Tag Archives: Eagle Ford Shale

New Opportunities in Oil: What’s Happening in Eagle Ford?

Late last year, we spent some time discussing the Permian Basin in Texas — specifically the Delaware Basin and the incredible rebound in oil and natural gas production it’s seen over the past few years. This month, we’re digging into the Eagle Ford Shale, the South Texas sibling of West Texas’ Permian.

 

Formation of the Eagle Ford Shale

Like the Permian Basin — which covers around 75,000 square miles of southeast New Mexico and western Texas — the Eagle Ford Shale was once submerged in the Tobosa Basin, the sea between the Laurasia and Gondwana supercontinents.

As the continents neared each other and the land rose, the area of the Permian remained submerged, thanks to the Hovey Channel, which kept the area connected to the ocean. As the Permian formed around 300 and 250 million years ago, the area that would become the Eagle Ford was still high and dry. It wasn’t until 153 million years later that the Eagle Ford Shale would begin to form.

Why the Recent Rebound?

The Eagle Ford Shale has a unique history, much different than that of its neighboring Permian basins. Those basins, the Delaware Basin, in particular, were impacted by three primary factors: availability, economic policy, and technology.

The United States’ embargo on Arab oil in the 1970s and corresponding crude oil export ban led to a considerable surplus of oil and a drop in crude prices — an inhospitable environment for large drilling operations. More recently, slowly rising oil costs, Congress’ 2015 vote to end the export ban, and advancements in horizontal drilling technology have led to a significant boom in Delaware Basin drilling, particularly for deposits that were unreachable until recently.

In the Eagle Ford, the situation has been somewhat reversed. In 2010, when drilling in the Permian was way down, the Eagle Ford Shale was among the most active drill sites in the United States. And as drilling in the Permian rose, drilling in the Eagle Ford slowed; by the last quarter of last year, there were 25 active Eagle Ford drilling operations.

Land, Oil, & Economics

Economics are the main cause of this contrast. The horizontal drilling opportunities present in the Permian are absent in the Eagle Ford. The ability of a single Permian well to tap multiple oil or gas formations reduces the break-even point for drilling to $30/bbl or less, while the Eagle Ford break-even, due to its lack of horizontally accessible formations, remains at about $50/bbl.

Land leases and production obligations also play a part. Eagle Shale drillers are operating the fewest number of drills required in order to maintain drilling obligations, allowing them to retain their leases and preventing other organizations from taking their own leases and starting wells. Simply put, drillers in this area are sitting tight on their Eagle Ford Shale assets while actively pursuing Permian Basin assets, which, at this moment, are more profitable.

This trend is already starting to reverse, however. While Delaware Basin drilling in the Permian remains strong, more wells are being reactivated in the Eagle Ford Shale. From its low point in fall of last year, the number of active Eagle Ford wells has increased by over 100%. While slow, with only a small handful of rigs coming online every week, the trend is distinct and holding steady.

A major driver of this rebound in the Eagle Ford is also a driver of the Permian rebound: the ever-present threat of peak oil. Though estimates of when we will hit peak oil vary tremendously, it is becoming increasingly clear that we’ll peak sometime in the next generation or two. The inevitability of peak oil — as well as constantly increasing pressure to move toward environmentally friendly and renewable energy sources — drives both an increase in oil drilling and an increase in natural gas drilling.

Southwest Process Controls

Southwest Process Controls, having maintained a presence in the petrochemical industries for 15 years, is committed to following and analyzing shifting trends in the oil and natural gas drilling fields. To keep on top of these trends and stay up to date on relevant industry news, visit our blog regularly and/or follow us on Twitter and LinkedIn.

The Latest from Eagle Ford

Oil Pouring ImageThe effects of the oil price downturn continue in the Eagle Ford Shale region. A recent report, detailed in the Houston Business Journal, has indicated that the number of active rigs in the area continue to decline. In February of 2014, there were 221 active rigs. In 2015 the number stood right around 157. According to data released on February 16th of this year, there are currently just 47. The combination of low oil prices (averaging around $30 per barrel) and close to record-high crude oil inventories are not-surprisingly seen as the primary culprits.

Impacting Local Economies

Not so long ago, the Eagle Ford Shale was considered a safe bet for all kinds of investments. Hotels, restaurants, retail—they were all booming. Unfortunately, the oil bust brought much of the success to a standstill. KUT News recently reported that over 20 hotels were built in Cotulla Texas to accommodate the influx of confined labor, but now most of them stand nearly vacant. The local Fox affiliate has also chimed in on the subject, reporting that many life-long native oil field workers are being forced to look for new lines of work. While other economies in the area are still going fairly well, workers and businesses connected to shale oil are bearing the brunt of this glut.

Where the Oil Continues to Flow

While the oil drilling industry has certainly felt a major impact of current circumstances, there are parts of the business that continue to move forward. A recent article on the PennEnergy website, reveals that initial production rates for tight oil continue to rise in the Eagle Ford Shale. The rigs that have survived the falling prices of oil remain in high-producing areas and have shown some resiliency, specifically, in light tight oil formations. While initial production rates in these areas remain high, production decline rates are still prevalent over the first and second years of tight oil production. PennEnergy suggests that new wells should be drilled in tight oil formations to counteract such production declines.

A Long Recovery Ahead

No one can know for sure when oil prices will rise again and allow shale drilling to resume at even close to the pace where it was before. As observed by the Houston Chronicle, the more wells that become disengaged, the harder it will be to re-start things as equipment gets dismantled and oil workers let go. In spite of all this, however, many analysts foresee an eventual recovery for shale drilling. Some predict that 2017 will be the year that U.S. oil companies regain the position to boost their oil production once again. Certain big name suppliers are voicing optimism about long-term production, including BP, who has projected that oil demand will ultimately grow to 20 million barrels per day by 2035. In the meantime, though, things continue on a slow path. Keep checking in with our blog to learn some of the latest news and trends in the Texas Shale Oil region.

Roseland’s South Texas Showdown Coming to Galveston in July

An Oil Show Like No Other

It’s summer, expo season is heating up, and the Roseland Oil and Gas South Texas Showdown is right around the corner.  Roseland is known throughout the industry for showcasing the most advanced oil and gas professionals, and this year’s South Texas Showdown will be no exception.  Taking place at the Moody Gardens Convention Center in Galveston on July 1st through 2nd, the expo promises to build on Roseland’s success of combining the newest products and services with unparalleled networking opportunities.

Take Full Advantage of the Texas Oil Boom

The Permian Basin and the Eagle Ford Shale continue to be among the most important sources for domestic oil in the country.  Roseland Oil and Gas is proud to provide a physical venue for professionals throughout the oil and gas industry to increase their exposure and make important connections to their peers in this powerful market.  Tens of thousands of attendees and exhibitors will be there, with an exhibitor list that reads like a Who’s Who of the petroleum industry.  Roseland always provides a complete array of industry-relevant speakers as well.  All of those who attend the South Texas Showdown are exposed to new products and services, a heavy equipment area featuring special, discounted rates, and endless possibilities for creating new leads and contacts.

User-Friendly Directory Available with Roseland Publications

In addition to promoting important trade shows, Roseland also publishes one of the best directories in the oil and gas industry.  Accurate, comprehensive, and user-friendly, the Roseland Oil and Gas Directory allows customers to connect with all types of companies working in both the Permian Basin and the Eagle Ford Shale.  Roseland works hard to ascertain the most recent information about the highest quality companies at work in the industry.  The exhibitors in the expo and the directory represent some of the best companies in oil and gas.

An Oilfield Friendly Atmosphere with Many Special Events

Even though the South Texas Showdown provides a wealth of industry opportunities, it certainly isn’t all business.  On the Monday before the event, Roseland is sponsoring the Roseland Golf Tournament at the Moody Garden Golf Course.  This friendly, relaxed competition allows players to network with Galveston locals while benefitting the Texas Wounded Warriors, an organization which provides important support for wounded veterans from Iraq and Afghanistan.  Other special events during the expo will include chili cook-offs, crawfish boils, and numerous charitable events.

Hy-Lok and Southwest: A Winning Partnership                                  

Southwest Process Controls will be at the South Texas Showdown with our partners, Hy-Lok USA.  We carry a full line of the finest quality fluid control products, including Hy-Lok Tube Fittings.  Our products are essential for a broad variety of oil and gas applications, including a full line of valves, fittings, gauges, regulators, and others.  Visit us this July in Galveston and find out how our products can benefit your operation.  To find out more about our high value products, please contact us directly.