less expensive, using on average 10% less water and 40% less sand, Wilson said.

Petrohawk also used flow-channel fracs on two wells in the Black Hawk area in DeWitt County, Tex.

For 2011, Petrohawk allocated $950 million for drilling and completions in the Eagle Ford as well as $250 million for midstream infrastructure. The company plans to run 5 rigs in Hawkville field and 9 rigs in the Black Hawk area through yearend. Petrohawk also is evaluating Red Hawk area in Zavala County, Tex., where it drilled 5 wells.

Interest in Eagle Ford from other operators continues to build. Marathon Oil Corp. agreed to buy Eagle Ford assets from privately held Hilcorp Resources Holdings LP for $3.5 billion (OGJ, June 6, 2011, p. 33).

Marathon entered the Eagle Ford in late 2010, and its transaction with Hilcorp involves assets primarily in Atascosa, Karnes, Gonzales and DeWitt counties, Tex.