Improved technology and stimulation have enhanced the outlook for the Eagle Ford shale in south Texas. But don’t be surprised if the next hot development in the play isn’t the Eagle Ford itself. Operators are targeting other formations, foremost the Austin Chalk.
And be prepared for more consolidation in the play area. That’s already happening, although non-core acreage remains available for leasing.
First developed in 2008, the Eagle Ford shale was one of the first resource plays identified in the United States. Also, one of the most promising. According to a 2018 estimate from the U.S. Geological Survey, the play holds 8.5 billion barrels of recoverable oil, 66 trillion cubic feet of natural gas and 1.9 billion barrels of natural gas liquids.
“The Eagle Ford has world-class source rock, when you think about it, billions of barrels of oil, deposited in the Late Cretaceous,” said Ryan Doucette, vice president of geoscience for WildFire Energy in Houston.
“You have this prolific resource that’s very repeatable, very reliable,” he noted.
Doucette described the Eagle Ford as basically an organic-rich marine shale, with deposition in an environment that was oxygen starved even before the Cenomanian-Turonian boundary event: “You have an anoxic period so there’s not a lot of oxygen in the ocean at that depth,” he noted.
“In other areas where you have a siliciclastic resource, or you’re in a carbonate area, there’s a lot of variability in those plays. The Eagle Ford is relatively more homogenous, within a couple of miles span,” Doucette said.
Today, the Eagle Ford is the second most active U.S. unconventionals play, behind the Permian Basin.
Key Observations
Here are four points to consider.
- Tackling the Eagle Ford requires a solid sense of location within the play.
The Eagle Ford is probably best known for its bands of thermal maturity. From north to south, primary output ranges from light oil to volatile oil, condensate, wet gas and dry gas. With color coding of wells, on some maps the play looks like a long slice of spumoni ice cream.
According to the Texas Railroad Commission, the Eagle Ford play includes 27 counties in south Texas. It arcs upward to the northeast from the Mexico border, approximately 400 miles long and 50 miles wide, with an average formation thickness of 250 feet at depths ranging from 4,000 to 12,000 feet.
Doucette said the San Marcos Arch divides the play into southwestern and northeastern sectors, with a Lower and Upper Eagle Ford prospective on the southwest side.
“Once you get past the arch (to the northeast), the Upper transitions into a seal whereas the Lower Eagle Ford remains prospective,” he noted.
“The Upper actually becomes too proximal. As you get over to our area, the organics weren’t preserved,” he said.
Both oil and gas wells have been drilled along the length of the play, but it becomes much gassier toward the Maverick Basin/Mexico border area, and an oil play as it extends toward the East Texas Basin.
Overall, Eagle Ford operators have to be keenly aware of local conditions and geology and best production practices in their area of the play.
- The Eagle Ford is consolidating, but lease acreage remains available.
Early last year, WildFire announced the acquisition of Chesapeake Energy’s remaining Eagle Ford holdings, about 377,000 net acres and 1,350 wells in the Brazos Valley region. That followed its earlier acquisitions from MD America Energy and Hawkwood Energy.
“In Lee, Burleson, Brazos counties, which is where we are, we’ve been fortunate to have consolidated the Eagle Ford,” Doucette said.
That activity resulted in WildFire holding 800,000 gross acres in the Eagle Ford with more than 45,000 net barrels of oil equivalent production per day and 80-90 percent of revenues from oil/liquids, he said.
Multiple other mergers have taken place in the play during the past two years, led by Marathon Oil’s acquisition of Eagle Ford assets from Ensign Natural Resources for $3 billion in 2022. ConocoPhillips, EOG Resources and Devon Energy also operate in the Eagle Ford, along with several smaller independents.
“The Eagle Ford is ripe for consolidation. To my understanding, no major has made a truly material acquisition in the basin,” Doucette observed. A significant merger may well happen in the future, but, “Who knows who it’s going to be?” he said.
Eagle Ford operators have gotten their best returns from focusing on dense development in the play’s core in Karnes, Dewitt and Gonzales counties, according to a recent study from Enverus Intelligence Research.
At 20 or more wells per section, Eagle Ford operators can still achieve break-evens below a $45 a barrel West Texas Intermediate oil price, it reported. As a result, drilling in the core areas has been heavy while some secondary acreage remains available.
“The status where we are today is, there’s still a decent amount of Tier II inventory left. The core has been pretty well drilled up,” Doucette said.
- Higher natural gas prices might not be a big boost for Eagle Ford drilling.
Low U.S. natural gas prices have suppressed overall Eagle Ford drilling activity. Some industry speculation projects a significant boost for the play if gas prices move toward $3 per thousand cubic feet, driven by growing demand for LNG and electricity production.
Doucette thinks that might not happen. Big gas-producing plays like the Haynesville and Marcellus would more likely ramp up production to feed the market, he said.
“In terms of prolificness, there are just so many more gas plays out there to meet demand. Other gas heavyweights would put their foot on the pedal,” he predicted.
Also, U.S. operators have left thousands of wells drilled but uncompleted (DUC), sometimes in anticipation of higher prices – currently, there are more than 4,300 DUC wells, according to the U.S. Energy Information Agency.
As of February, the Eagle Ford had the second lowest number of DUCs in U.S. unconventionals, 349 compared to the Bakken’s 325, but far less than the Permian’s 883. Some of those wells undoubtedly would be completed and come online if gas prices rose.
Higher gas prices could push drilling activity up somewhat in the Eagle Ford play, but not all in the Eagle Ford shale. Operators have now moved on to evaluating other formations. In the play area, “the Austin Chalk and the deep Bossier sand are proving very productive on the gas front,” Doucette noted.
- Eagle Ford opportunity includes conceptual, geographic and stratigraphic expansion.
Early U.S. resource plays like the Eagle Ford tended to be under-stimulated, Doucette observed. Those plays are now benefiting from improved stimulation techniques, as well as the introduction of longer laterals.
“It was a technological change and a change in approach. In 2008, we just didn’t have the technology,” he explained.
In future geoscience work, “I would say the next frontier is the shallower, less mature Eagle Ford, to quantify the oil in place as well as understand pressure regimes,” Doucette said.
From that point, “it’s handed to our trusted engineers to extract oil from these low-pressure regions via creative artificial lift methods,” he added.
As the Eagle Ford play expands to counties outside the core area, operators also are looking at formations up and down the stratigraphic column. The fractured, Upper Cretaceous Austin Chalk has re-emerged as a target of interest.
“Stratigraphically, it sits right above the Eagle Ford. There’s ample data and production to help understand the Austin Chalk,” Doucette noted.
“That’s the cherry on top, while the Eagle Ford is the ice cream,” he said.