In great news for the Texas oil and gas industry, as well as the Texas economy, drilling at the Eagle Ford Shale, a band of rock in south Texas containing a mixture of light, sweet crude oil, natural gas, and high quality condensates, may outpace last year’s boom. UK based research company GlobalData, issued a report earlier this year indicating that production will increase in 2012.
The report confirms there has been explosive growth in oil and gas activity in this area of south Texas. This was already apparent last year, when production of crude oil, natural gas and natural gas liquids tripled compared to 2010. Combined liquids production is estimated to have increased by an even greater factor, from 10.8 million barrels of oil equivalent in 2010 to 57.5 million barrels of oil equivalent in 2011, an increase of 432%.
This data confirms other reports and evidence that drilling has shifted away from natural gas and towards the more lucrative crude oil and condensates, largely as a result in the drastic decrease in North American gas prices. Regardless of this shift in focus, natural gas continues to play a significant role in Eagle Ford drilling. The GlobalData report states that combined liquids and gas production was at 105 million barrels of oil equivalent in 2011. Only five years earlier the output was 200,000 million barrels of oil equivalent. By the end of the current year, the company expects the production to have doubled from last year, to 207.3 million barrels of oil equivalent.
This production boom in the Eagle Ford has resulted in companies such as Anadarko Petroleum Corporation, Petrohawk Energy Corporation, EOG Resources Inc, Burlington Resources Inc, and Rosetta Resources Inc producing high volumes of natural gas and high-quality liquids.
The rate of drilling permits has also increased significantly in this area of Texas. If the current rate of permit issuance by the Railroad Commission of Texas continues, last year’s 4,286 drilling permits could be exceeded. 1,620 permits were issued in the first four months of 2012 alone and if that rate continues more than 4,800 permits could be issued this year. As an example of the rate of expansion, Chesapeake Energy Corporation alone received a record number of 724 drilling permits in Eagle Ford during 2011. That company plans capital expenditures of up to $2.4 billion. If this continues, there could be major companies fighting each other to get a piece of Eagle Ford’s wealth.
“GlobalData anticipates that the Eagle Ford shale play will continue to see increased drilling activity during the coming years,” the company says, which is good news for Texans.
The University of Texas, San Antonio, also released a study on Eagle Ford activity and the impact on south Texas. This study estimated that the oil boom has led to about $25 billion in economic output in the 20 counties affected. Researchers estimated that crude oil production increased six fold from 2010 to 2011. With these recent studies, all Texans should be optimistic about the future of our oil and gas industry and the positive effects it will have on our economy as a whole.
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