The Eagle Ford Shale play is still in its early stages, with landmen continuing to hunt for mineral rights across South Texas and no one really knowing how much oil is out there.
But if the Eagle Ford seems big, get ready for what’s happening in West Texas, where oil and gas production is ramping up in shale layers such as the Wolfcamp in and around Midland.
“They’re getting thousands and thousands of feet of pay zone,” said Ken Morgan, director of the Texas Christian University Energy Institute, who spoke Wednesday at Palo Alto College. “It’s like the Eagle Ford on steroids. They haven’t even begun. We’re just in the toe of this thing.”
Morgan, who spoke as part of an Eagle Ford Consortium and Alamo Colleges event, said it’s going to take “decades and decades” for companies to work through the shale reserves in West Texas.
And how long will it take for the Eagle Ford to play out? And how much oil is there?
“We’re so early in this,” said John Breyer, a geologist and senior technical consultant at Marathon Oil Corp. “I don’t think anybody really knows.”
But Breyer said that wells in the Eagle Ford are producing more oil using horizontal wells that are half the length of those in North Dakota’s Bakken Shale.
“This is going to dwarf North Dakota,” Breyer said.
He said companies would invest $25 billion in the Eagle Ford this year.
That’s in line with a report last month from Wood Mackenzie, a global energy research firm, which estimated that the industry would sink $28 million into the Eagle Ford this year — about 27 percent of all oil and gas investment in the lower 48 states. Between 2012 and 2015, Wood Mackenzie expects capital spending of about $116 billion in the region.
Leodoro Martinez, chairman of the Eagle Ford Consortium and executive director of the Middle Rio Grande Development Council in Carrizo Springs, said that even a few years into the play, which kicked off in 2008, there are still concerns about everything from housing to setting up adequate worker training programs.
“As far as we’re concerned, we’re just kicking off. We’re just starting,” Martinez said. “Our courthouses are still packed with landmen looking for additional resources.”
Morgan said the Eagle Ford is part of a larger global energy picture, with U.S. shale plays upending the energy market. The United States imports $1 billion in oil per day, but Morgan said it has a chance to become more economically independent with hydraulic fracturing, which is the process of pumping sand, water and chemicals at high pressure to fracture dense rock formations to release oil and natural gas.
“We are covered in shale plays, and what we know about shale is the tip of the iceberg,” Morgan said.
While companies have been drilling in the crude oil windows of shale plays, one thing limiting drilling of natural gas reserves across the country has been low natural gas prices, which fell, ironically, because of the abundant shale discoveries.
Prices are below $4 per million British thermal units, down from $12 in 2008. And dry gas sits at greater depths, making those wells more expensive to drill than oil wells.
If liquefaction plants are built, the U.S. can export natural gas to Europe and Japan, where prices for natural gas are much higher. Morgan also said large companies are looking at converting fleets to run on natural gas instead of diesel. “You’ve got cheap fuel, so cheap it’s ridiculous,” he said.
But Morgan also said OPEC is “jittery” about U.S. shale plays, and thinks that at some point it will drop the price of oil on the world market to try to force natural gas out of the market in favor of cheaper imported oil.