The 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.