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After all, as crude oil prices have fallen, so have
the number of active Eagle Ford rigs. In just the three
months since November 2014, the total dropped
about 27 percent, from 264 to 192, according to
Energy Information Administration (EIA) data
published in March 2015. And in light of continuing
weak global energy demand, the prospects for a quick
rig count turnaround seem unlikely.
But don’t cue the dirge quite yet. A decline in rigs
isn’t necessarily a predictor of falling production.
In fact, during the natural gas price plunge of 2008,
output actually increased, even as rigs came offline.
In short, rig counts can be misleading. At least
that’s the view of Citigroup commodity strategist
Anthony Yuen, co-author of a Citigroup research
note comparing the events of 2008 to today’s drop
in U.S. crude oil prices, which have fallen more
than 50 percent since the summer of 2014.
Yuen points out that the total number of U.S.
natural gas rigs peaked at about 1,600 in 2008
before falling to 672 by July 2009.
Today, the number of natural gas rigs is less
than half that, closer to 300. Yet the data indicates
that production is up 50 percent from when the rig
count was at its highest point.
Credit drilling and operating efficiencies for
the boost, says Citigroup.
Can boosting efficiency have the same effect in
the Eagle Ford? Can technology – automation in
particular – mitigate the drop in crude prices by
reducing operating costs, increasing product
flow, and helping to capture marketable
NGLs and condensates?
There’s ample evidence those types of
improvements are already in play. And
they’re having a big impact on operators’
P&L statements.
A Stutter Step in Rig Count
Doesn’t Mean the End is Nigh
Before 2008, the Eagle Ford shale formation
– a narrow, roughly crescent-shaped band
sweeping 650 kilometers (400 miles) across
Texas – hadn’t caught the eye of many oil and
gas companies. Although the area was known
to contain hydrocarbons, the rock unit’s
permeability was exceptionally low. It was
doubtful that oil and gas could flow through
to a production well.
Until, of course, it did.
The Eagle Ford success story is the
stuff of legends: 5-year-old independent
energy company Petrohawk combines two proven
technologies and cracks a formerly unyielding
energy deposit, demonstrating the area’s viability
with a well that comes in with an initial flow rate
of 7.6 million cubic feet of natural gas per day. By
September 2014, the Eagle Ford roll call includes
industry luminaries and lesser-knowns alike,
who, all together, are pumping out more than
1.5 million barrels per day of crude oil and light
condensate. Late in 2014, the Eagle Ford hits the
1 billion barrel mark, outpacing its North Dakota
rival, the Bakken. And projections for future
growth are impressive, with suggestions that the
region will produce 1.8 million barrels per day of
8
M
6
M
4
M
2
M
2007 2008 2009 2010 2011 2012 2013 2014
300
200
100
0
Eagle Ford Production vs Rig Count
Production
Rig Count
Rig Count
Natural Gas Production
in mcf/d
Oil Production
in bbl/d
Source: Energy InformationAdministration