Eagle Ford Oil Output Surpasses 600,000 b/d In May

Eagle Ford Shale Well Map

Eagle Ford oil production crossed 600,000 b/d for the first time in May 2013. Initial reports to the Texas Railroad Commission total more than 580,000 b/d. With revisions and late reporting almost every month has been revised upward by 30,000-50,000 b/d.

The U.S. produced 7.3 million b/d of crude oil in April, so the Eagle Ford accounts for more than 8% of all oil produced across the country. The Eagle Ford is quickly gaining on other shale plays and will likely match and surpass Bakken production sometime in the next two years.

Gas production from the Eagle Ford has held relatively flat. The Eagle Ford has averaged a little more than 2.1 Bcf/d of natural gas production so far this year.

As of July 3, 2013, a little less than 4,000 oil wells and almost 1,700 gas wells were producing from the Eagle Ford. More than 10,000 permits have been issued in the play since 2008.

Remember, liquids reported by the TX RRC are measured at the wellhead. Additional condensate and natural gas liquids will be gathered further downstream in separators and processing plants. Industry analysts estimate the Eagle Ford is producing closer to 900,000 b/d of crude oil, condensate, and NGLs.

Eagle Ford Shale in Mexico Needs Private Investment

The Eagle Ford Shale in Mexico is still years away from development even though over 5,000 wells have been permitted and more than 2,000 wells are producing on the U.S. side of the border. The difference is a nationalized oil monopoly versus the free market north of the Rio Grande. Literally hundreds of companies have competed for the right to develop the Texas Eagle Ford, while PEMEX (the national oil company in Mexico) has been forced to standby and wait until the organization has a better understanding of hydraulic fracturing. Only FIVE wells have been drilled to date and 170 wells are planned over the next four years. For reference, there are more than 200 wells being drilled each month in the Texas Eagle Ford.

What will spur Eagle Ford development in Mexico?

Mexico's president elect, Enrique Pena Nieto, has proposed energy reforms that will allow private investment into the country, but he faces a strong headwind. Both houses of congress are controlled by his opponents and constitutional reforms require a two-thirds vote for approval.

Read more at Chron.com.

Updated Texas Railroad Commission Map of the Eagle Ford Shale

Eagle Ford Shale Well Map

The Railroad Commission released an updated well map in May. Since the March 15, 2012 version, the number of gas wells on schedule has only grown by 25, but the number of oil wells on schedule has surged by 422 to 1,376.

We're close to having 2,000 producing wells on record. Take into account the delays in reporting and we're likely well past 2,000.

The number of permits issued in the play jumped 381 to more than 4,000 over the past two months as well.

We're running at a blistering pace. 400+ oil wells in two short months is a substantial feat and with ~250 rigs running, we'll likely replicate the growth of the past two months many times over.

The increased pace of drilling and permitting is exactly why we're seeing higher future production estimates almost weekly.

Eagle Ford Shale Well Map - 3,700 Permits - 1,500 Producing - March 2012

Eagle Ford Shale Well Map

As of March 15, 2012, the Texas Railroad Commission reported almost 3,700 permits had been submitted, with 954 oil wells and 578 gas wells on schedule. That's up from ~1,900 permits, with 194 oil wells and 249 gas wells on schedule in June of 2011. That means the industry brought on almost 1,100 wells in 9 months. Add in the many gathering delays in 2011 and that number could have been even higher. In 2012, don't be surprised if as many as 2,500 wells are brought to production.

Also, note the difference in the proportion of oil vs. gas wells. In June of 2011, 56% of producing wells were considered "gas" wells, but in March of 2012 that number had fallen to just 38%. That's a direct reflection of the commodity markets. Natural gas is at multi-decade lows, while oil has held strong above $100 per barrel.

Do you think 2,500 Eagle Ford wells will be drilled this year? Use the comments below to share your thoughts.

Eagle Ford Consortium Highlights

Just a few thoughts from the Eagle Ford Consortium Conference last week:

• Production is outpacing expectations - Almost double early predictions from UTSA
• Housing remains a concern, but investors are beginning to consider major multi-family developments
• Peak drilling in the Eagle Ford is expected at 2,500-3,000 wells per year
• The success/economics of downspacing will ultimately decide how far we go below the range of 65-130 acre spacing currently
• More than 70,000 direct Eagle Ford Shale jobs will be created by 2020
• Permits issued over the past three years in the Eagle Ford have gone 2009 - 94; 2010 > 1,000; 2011 > 3,000
• In the most active counties, sales tax revenue increases have been as high as 500%
• Oil prices remain the major risk to development

UTSA is currently working on an updated economic impact study and the expectation is for almost all figures to be revised upwards. The new study will be out in April.

Use the comments below to share your thoughts and notes from the conference. I only hit on the major themes I heard from talking to everyone in San Antonio.