WoodMac: Eagle Ford to Hit Two-Million b/d Mark by 2020

Potential for Eagle Ford Production Constraints by end of Decade
Eagle Ford Shale Well Map

Eagle Ford Shale Well Map – May 2013 | Click to Enlarge

According to the oil and gas research and consulting firm Wood Mackenzie, the Eagle Ford will reach two-million b/d of crude and condensate production by 2020. Compared to the next most significant liquids-rich shale play in the U.S., the Bakken Shale, in North Dakota, the Eagle Ford is expected to produce 16% more crude and condensate production during the same year combined.

The Eagle Ford Shale is really on a roll. In June of 2014, analysts at the Bentek Energy Benposium Conference, in Houston, TX, said the Eagle Ford had the highest internal rate of return (IRR) among all other U.S. Shale plays. According to Bentek Energy Senior Analyst Catherine Bernardo, the Eagle Ford is sitting at just over 70% IRR.

Read moreEagle Ford Rate of Return Higher than Other U.S. Shale Plays

Potential for Eagle Ford Production Constraints

Currently, there aren’t  any production constraints in the Eagle Ford. That’s due to a number of factors, but namely an already existing midstream infrastructure in Texas, the completion of multiple midstream projects since the boom began and the Gulf Coast refining markets ramping up to accommodate Eagle Ford production.

At Benposium, analysts predicted the Eagle Ford market would not see a lot of production constraints near the end of the decade; however that could change if Eagle Ford production reaches a certain threshold.

Bentek Energy Sr. Analyst Erika Coombs, said in a presentation, “if the Eagle Ford reaches two-million b/d by 2019, there would be production constraints in the play.”

Should Eagle Ford production reach two-million b/d of crude and condensate production by 2020, that means industry players essentially have a one-year pad to accommodate for the anticipated increase.

Eagle Ford Capital Spending Makes the Play the Largest in the World

Eagle Ford Spending in 2013 Will Rival the Median Country's GDP
Eagle Ford Capital Expenses

Eagle Ford Capital Expenses 2013 | Click to Enlarge

Did you know? The Eagle Ford now ranks as the largest single oil and gas development in the world based on capital expenditures. That means more will be invested in the South Texas oil play than any other single oil and gas development in the world! That’s the headline takeaway from a recent report released by Wood Mackenzie Analyst Callan McMahon.

The report notes that BHP, ConocoPhillips, and EOG Resources have a combined value of more than $30 billion in the Eagle Ford. That number likely doubles when you add other large players like Anadarko, Chesapeake, Lewis Energy, Marathon Oil, Murphy, Pioneer, and Talisman. If natural gas prices recover to more than $5/mmbtu, it’s quite possible more than $100 billion in value has been created by operators across the Eagle Ford. [Read more…]

Big Firms Say Shale Plays Are Here To Stay

“Shale gases have redefined natural gas supply” is the quote from Hill Vaden of Wood Mackenzie. As large scale firms enter shale plays across the U.S., it is an indication that things have changed for the long term. The Kinder Morgan – El Paso merger is the latest shale driven deal that expands a companies foot print and leverage to the growing shale boom.

With Exxon and international companies like Statoil in the fray, you can bet many of the development decisions that are made today are part of long – very long term plans. Shale plays are ushering in a new wave of domestic development. Just visit North Dakota, Pennsylvania, or Texas if you don’t believe me. [Read more…]