Eagle Ford Production Up Slightly in March

Eagle Ford Produced 1.6 Million bpd in March
Eagle Ford Produced 1.6 Million bpd in March

Oil production in the Eagle Ford increased 28 percent from the same month last year, averaging 1.6 million barrel a day in March.

Relates: Eagle Ford Production Expected to Decline

These findings are from Platt’s Bentek Energy, who also reported that there an increase in production of 17,000 barrels per day for the combined shale formations in North Dakota and Texas in March versus February. This slight increase of 1% may signal a slowdown in the record production that has led to an oil surplus. Platt's daily price assessment shows the value of oil out of the Eagle Ford is up 25% since mid-March due to an average price for the year is $53.30 barrels per day.

Producers the Eagle Ford are still maintaining their production levels by high-grading their acreage and pushing for better efficiencies. The current average economic return for the two basins is 17%. However, the downside risk is that some producers may elect to increase their number of drilled-but-uncompleted wells in the near term—until they figure out their cash flow status—which will further flatten or bring down production levels.
— Sami Yahya, Bentek Energy Analyst

Eagle Ford Oil Production Growing Twice As Fast As Thought - Bentek

Eagle Ford Oil Production Forecasts
Eagle Ford Oil Production Forecasts

Eagle Ford crude oil production has grown twice as fast as anyone thought just two years ago. That was the message delivered at day 2 of Bentek's annual Benposium.

Rusty Braziel, founder of RBN Energy, compared the company's forecast from two years ago to what the company expects today. What was predicted as production for 2016 in 2011 has already been eclipsed! In 2011, Bentek expected Eagle Ford oil production would eclipse 800,000 b/d sometime in 2016.

Well, the play eclipsed 800,000 b/d sometime at the end of 2012 and is now expected to produce more than 1.4 million b/d by 2016. How's that for impressive production growth.

Other highlights from the conference included:

  • The average Eagle Ford well drilling time is estimated at 20 days - Down from 38 in 2010
  • Some Eagle Ford crude will have to be moved by water - Gulf Coast demand will not be enough

Bentek's annual Benposium conference is held in Houston each Spring.

Eagle Ford's Location is Long-Term Strategic Advantage

After spending much of the week at Bentek's Benposium, it is clear the Eagle Ford's position in the Gulf Coast energy complex is a long-term advantage.

"The Eagle Ford is exciting because of its location to the Gulf Coast. With rich gas in close proximity to Mont Belvieu, the Eagle Ford's NGL net backs are among the highest in the country" - Kristen Holmquiest, NGL Analytics at Bentek

Energy Isn't New to Texas

The state of Texas leads oil & gas development in the U.S. Almost 44% of active onshore rigs are running in the state. The state has been an energy leader for decades......

For the Eagle Ford, that means the oil companies are close, infrastructure is close, and the chemical complex is very well developed. Midstream operators have announced $5 billion plus in expansions in the past six months. They will collectively add more than 3.2 Bcf/d in processing capacity in the region.

Even that is dwarfed by what oil & gas operators are spending, and both are setting the stage for what's to come. We're only one year into true development and the play is just starting to roll. The half a million barrels a day of liquids the play will produce by the end of the year is clearly on a path to double or triple in the subsequent five.

The play's location also means operators realize better prices. Oil produced in the Bakken Shale, due to constraints and transportation costs, can be priced at a discount from $10 to $20 per barrel less than WTI. Compare that to the Eagle Ford where we're currently seeing positive differentials to WTI, and you see why being close to the refineries is important. $10/bbl makes a big difference on the bottom line.

Risks to Eagle Ford Development

As with all oil & gas plays, the Eagle Ford isn't without risk. Its location offsets the major risks to some degree, but we've seen prices and economies change in the past. $100/bbl oil has driven development to current levels, but if prices dropped below $80/bbl, you'd begin to see a slow down.

As production grows, there could be growing pains. There is only so much capacity for the light crude in the Gulf Coast. If refiners don't act quickly, we could have periods where there simply isn't enough demand for Eagle Ford condensate.

Bentek's Benposium May 15-17, 2012

Bentek's Benposium conference is May 15-17 in Houston. We're out at the event and will be providing updates on the latest developments affecting South Texas.

Sign up for our Email Alerts and Follow on Twitter to keep up with our coverage.

If you're new to the event, here's a short description of Benposium 2012:

With great changes come great opportunities and North America is poised once again to reassert itself as a leading global energy innovator, producer and exporter. But with new expectations and assumptions come unknown risks and untold rewards. Questioning historical production, transportation and pricing relationships are at the center of the debate as new technologies rattle the energy supply stack.

The shale gas revolution, which is now spreading to oil, continues to have a profound impact on the continental energy landscape and new possibilities are unfolding faster than many in the market anticipated. Producers focusing on traditional natural gas plays have entered into a new era of production optionality, with NGLs and oil the sought after prizes, while abandoning emerging plays that were first developed just a few years ago. International investors have taken notice, investing billions into developing and transporting new domestic resources. The power generation, end users and petrochemical sectors face monumental decisions for making long-term strategic decisions.

This is the objective of BENPOSIUM 2012, a premier event from BENTEK Energy: To explore the most important aspects of these developments through the practical application of fundamental analysis in energy markets.

Read the full agenda at benposium.com

U.S. Oil Production Growth Expectations Continue To Rise

U.S. oil production is expected to rise more than 2 million barrels per day by 2015. That's from a new report written by Bentek that was released after the National Petroleum Council's Production Report last week. The bulk of production will be added by the Bakken, Eagle Ford, and other plays in West Texas. IHS predicts that same oil growth could fuel the addition of 1.3 million jobs and add $97 billion in tax revenues. I think it's safe to say all three, production, jobs, and tax revenues, should be welcomed during this economic climate.

North America appears headed for an oil renaissance, with crude production expected to hit an all-time high by 2016 given the current pace of drilling in the U.S. and Canada, according to a study released by an energy research firm this week.

U.S. oil production in areas including West Texas' Permian Basin, South Texas' Eagle Ford shale and North Dakota's Bakken shale will record a rise of a little more than 2 million barrels per day from 2010 to 2016, according to data compiled by Bentek Energy, a Colorado firm that tracks energy infrastructure and production projects.

Read the full news release at mysanantonio.com