The Eagle Ford Shale started as a natural gas play around mid-2010, and if it had stayed that way, there wouldn’t be so much talk about it.
But as natural gas prices fell, the industry within a year had switched gears in South Texas, focusing instead on extracting the more profitable crude oil and natural gas liquids from the shale rock.
That play-within-a-play characteristic of the Eagle Ford Shale is making it a premier shale play, speakers said at the recent Hart Energy’s third annual DUG (Developing Unconventional Gas) Eagle Ford Conference in San Antonio, TX.
“The Eagle Ford Shale has emerged as the most significant opportunity for unconventionals in North America and perhaps the world,” said David Roberts, executive vice president of COO of Marathon Oil Corp.
Roberts said that as of 2006, Marathon had zero production from unconventional sources. Now liquids-rich shale plays make up 15 percent of the company’s global production, and that likely will double by 2015.
Last year it had a gross production from the Eagle Ford of 29,000 barrels of oil a day, and now that’s up to 100,000 barrels and growing.
Mark Sooby, managing director of energy investment banking of Bank of America Merrill Lynch, said the Eagle Ford is more profitable than many other plays because of its proximity to refineries.
“This is just an amazing oil story in the middle of what started as a gas play,” said Sooby.
Companies at the DUG conference said that drilling and production are getting more efficient and faster — and more profitable.
Richard Mason, chief technical director of upstream with Hart Energy, said rig counts in the Eagle Ford are likely to increase a bit in early 2013 as companies start their new fiscal year and can invest more into the area. But until natural gas prices start to rise again, Mason said there won’t be a huge increase in drilling.
“That horizon is out there,” he said.
“Nobody like dry gas,” Gilmer said. “It is the redheaded stepchild of the entire play.”
But several companies said that even as they focus on liquids production, they are hanging onto their gas acreage in anticipation of the day that natural gas prices start to rise.
Sooby said there’s generally far more natural gas available than oil in shale plays across the U.S. Finding new uses for that gas should be a priority for U.S. policy, he said.
No matter what’s being produced, Texas remains well positioned, with the Permian Basin similar to the Eagle Ford in terms of its ability to produce natural gas, oil and natural gas liquids.