It’s been a scorcher this summer in South Texas, where oil production has more than doubled from one year ago.
According to preliminary data released Monday, the Eagle Ford shale play produced 621,000 barrels per day (bpd) in June. That’s a whopping 60.2 percent higher than this time last year.
And these numbers were even greater in May, when official results show that the shale play produced more than 650,000 bpd, according to Rigzone, a 4.47 increase from the projected numbers of June.
Up. Down. You get the idea – the Eagle Ford is going off right now. Companies are hitting all 17 oil and gas fields like there’s no tomorrow. And aside from the oil, 93,000 bpd of condensates were produced in June, along with 1.52 billion cubic feet of natural gas.
The Eagle Ford is already considered the best U.S. unconventional oil play because of its higher production and lower costs of its wells.
And just like the explosion of shale oil caused by North Dakota’s Bakken, the Eagle Ford is leading the way for Texas, which still remains the king of oil here in the states. It wasn’t long ago when Texas experienced its resurgence in oil and gas production after a combination of hydraulic fracturing and horizontal drilling techniques were able to unlock shale resources that had, until then, been unreachable.
In May, Texas was producing oil right around 2.5 million bpd, the latest month for which official data is available.
Why So High?
The first reason for this has a lot to do with the geology of the Eagle Ford. It’s unique in that it can change significantly from one mile to the next, and in some areas, it’s hard to even compare similar areas of the same play. There are so many factors that go into it – depth of your source rock, thickness, its lithology, permeability – all this will affect your production and cost.
Once you know the type of rock you’re working with, you get into the operation. For that, many producers have a unique well design. With the design of your well comes a whole other list of variables that affect production.
Lateral length and stages are two crucial components. If your well runs with a longer lateral, you don’t need to drill as much vertically, and that can save you a pretty penny. The problem with a longer lateral is the longer it gets, the more control you lose.
It’s all about finding that perfect balance.
But still, 60 percent higher production!?
Companies like Marathon Oil Corp (NYSE: MRO) drilled 82 new wells in their Eagle Ford play and brought 70 others to market, according to MySanAntonio, and that was only in the second quarter.
What they’re doing is multi-well pad drilling – when roughly 6 to 8 horizontal wells can stem from the same well pad. Since horizontal wells are much more expensive than your typical vertical well, you’re getting a lot more bang for your buck – and a whole heck of a lot more production.
And it’s sweeping through the region, saving time and money, and making operations run more efficiently.
This practice is proving especially useful, as Texas operators are forced to drill within a certain amount of time or run the risk of losing the right to drill.
Pad drilling ensures these companies hold their acreage by production and eliminate that risk. They’re not running all over, trying to beat the clock on their lease terms.
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How Does it Play Out?
Performance of these wells has been tremendous, often exceeding wells drilled in the Bakken, which is considered the tight oil standard.
Things be any better for those in the Eagle Ford right now, and it is quickly becoming a serious contender for the best tight oil play in the U.S. after recent drilling results.
The Eagle Ford will never match the total recoverable resources of the Bakken, but the Bakken is also more uniform in its resources, with a much higher liquid content. The Eagle Ford offers the whole kit and caboodle – oil, natural gas, and natural gas liquids.
Petrohawk was the first to drill and produce gas and oil in 2008, and now the play stretches into Mexico, hitting 24 Texas counties. It’s 50 miles wide, 250 feet thick, and has depths between 4,000 and 12,000 feet.
ConocoPhillips (NYSE: COP) says it too is getting better results from its pad drilling efforts. It’s already one of the play’s biggest producers and is doubling its production from one year ago. ConocoPhillips was able to get in early when acreage was way down.
And like I said before, Marathon is already up more than 10 percent from where it was when the year started.
Go figure, everything really is bigger in Texas.
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