Things are much different today in the 23 county area of rural South and Central Texas known as the Eagle Ford Shale Region than they were just a few years ago. There is no hotel and motel-building boom taking place. There are no more massive traffic jams at the intersection of Texas Highway 123 and U.S. 181 in Karnes City, no hour-long waits to get inside the Dairy Queen in Cotulla to grab a burger for lunch.
All the man camps that sprung up during the boom of 2010-2014 have pretty much either been re-purposed or gone away entirely, and the owners of fast food joints and grocery stores in the region's small towns no longer must transport workers in from San Antonio or Austin each morning because their other employees had all gone to work in the oil patch. The massive five-year boom that turned this region into one of the hottest economic development areas in the nation is now a distant memory, and the small towns that characterize the area (the largest city actually in the 23 county Eagle Ford Region, Beeville, has fewer than 15,000 residents) feel like small towns once again.
Still, things are beginning to show signs of picking up. The region's rig count, which once rose to more than 270 during the peak of the boom that ended with a crash in 2014 and then dropped to as low as 32 two years ago, is now back to a healthy and far more sustainable 90 or so, according to the U.S. Energy Information Administration (EIA). That number of active rigs makes the Eagle Ford the second most-active drilling basin in the country, and the count promises to rise to some extent over the second half of the year.
As noted late last week by Pioneer Natural Resources CEO Scott Sheffield, the Permian is experiencing a worsening shortage of pipeline takeaway capacity as production of both oil and natural gas threatens to overwhelm the existing infrastructure and cause producers to shut in wells and forego planned drilling opportunities there. As a result, some of these producers are likely to shift capital originally planned for Permian wells to other producing basins, including the Eagle Ford, in the coming months.
So, those who value the economic development and influx of wealth the oil and gas industry brings with it already had cause for optimism, and they were given another healthy dose on June 22 with a new report from the United States Geological Survey (USGS). The full massive extent of the oil and gas reserves present in the Eagle Ford formation became a bit clearer as the USGS released an updated resource assessment for the basin, which it refers to as the "Eagle Ford Group of Texas." According to the USGS, the “Eagle Ford Group of Texas” contains 8.5 billion barrels of oil, 66 trillion cubic feet (TCF) of natural gas, and 1.9 billion barrels of natural gas liquids that are “undiscovered” and “technically recoverable.”
What those last two terms mean is that these volumes of oil, gas and natural gas liquids are known today to be in place and can be produced using current technology. Of course, technology in the oil and gas industry advances each and every day, so this means that even this updated estimate of the Eagle Ford’s potential is significantly understated, as these government assessments always are.
Placed in context, the most prolific single underground formation ever discovered in the lower 48 states – the East Texas Field – has produced about 5.5 billion barrels of oil from the prolific Woodbine Formation (a cretaceous age sandstone formation) since its discovery in the early 1930s.
Per the EIA, total oil production from the Eagle Ford Shale recently topped the 3 billion barrel mark since its inception 2008 . Added to the 8.5 billion technically recoverable barrels estimated by the USGS, that would mean that we can expect ultimate recoveries from the massive formation to exceed 11.5 billion barrels of oil. It’s not the Permian Basin, which is home to a number of very rich shale oil-producing formations, but the Eagle Ford is a phenomenally rich reservoir in its own right.
As with the Permian and the Bakken Shale, crude oil production is only a part of the story where the Eagle Ford is concerned. As USGS scientist Kate Whidden, the lead author for the Eagle Ford assessment noted, “This assessment is a bit different than previous ones, because it ranks in the top five of assessments we’ve done of continuous resources for both oil and gas. Usually, formations produce primarily oil or gas, but the Eagle Ford is rich in both."
Indeed, at current usage levels, the 66 TCF of natural gas that USGS assessed to be in place represents almost three years of U.S. consumption . That's a lot of gas.
Bottom line, while you haven't been hearing a lot about the Eagle Ford Shale in recent months in the face of all the attention being paid to the boom in the Permian Basin, you can count on hearing much more about this slumbering energy powerhouse in days and weeks to come.
Date: Jun 26, 2018