In recent years, oil and gas development in the United States has reached such a high level of public prominence that most people have become familiar with terms like “fracking,” “Marcellus,” and “Utica.” Oil and gas attorneys undoubtedly could offer explanations on a few more: “Onondaga,” “well casing,” “impoundment pond.” But outside of specialized oil and gas attorneys, few people have ever heard of the Eagle Ford shale play. If recent studies and projections can be believed, this is about to change.
Located in South Texas and producing oil from depths of 4,000-14,000 feet, the Eagle Ford shale play (Eagle Ford) is one of the most active natural shale deposits (which are also commonly referred to as “shale plays”) in the world. Eagle Ford Shale, named for the town of Eagle Ford, Texas, the shale play currently boasts over 200 active rigs with wells known to produce over 4,000 barrels of oil per day (bpd). Id. The play itself stretches across 20,000 square miles – from southern Texas near the Mexican border up to East Texas (Daily Finance, 5 Mind Blowing Facts About the Eagle Ford). The number of recoverable barrels of oil in the play is unknown, but the U.S. Geological survey has estimated the field could be the largest on-shore oil reserve ever discovered in the United States, holding anywhere from 7-10 billion barrels of oil. Id.
Like most things in Texas, the Eagle Ford buzz started out small but has now grown to prodigious size. When the first well was drilled in 2008, it was only able to produce 358 bpd. Id. By 2012, the Texas Railroad Commission had issued over 4,000 permits and output hit a record of 580,000 bpd. Id. According to estimates, production could reach 1.6 million bpd by 2016. Id.
Eagle ford crude oil is particularly valuable to investors because its makeup makes it incredibly inexpensive to refine. Id. This is partly due to its location directly beneath the Austin Chalk (a geological formation in Texas comprised mainly of chalk and marl, a calcium carbonate rich mud which has been used as a soil conditioner and an acid soil neutralizing agent). Eagle Ford Shale. The Eagle Ford shale is unique because it is considered to be “source rock,” meaning that it is the original source of hydrocarbons that are contained in the Austin Chalk above it. Id. Additionally, its location just 100 miles from refining hubs in Corpus Christi and Houston means that transportation costs are essentially a non-issue Id. Finally, Eagle Ford will likely not have to worry about pipeline capacity issues like those that plague the Marcellus and Bakken plays because pipeline construction is slated to outpace production growth over the next four years. Id.
Another aspect of Eagle Ford that is making it increasingly attractive to investors for its huge profit potential is that well costs are falling rapidly.According to EOG Resources (one of the companies operating within the Eagle Ford play), well costs have fallen from $9.1 million in 2009 to $5.8 million per completed well in 2013. Id. EOG Resources has also reported that it may be able to lower costs by an addition $300,000 by January of 2014. Id. Much of these savings can be attributed to the falling price for hydraulic fracturing services, experience operating in the play, and improved drilling techniques. Id.
Overall, the Eagle Ford shale play has emerged as one of the best shale oil deposits in the United States and offers substantial returns to energy companies willing to invest in the Lone Star State. If production can continue to match industry estimates over the next few years, it may just be that the United States has found an onshore source of petroleum that is inexpensive, easily accessible, and capable of reducing American dependence on foreign oil.