Eagle Ford Shale

The Eagle Ford Shale forms an arc across 20,000 square miles in South Texas. It begins in Laredo near the Mexico border and extends 400 miles northeast between Austin and Houston. The formation is divided into three zones, commonly referred to as windows (Chart 1).

The northernmost window contains high concentrations of oil while the southernmost window contains high concentrations of natural gas. And the central window contains natural gas liquids, such as ethane, propane and butane, which are used to produce a variety of industrial products.[1] These windows have played an important part in the story of the Eagle Ford, as they allow drillers to target different areas depending upon which commodity is most valuable. While companies initially focused on the area's natural gas resources, the other windows have attracted the lion share of activity over the past decade, due to the relatively low price of natural gas in the United States (Chart 2).[2]

Petrohawk Energy Corp. completed the Eagle Ford's first well in October 2008.[3] Activity was slow to pick up at first, due to the onset of the Great Recession and a sharp decline in natural gas prices. Starting in 2010, though, the area experienced a gold rush that lasted through 2014. The number of drilling permits (Chart 3) and completed wells (Chart 4) skyrocketed, and both oil and gas production followed suit. By the end of 2014 the area was producing 18 percent the country's oil and 8 percent of its natural gas (Chart 5).

The gold rush ended even faster than it began, though. The boom had been supported by a period of relatively high oil prices but at the end of 2014 those prices declined precipitously. This led to a sharp cutback in drilling activity both inside and outside the Eagle Ford. As in other areas in the country, lower prices spurred E&P companies operating in the Eagle Ford to become more efficient in a variety of ways. This has included shifting drilling activity to the best acreage, finding ways to optimize well spacing and completions design, and reducing costs by increasing scale.

Companies also have made efforts to increase the horizontal lateral length of the wells being drilled (Chart 6). Those lengths have leveled off in recent years, though, to an average of about 7,500 feet. This has had impacts on the well-level economics relative to some other basins, which have seen more substantial changes in lateral length. For example, in the Permian Basin and the Bakken companies drill wells with lateral lengths of near 10,000 feet, on average. While production for new wells in the Eagle Ford saw improvement in the initial years, that improvement has also flatlined in recent years (Chart 7).

Since the price bust, neither drilling activity nor oil and gas production in the Eagle Ford have recovered back to their peak levels. However, the efficiency gains made by companies since the bust have allowed the economics of the Eagle Ford to remain favorable enough to sustain a reasonable level of activity, stabilizing oil production at over 1 mb/d (Chart 8).[4] In the first quarter 2023 Dallas Fed Energy Survey, operators reported they needed, on average, $56 per barrel to profitably drill a new well in the Eagle Ford, below the average WTI price during the survey period ($69 per barrel).

Estimates from the Energy Information Administration for 2021 estimate the Eagle Ford still contains 30.0 trillion cubic feet in technically recoverable natural gas and 3.6 billion barrels in technically recoverable oil.[5] With the diversity of its resources and its close proximity to the coast, which reduces transportation cost versus other basins, the Eagle Ford is poised to continue producing for many years to come. However, significant growth is unlikely in the coming years in the current pricing environment, as the basin has matured and most of the “sweet” spots in the basin have already been drilled.

Notes

1. For more information on natural gas liquids and their many uses, see What Are Natural Gas Liquids and How Are They Used?, Energy Information Administration, April 20, 2012.
2. Oil Boom in Eagle Ford Shale Brings New Wealth to South Texas, Southwest Economy, Second Quarter 2012.
3. The Discovery of the Eagle Ford Shale, Texas A&M University-Corpus Christi.
4. Drilling Productivity Report, Energy Information Administration.
5. U.S. Crude Oil and Natural Gas Proved Reserves, Energy Information Administration.

• Energy Data Explanatory Notes and Resources
  Describes the methodology used to compute production for counties in the Eagle Ford.
• Spotlight: Oil Patch Productivity Rises; Jobs Vanish, Southwest Economy, Second Quarter 2021.
• Producers, Refiners View Strategies to Trim Texas’ Glut of Ultralight Condensate Oil, Southwest Economy, Fourth Quarter 2014.
• South Texas County Hopes to See Lasting Gains from Eagle Ford Shale Oil Boom: A Conversation with Joel Rodriguez, Southwest Economy, Third Quarter 2014
• Oil Boom in Eagle Ford Shale Brings New Wealth to South Texas, Southwest Economy, Second Quarter 2012.
  An article by Dallas Fed economists exploring the economic gains from production growth across the region.
• Energy Information Administration Drilling Productivity Report
  Monthly estimates of oil and gas production for the Eagle Ford and other U.S. shale plays.