Eagle Ford Overview: Part II-Success Factors
Hart Energy, the publisher of “E & P” magazine recently released their “Eagle Ford Techbook” which includes an excellent article by Richard Mason entitled “The Eagle Ford Shale, Energy Titan of the Southwest”. I intend to post several times in the future relating some of the information contained in the Techbook in general, and Mason’s article, in particular. I have also injected my opinions as well. This is the second of what hopefully will be a series.
The Eagle Ford today is a study in efficiency; facilities are built on a just-in-time basis as operators march across the arid landscape drilling, completing, gathering, processing and transporting hydrocarbons to market.
While this was not always the case, a number of contextual, technical and managerial factors helped make the Eagle Ford’s rapid rise to prominence possible. South Texas has a history of oil and gas exploration and production. The local population is familiar with oil field processes and practices, and is largely supportive. Some energy related infrastructure was already in place, and geographically, the Eagle Ford is close to the markets of the Gulf Coast.
The Eagle Ford has also been a laboratory for technical experimentation and innovation. As has been discussed in a previous post, stacked laterals, frac intervals and placements, etc. were all used to optimal advantage.
Managerial innovations such as widespread use of pad drilling in a non-urban environment, learning curve efficiencies, and economies to scale have contributed to Eagle Ford success as well.
However a major factor was the free market. The old saying “Timing is everything” could not be more true than has been the case in the Eagle Ford. In the early years, 2010-2012 shortages of equipment and crews led to high costs. However, with the gas market collapse of 2012, service companies gravitated to the liquids rich Eagle Ford. As the supply of goods and services increased, prices decreased.
In the period of 2012-2014 the price of a frac job went from roughly $200,000 to $100,000 per stage and average well costs from $9 M to $7.5 M.