Anadarko Plans More Eagle Ford Drilling With Fewer Rigs

Anadarko Eagle Ford Acreage Map

Anadarko Petroleum's Eagle Ford assets will be developed with fewer rigs in 2013. Anadarko is dropping its average rig count from 10 to 8 after the company was able to drop its spud to rig release time by 26% in 2012. The average spud to rig release averaged 9.2 days during the quarter and a record 5.4 days was set.Anadarko hit another record as well when operated production surpassed 125,000 boe/d (54,400 net) at one point during the quarter. Production averaged 39,100 boe/d net during the quarter, which represents 71% growth over fourth quarter 2011 volumes.

The company continued its midstream expansion during the quarter as it extended an oil gathering line from Gardendale to Cotulla, as well as expanding gathering capacity to 350 mmcfd. On the processing side, the Brasada Plant, in La Salle County, is on pace to come online in the second quarter of 2013. The plant will be able to process 200 mmcfd and recover as much as 30,000 b/d of NGLs.

SM Energy's Plans $650 Million in Eagle Ford Spending in 2013

SM Energy Operated Eagle Ford Acreage Map

SM Energy plans to spend $650 million or more than 50% of its drilling and completion budget in the Eagle Ford Shale in 2013. That's net of costs carries related to its joint venture with Mitsui. The company will spend a total of $1.5 billion in 2013, with the Bakken being the second largest area of focus.

SM will operate five drilling rigs and two frack crews. Operated activity will be focused in the northern portion of the company's acreage. A total of 75 completions are expected during the year, with an inventory of 40 wells drilled, but not completed at year-end. SM also expects its non-operated partner, Anadarko, will run nine rigs and a spudder rig. Costs associated with Anadarko's drilling are being carried by SM's JV partner and are expect to last another 2-3 years before being exhausted.

Tony Best, CEO, remarked, “Our 2013 capital program positions the Company for another year of record production while generating strong returns from our key projects. The capital budget is anchored by our high return Eagle Ford and Bakken/Three Forks development programs, with additional investments being made in emerging oil programs in the Permian Basin.

Production is expected to grow approximately 20% year over year to 255-267 bcfe and then 15% in each of 2014 and 2015.Read the full press release at sm-energy.com

SM Energy Eagle Ford Production Surpasses 200 MMCFE/d in Q2 2012

SM Energy Eagle Ford Acreage Map

SM Energy's Eagle Ford production eclipsed 200 mmcfe/d in the second quarter and the company's well completion schedule will be weighted toward the latter half of the year. Even though production grew 16% over the first quarter, the numbers were below expectations due to downstream pipeline curtailments and delays in receiving equipment.

SM completed 26 operated wells in the first half of the year and has seven operated drilling rigs running as of August. A total of 67 wells are planned to be completed during 2012, so 41 of those will come in Q3 and Q4.

SM Energy's Non-Operated Acreage

The company also has a significant non-operated position that is operated by Anadarko Petroleum. Production from Anadarko operated acreage averaged 9.5 mboe/d in the second quarter. Anadarko has 9 drilling rigs and 1 spudder rig working the Eagle Ford and is expected to hold that level through the remainder of the year.

In a complex twist to joint venture agreements, Anadarko has increased the pace of expansion of its midstream assets, which in turn increase the capital needs of SM Energy for the year. Midstream expenses are not treated the same at development expenses and are not carried under the JV agreement with Mitsui.

Anadarko Eagle Ford Drilling Time Falls to 6.8 Days for Record

Anadarko Eagle Ford Shale Map

Anadarko set an Eagle Ford record with a spud to rig release time of just 6.8 days for its best well in the second quarter of 2012. On average, the company spent just 10.5 days from spud to rig release for each well. That is down from almost 18 days when the company started drilling Eagle Ford wells in 2009.

Anadarko also set a record with a weekly net production rate of 32,300 boe/d in the quarter. Gross processed production is approaching 100,000 boe/d.

Anadarko is utilizing 9 conventional rigs and 1 spudder rig in the play. Eagle Ford drilling for the second quarter included spudding 70 wells, completing 50 wells, and reaching first production on 44 wells.

Horizontal Drilling and Hydraulic Fracturing Brought the Eagle Ford

Anadarko's drilling manager Mark Sunland was interviewed by MyWestTexas. He talks about new technologies opening up what was traditionally thought to be a source rock. The combination of horizontal drilling and hydraulic fracturing have made the play economic and opened vast domestic resources. Future improvements, such as rotary steerable technology, will only improve the efficiency of shale drilling onshore. 

"The technology involved in (horizontal drilling) is not really anything new to us," Sundland stated, adding hydraulic fracturing is not new either, having been around since the late 1940s. "It's applying technology that we use for a different style play and applying it to a new geological setting."

Historically, producers considered shale formations to be sources of oil and gas, but not to be access points because shale is not sufficiently porous nor permeable to release its hydrocarbons efficiently.

Whereas the older vertical drills could access only a small slice of a formation, horizontal drilling can cut through miles of the same layer of rock. Anadarko's record for horizontal hole length is 8,340 feet, with the average Eagle Ford hole coming in at 6,000 horizontal feet. This greater formation exposure was then combined with hydraulic fracturing, which created the artificial permeability needed to allow the oil to flow to the pump.

"This is the beauty of two well-understood technologies being applied in a different way. It has completely changed the paradigm for petroleum engineers," Sundland said.

Rotary steering technology (RST) on the other hand, is "much more high-tech," he said, not relying on bent housing, instead using computer controls to direct the bit. The drawback for RST, and the reason it had been mostly used offshore, is that it is much more costly.

This type of technology has opened not only the Eagle Ford shale - whose reserves Sundland compared to major offshore fields -- but in the Permian Basin and elsewhere as well, driving production rates in Texas to an upward curve for the first time in 40 years.