Posted on 01/10/2013 11:44:06 AM PST by thackney
The Eagle Ford Shale play is still in its early stages, with landmen continuing to hunt for mineral rights across South Texas and no one really knowing how much oil is out there.
But if the Eagle Ford seems big, get ready for what’s happening in West Texas, where oil and gas production is ramping up in shale layers such as the Wolfcamp in and around Midland.
“They’re getting thousands and thousands of feet of pay zone,” said Ken Morgan, director of the Texas Christian University Energy Institute, who spoke Wednesday at Palo Alto College. “It’s like the Eagle Ford on steroids. They haven’t even begun. We’re just in the toe of this thing.”
Morgan, who spoke as part of an Eagle Ford Consortium and Alamo Colleges event, said it’s going to take “decades and decades” for companies to work through the shale reserves in West Texas.
And how long will it take for the Eagle Ford to play out? And how much oil is there?
“We’re so early in this,” said John Breyer, a geologist and senior technical consultant at Marathon Oil Corp. “I don’t think anybody really knows.”
But Breyer said that wells in the Eagle Ford are producing more oil using horizontal wells that are half the length of those in North Dakota’s Bakken Shale.
“This is going to dwarf North Dakota,” Breyer said.
He said companies would invest $25 billion in the Eagle Ford this year.
That’s in line with a report last month from Wood Mackenzie, a global energy research firm, which estimated that the industry would sink $28 million into the Eagle Ford this year — about 27 percent of all oil and gas investment in the lower 48 states. Between 2012 and 2015, Wood Mackenzie expects capital spending of about $116 billion in the region.
Leodoro Martinez, chairman of the Eagle Ford Consortium and executive director of the Middle Rio Grande Development Council in Carrizo Springs, said that even a few years into the play, which kicked off in 2008, there are still concerns about everything from housing to setting up adequate worker training programs.
“As far as we’re concerned, we’re just kicking off. We’re just starting,” Martinez said. “Our courthouses are still packed with landmen looking for additional resources.”
Morgan said the Eagle Ford is part of a larger global energy picture, with U.S. shale plays upending the energy market. The United States imports $1 billion in oil per day, but Morgan said it has a chance to become more economically independent with hydraulic fracturing, which is the process of pumping sand, water and chemicals at high pressure to fracture dense rock formations to release oil and natural gas.
“We are covered in shale plays, and what we know about shale is the tip of the iceberg,” Morgan said.
While companies have been drilling in the crude oil windows of shale plays, one thing limiting drilling of natural gas reserves across the country has been low natural gas prices, which fell, ironically, because of the abundant shale discoveries.
Prices are below $4 per million British thermal units, down from $12 in 2008. And dry gas sits at greater depths, making those wells more expensive to drill than oil wells.
If liquefaction plants are built, the U.S. can export natural gas to Europe and Japan, where prices for natural gas are much higher. Morgan also said large companies are looking at converting fleets to run on natural gas instead of diesel. “You’ve got cheap fuel, so cheap it’s ridiculous,” he said.
But Morgan also said OPEC is “jittery” about U.S. shale plays, and thinks that at some point it will drop the price of oil on the world market to try to force natural gas out of the market in favor of cheaper imported oil.
Eagle Ford / Permian Basin ping
Any word about California? I thought they had huge amounts of trapped oil in fields that had been previously pumped (which eases title considerations). Are drillers avoiding California because of concern about possible regulatory nightmares like in New York state?
And the Northwes Territories in Canada has a huge shale deposit.And Russia has one. Energy will become very cheap again in a few years but, alas, It will not do this society any good. By then it will all be government owned and mostly shut down in what will be a backwater to the developed world, the once great USA. It’s what happens when you put a communist incharge of the powerhouse of Free Markets.
There are words, just not much drilling, yet.
http://gis.bakerhughesdirect.com/RigCounts/default2.aspx
The Monterey Shale: Big Deal, or Big Bust?
http://www.aapg.org/explorer/2012/11nov/monterey1112.cfm
The Monterey/Santos shale play in southern California was estimated to hold 15.42 billion barrels, or 64 percent of the total. By comparison, the Bakken Shale was projected to hold 3.59 billion barrels of shale oil resource and the Eagle Ford 3.35 billion.
Sounds good, until you realize there is no truly successful Monterey resource play to date.
Some reports have speculated that the southern California play area for the Monterey Shale is too tectonically faulted and fragmented for development by horizontal drilling.
Clarke thinks that isn’t true.
To him, the biggest problems are characterizing the shale across the play area, understanding the Monterey stratigraphy and dealing with government regulations affecting drilling and development.
Unlike some shales, the Monterey Shale doesn’t present a highly consistent picture. Instead, “it changes dramatically wherever it is in California,” Clarke said.
Energy will become very cheap again in a few years
- - - - -
If it does, you will see the shale drilling programs shut down.
These tight, deep formations are not going to be produced without spending far more money up front and the production fall off is fast compared to traditional plays. It takes millions more to complete a shale well and it slows down far faster.
It has take both the technology advances of horizontal steerable drilling combined with hydraulic fracturing along with the historically high cost of oil/gas to begin producing these fields.
If the oil cost drops like the Natural Gas price dropped, you will see the oil shale drilling drop, just like the Dry Natural Gas drilling dropped. 10 years ago, 85% of the US drill rigs were chasing Natural Gas, today it is 25%.
Aren't California's nature/eco rules so bad now that each person can only breathe so many times a day to prevent depletion of oxygen??
An oil company would be crazy to enter that state.
Texas has always been cattle, oil, gas rich and FULL OF GUNS. Now comes the second wave of oil/gas. This will set our economy and growth of jobs for many years to come. Any conservative needing a job will be able to find one as this sector grows.
The certified engineer husband of my sister-in-law was without a job when the company he worked for in Corpus lost a contract - he had been there for years. He worked every small job he could during the time he was trying to find another one in his field. Then Eagle Ford began and he has a fine engineer's job with a large company due to that shale oil field.
Texas will be booming for years plus I don't think our conservative legislature and governor and the people will tolerate Hussein's gun grab - Washington, D.C. is somewhere up north and we don't cotton to those people. We have heating oil underground pipe lines, and oil and gas underground lines to the north to keep them warm and their cars and plants moving so it they want to keep that, best not mess with our guns.
Seriously, our legislature is now in session and I believe there will be a bill or bills, making a statement or taking action to preserve our right to our guns without federal government interference. It appears our approach to school safety is to encourage concealed carry among teachers and staff. Even now, any school board here can add a peace officer to every school in their district if they choose to do that.
A word about those underground pipelines to the north - years ago I had stock in a company that built and maintained those pipelines and I was stunned to see a detailed graphic of every line going to the north. I thought then that the north couldn't survive without the Texas products from our oil cracking plants going through those lines.
A lot of people thought I was nuts when, several years ago, I told them that $3.00/gallon gas, $90/barrel oil was a good thing. I knew it would make new sources economically recoverable, so long as there is enough price stability to get companies to invest the money. And I’m a firm believer that as the technology becomes more prevalent and technique improves, production costs will go down.
The economy at large will adjust to the higher prices so long as they are relatively stable. It was the shock of the sudden large spike in oil prices that triggered the “Great Recession,” so that is obviously undesireable. But in the long run, we benefit from our own production, even if the intitial cost is greater.
Oh no...the “experts” said we were at “peak oil,” and there is absolutely, positively, without a shadow of a doubt NO MORE OIL!!!!! Because the “experts” said so. (snicker)
While I do agree with that, which is why we can produce these fields today and could not 20 years ago, I don't think there is a chance in the world that we see the $20 barrel of oil that some seem to think is coming. If for no other reason than that $20 ain't what it used to be. If you look at oil priced in gold going back over many decades, it tells a far different story than dollars.
If our Natural Gas price does not become more competitive with oil and other energy sources, the drilling for gas will continue to fall, and the price paid will start to rise back up. Natural Gas producers are not going to continue to invest significant amounts of money without a profit.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.