Eagle Ford oil play booming in South Texas
Last week I attended the inaugural conference of the Eagle Ford Consortium in San Antonio. This was a very interesting gathering of 600 or so people representing local to national governments, property owners, oil and gas industry, academia, citizens and more.
They discussed the opportunities and challenges facing the counties of south Texas that are in the midst of the largest oil and gas boom and soon to be the largest oil field in the US outside Alaska since 1930.
Ten counties are entirely over the Eagle Ford Shale formation and 14 more are partially involved, including Milam County.
Currently about 14 counties between San Antonio, Laredo and Corpus Christi are heavily impacted and it may be coming our way.
I was there to find out all I could about what to expect if it does. Leasing activity is going strong here in Milam County already, permitting is under way, and a few wells have already been drilled.
The boom is made possible by new horizontal drilling technology coupled with the hydraulic fracturing process which is constantly being improved.
The southeastern side of the Eagle Ford Shale formation is dry gas only, the middle part is “wet” producing both light crude and gas, and the inland portion is oil only which is where we are located.
Because of the current high price of oil and the relatively low price of gas, the oil and condensate (wet) portions are where the activity is currently concentrated.
The impact of the Eagle Ford and other shale formations in the U.S. is dramatically changing the U.S. position in the world market to where we are almost totally independent on natural gas and have dropped from 60% to some 39% dependency on foreign imports of oil over the past three years. Activity in the Eagle Ford play has skyrocketed. Permits have gone from 94 in 2009 to 1,000 in 2010 to 3,000 in 2011.
Oil production has gone from 300,000 barrels in 2009 to 4 million barrels in 2010 to 22 million barrels in 2011 through November, plus 6 million barrels of condensate (light crude from the middle section).
Number of wells brought in per year has increased from 408 in 2010 to 1,100 in 2011. These are all round numbers and taken from my notes, so for you experts out there, forgive me if I’m off on some of my facts.
But the numbers are staggering. What’s more, the speaker projected that some 2,500 wells would be brought in per year for the foreseeable future ultimately reaching a total of at least 25,000 in the Eagle Ford field with the potential of going as high as 60,000.
If this happens, this would make this field the largest ever in the U.S.
Towns like Three Rivers, Cotulla, Carrizo Springs, and Kenedy made presentations reporting congestion, housing and water shortages, lack of workforce, soaring prices.
Bankers reported that people were paying off all their loans; total bank deposits in the 14 county area have surpassed $14 billion.
County judges report that tax rolls are growing dramatically and that ad valorem tax rates have dropped accordingly; those cities and counties with a sales tax have seen sales tax revenues soar.