New shale play gives Texas oil, gas in four directions
In a seemingly nonstop line of emerging shale plays, the Eagle Ford Shale of southwest Texas, near the Texas-Mexico border, is just the latest during the past several years to spark interest, but many companies see potential all the same.
Since Houston’s Petrohawk Energy Corp. “discovery” well – the shale was known to exist but sat untouched for decades – one year ago, the Eagle Ford Shale steadily has raised interested eyebrows from industry exploration and production companies large and small. Now, at least 10 producers have drilled or will drill wells in the play to get a better idea of its true size and potential.
The shale is located south of San Antonio running in a crescent moon shape from the coast to the western border of the state. It begins in Dimmit and Webb counties at its westernmost and runs through La Salle, McMullen and Live Oak counties before turning northeast in a diagonal line through Bee, Karnes, Goliad, De Witt, Lavaca and Colorado counties. Thickness is estimated anywhere between 150 feet and 475 feet and Petrohawk estimates drilling and completion costs for wells at about $5 million or more.
Petrohawk now boasts 210,000 acres in the play, and recently sold its Permian Basin assets for $376 million to a private company to shift focus on its Haynesville and Eagle Ford assets. The company isn’t alone either. Other players that have taken up stakes in the play include Apache Corp., Anadarko Petroleum Corp., Swift Energy Co., EOG Resources Inc., Rosetta Resources Inc., ConocoPhillips Co., XTO Energy Inc., Chesapeake Energy Corp. and more.
Some numbers
Leasing in the Eagle Ford Shale has been concentrated in Karnes, De Witt and Colorado counties since December 2008. In Karnes, 818 leases have been signed, compared to 561 leases in De Witt, 386 leases in Colorado, and 374 leases in Live Oak County. Goliad has experienced the least interest with 62 leases, according to August data from The Tobin Monthly, a newsletter that publishes data compiled by P2 Energy Solutions Inc., an oil and gas software, data and services company.
“I’ve seen some numbers that in the Eagle Ford you can be more economical and more profitable than in other areas such as the Marcellus,” said Tom Neubert, senior vice president of data operations at P2 Energy Solutions. “Is it different? I think the only things I’ve heard are the ability to produce oil and it’s just a low break-even point.”
Needless to say, the interest is good but many companies are playing their cards close to their chests.
XTO Energy CEO Keith Hutton recently acknowledged the company had some acreage in the Eagle Ford Shale, saying the company was watching it closely but would not comment just yet.
An EOG Resources spokeswoman also said the Houston-based company would not comment on its Eagle Ford Shale development at this time.
Overseas visitors
The shale also has interested some producers from abroad. Brisbane, Australia-based Texon Petroleum Ltd. has been drilling for oil and gas in McMullen County, east of La Salle County, for more than a year, but its fifth Leighton Project well, begun October 10, will be the company’s first to tap into the Eagle Ford.
“It’s an emerging play, it has oil associated with it and gas prices are improving,” said CEO David Mason. “We wanted to assess the value of what we have on our properties so we’re just deepening to get a look.”
Texon Petroleum is drilling with a planned depth of 11,300 feet. The Eagle Ford rests at about 10,500 feet, Mason said, and another oil reservoir is located at about 8,700 feet. Results are expected around the beginning of November, and should the well produce, it would be Texon Petroleum’s fifth producer in
the zone.
“Petrohawk is to the south of us. San Isidro is drilling a horizontal well just now,” Mason said. “We’ve just been watching the trend and we wanted to evaluate the potential in our area and it doesn’t cost us much more to go a bit deeper.”
San Isidro Development Co. is the operator on the Yellow Rose project, also in McMullen County, in which another Australian producer, Antares Energy Ltd., has a 75 percent working interest. The latter announced Oct. 12 it acquired 500 additional acres, giving it working interests of between 50 percent and 75 percent in more than 17,800 prospective Eagle Ford Shale acres.
Antares Energy’s James Cruickshank, CEO and managing director, said the company divested its Turkish and Australian assets so it could focus entirely on oil and gas production along the Gulf Coast. The company has drilled in the area for several years, but its most recent well is, like Texon’s, its first Eagle Ford Shale well. The companies will drill down 11,300 feet and horizontally another 3,000 feet. Antares Energy and San Isidro already hit gas at 11,100 feet during another well.
“Our desire is to become a significant Eagle Ford player,” Cruickshank said. He added, “We’d like to develop the largest possible reserves, production and revenue possible from our Eagle Ford prospects. We certainly see a lot of prospectivity and upside potential in the Eagle Ford.”
